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Optimal Utilization: Regime IV pb =$0.067/kWh, ps ==$0.060/kWh Regime V pb =$0.0725/kWh, ps ==$0.02/kWh The logic here is a little tricky to work out, but quite unambiguous once it is done. I present it in a series of propositions. Proposition 1: Farms facing price regimes I,II and III (ps≥pb) will run their generators at full capacity and sell all of their electricity to the grid. Consider the inflexible case first. A farm facing ps>pb that is inflexible must choose whether to use its power to off-set its own bills, or to sell to the grid. Clearly the latter is more profitable under this price scheme. In the flexible case, a farm facing ps>pb still utilizes power for greater profit if it sells it, than if it uses it to off-set its own requirements. In either case, if ps>pb there is no incentive to ever turn of the generator. Now, in the inflexible case, if ps = pb, then a farm choosing to use its electricity may end up being unable to find a use for all its power. However, if it sells to the grid it can always sell all of it. Thus its revenues will always be (weakly) larger if it sells to the grid. Finally, a flexible firm, facing ps = pb will be indifferent between using or selling its power. It is well worth noting that under regime I (ps>pb) there is an obvious incentive to cheat. A farm could conceivably purchase power and sell it back at the higher green rate. Regulators and distributors should beware of such power laundering schemes. Proposition 2: Under price regimes IV and V (psPDF Image | The Economics and Feasibility of Electricity Generation using Manure Digesters on Small and Mid-size Dairy Farms
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