Value creation in the biogas industry
A value network analysis to identify the main drivers of value creation
University of Groningen Faculty of Economics and Business
M.Sc. Technology Management
Robbert-Jan Harmen van der Burg S2036215
rh.vd.burg@gmail.com
August 19, 2013 Final version
Supervisor University of Groningen: prof. dr. G.B. Huitema Co-assessor University of Groningen: prof. dr. ir. J.C. Wortmann
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Preface
This thesis is the result of my final research, carried out at TNO, to obtain my M.Sc degree in Technology Management at the University of Groningen, and describes the results obtained from a value network analysis of the Dutch biogas industry.
Developments in social relevant markets and especially the sustainable energy industry had already thrilled me for some time and this research gave me the opportunity to gain some experiences and insights in this market and related developments. Performing this research was a great experience and really challenged me. When starting, I had never expected to perform this type of research and to come with these results.
While performing this research, I had the opportunity to interview many persons. In addition to the fact that these interviews were really interesting, informative, and useful for my research, it was also a great pleasure to notice the passion and enthusiasm of all interviewees about sustainable developments of this industry and the role the interviewees fulfil herein. The enthusiasm and willingness of the interviewees to participate in this research has contributed to the results, and made me enjoy the research even more. Therefore, I would like to thank all interviewed persons who helped me to perform this research and gave me some of their passion about sustainable energy development in this industry.
I would like to thank TNO, and in specific Jeroen Broekhuijsen, for providing the opportunity to perform this research and all the support and input given during the process. It was a really interesting, informative and above all pleasant time at the office of TNO.
From the University of Groningen, I would like to thank my supervisors, prof. dr. George Huitema and prof. dr. ir. Hans Wortmann for their willingness to supervise my research, and to provide extensive feedback during my whole research process. Hereby, I would also like to thank Austin D’Souza for the feedback and numerous thought-provoking and interesting sparring moments, this has really helped me.
Lasts but not least, I would like to thank my parents for giving me the opportunity to obtain this M.Sc degree in TM and all the other help you have given me in the past years as a scholar and student.
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Research summary
Most research and development in the biogas industry focus on technical developments. However, business orientated academic research, focussing on the biogas industry is sparse. Therefore, knowledge about the business environment in which these technical developments will be applied is lacking, making it hard for actors to improve their activities and develop the market effectively. Knowledge and insights about value creation and its drivers of value creation in this industry can help to develop and improve the industry and enhance sustainable developments. Therefore, this research attempts to contribute to theory development with practical usefulness. This has led to the following research objective: ‘To analyse the value creation of the
multi-actor biogas industry in order to determine the drivers of value creation.’
As a result, this research yields four main drivers of value creation, abstracted from three case studies. The first case concerns a farm-scale co-digester producing biogas and digestate. This biogas is subsequently used for green electricity and heat production. The second case concerns an industrial company producing green gas and digestate. The third case concerns an open biogas network . This network transports biogas in a dedicated biogas infrastructure. After digestion, actors inject and take out biogas for processing at different locations. As a result, the production of biogas is not at the same place as its processing. The value networks of actors that jointly co-create value out of biomass are pivotal in these case studies.
Based on literature, a research framework and methodology is developed, concentrating on three levels of analysis; the actor level focussing on the resources, capabilities, and interests of actors. The network level focussing on the interactions of those actors and the macro-level focusses on macro factors that influence value creation in the specific networks. In total, 27 interviews are held with both domain experts of the biogas industry, as well as actor’s active in the cases.
By analysing the individual cases and a cross-case analysis, this research found four main drivers of value creation. These are:
1. Local opportunities
Due to geographic restraints regarding biogas valorisation, the local environment of actors plays an important role. This driver of value creation concerns about value creating opportunities offered to an actor by its direct local environment. Local demand for products like heat and electricity, or grid capacity to inject green gas can inhibit or enable the creation of value by decentralized biogas cases.
2. Shared visions
Because of intensive and long-term cooperation between actors, dependencies and interests influence value creation. The combination of a shared vision and the degree of interdependencies between actors affect effective and efficient cooperation. High dependencies and a lack of a shared vision can create struggles in the cooperation and hence, inhibit the creation of value. If interdependencies are equal and a shared vision between actors exists, cooperation and thus value creation will be enhanced.
3. Stability and certainty
Due to the high investments needed to initiate a business and intensive cooperation required to participate and maintain a network, stability and certainty influences the degree of value creation. The degree to which stability and certainty is realized in a network positively affects value creation. If stability is around, actors know what to expect and can anticipate towards it. Subsequently, actors can improve the activities they perform, work more efficiently, and create higher value by the actions and transactions they perform instead of putting effort in adapting to new situations.
4. Economies of scale
Investments in assets like infrastructure or digestion installations are often high. Due to economies of scale, costs per unit of production decreases and opportunities for production techniques that produce products with higher values rise and hence, affects the value created out of biogas. Economies of scale also enable to attract resources in-house and reduce the cost related to the transactions. Besides, an increase in organisations internal efficiency due to economies of scale creates higher margins enhancing the viability of actors.
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Practical recommendations
Though beyond the scope of this research, practical suggestions for improvements are made based on the analysis on of the three cases of this research and some additional findings found when performing this research. These practical recommendations are summarized below.
Dependency of biomass trader and increasing biomass prices
The biomass trader adds value to collect biomass from different initial biomass owners. However, he has the power to allocate biomass to the highest bidder and push the price. Higher subsidies or additional generated income will not improve the business case, since these additional incomes will directly flow to the traders. Different options can help to prevent from this. Further and more detailed research has to determine which option suits best.
Cooperation of biogas producers for biomass procurement
A cooperation of biogas producers who will fulfil the role of biomass trader can help to prevent. Such cooperation can establish their own trading agent and supply their own digesters, preventing from pushing up the price and squeezing out producers. It is important to create economies of scale and a sufficient demand of biomass, to become an interesting partner for initial biomass owners. Long-term contracts with initial biomass owners can be arranged and a secure and stable input guaranteed. If achieved, the producers reduce their dependency and create a better business case. However, this can still create a relative high demand and thus price at the initial owners of biomass. However, the unreliable biomass trader is avoided.
To facilitate this, the difference in the amount of granted subsidies (MEP, SDE) has to be eliminated. Otherwise, cooperation with different biogas producers is difficult.
Mono-digestion
Another option is to focus on mono digestion (only manure) and mineral extraction by refinery. This eliminates the dependence of the biomass trader, since no co-products are needed anymore. When digestate is treated, for example dried or refined, it can be transformed into a valuable product and sold. This will increase the viability of the biogas producer.
Limitation of biomass transport
A law limiting the ability to transport biomass for long distances can help to improve the situation as well. Due to this limitation, the allowable sales area decreases and probably demands as well, since much biomass goes to other countries. Hence, it is expected that prices will decrease as well. This will enhance the economic viability of biogas producers, reduces of CO2 emissions, and thus enhances sustainability.
Closed chain
The creation of a closed chain will result in an alignment of interest of actors participating in this chain. If initial biomass owner will be the consumers of the produced energy, biomass is connected to electricity or GG production. An increase in biomass price will therefore lead to an increase in price of produced energy. Hence, interests will be more aligned with each other. However, it might be hard to develop and maintain such a closed chain.
Effect of subsidies
Biogas producers receive a subsidy for production. However, it is questionable if this subsidy has any positive influence for the biogas producers.
Due to the high dependencies toward biomass traders, prices of biomass increase and providing additional subsidies will increase biomass prices even more. In addition, an unequal market is created by the differences in current subsidy systems. The newer SDE subsidy provides a higher amount than the old MEP subsidies, creating an unfair competition.
Besides, when initiating a project, it is not certain if a subsidy is granted or not, even if all requirements are met and production can almost starts. In some cases, a subsidy is allocated to projects, even if they have not yet a grounded business proposal and are therefore not able to use their subsidy possibility.
As a result, both projects are not able to start. This creates high uncertainties and stagnates development of new initiatives.
Start-up assistance
8 A more focussed research is recommended to determine the effects of subsidies and if the current way of subsidizing is the most suited and best option for all actors.
Forced trade with GG certificates
Most of the times, GG certificates are sold to the energy retailers. However, a direct sale to end consumers is also an option. This reduces one link in the chain, and will enhance the trade in certificates and increase its value. However, this is not often done, since energy retailers only accept to buy GG in combination with their certificates, forming a kind of forced trade.
It is questionable if the current certification system is suitable for this market and product. It has the same set-up as the green electricity system. However, GG market and injection is different compared with green electricity injection and its market. A more focussed research is recommended to determine in detail what the best way is to develop the GG certifications system and how this effects value creation of GG.
Improved information biogas certification
Certification indicating the sustainability and content of biogas used for GG production makes it able to communicate to customers about the degree of sustainability, CO2 reduction, location of production etc. This can increase the value of GG, since some customers have demand for GG with specific characteristics. However, it is important not to create a system of certifications and control that incurs major costs.
Focus on the reduction of energy costs, instead of making money out of sales
Most interesting for biogas producers is the reduction of own energy costs, instead of sales out of biogas related products. Since remotely located areas have often no specific demands, it is more beneficial to produce less and only sufficient for own consumption. This creates the highest yields and most efficient use of resources.
Standardization of GG injection requirements
Energy retailers help to initiate many GG production initiatives. However, since a lack of standardization, all DSOs have different requirements. This makes it hard to initiate new projects efficiently, and to develop the market. Stable and consistent regulations concerning injection requirements will increase cooperation between concerned actors.
Improved cooperation
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Table of content
1 Introduction ... 11
1.1 Research context ... 11
1.2 Aim of the research ... 12
1.3 Research question ... 13
1.4 Scope ... 13
1.5 Outline report ... 13
2 Theoretical framework ... 15
2.1 Introduction ... 15
2.2 The network perspective of value creation ... 15
2.3 The actor level creating value... 17
2.4 The network level creating value... 18
2.5 Forces outside the network affecting value creation ... 20
2.6 Conclusion ... 20
3 Research methodology ... 21
3.1 Case study research ... 21
3.1 Methodological steps ... 21
3.2 Case selection ... 24
3.3 Data gathering ... 24
3.4 Reliability and validity ... 25
4 Macro-level analysis of the biogas industry ... 27
4.1 The socio-technical system ... 27
4.2 Value streams ... 29
4.3 Macro-economic environment ... 29
4.4 Conclusion ... 31
5 Individual report case 1: Co-digester producing heat and power ... 33
5.1 Introduction to the case ... 33
5.2 Actor level ... 33
5.3 Network level ... 35
5.4 Analysis ... 38
5.5 Interpretation and conclusions ... 39
6 Individual report case 2: Industrial digester producing GG ... 41
6.1 Introduction to the case ... 41
6.2 Actor level ... 41
6.3 Network level ... 43
6.4 Analysis ... 45
6.5 Interpretation and conclusions ... 46
7 Individual report case 3: Open biogas hub ... 49
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7.2 Actor level ... 49
7.3 Network level ... 51
7.4 Analysis ... 53
7.5 Interpretation and conclusions ... 53
8 Cross case analysis... 55
8.1 Cross case analysis ... 55
8.2 Drivers of value creation ... 56
8.3 Conclusion ... 59
9 Conclusions ... 61
9.1 Conclusion of analysis ... 61
9.2 Applicability ... 62
9.3 Reflection on research ... 63
9.4 Suggestions for future research ... 63
References ... 65
Appendices ... 69
Appendix I. List of biogas cases ... 70
Appendix II. Interviews and validation presentation ... 71
Appendix III. Questionnaire ... 72
Appendix IV. Value streams ... 74
Appendix V. Analysis of macro-economic environment ... 75
Appendix VI. CASE 1: Ancillary actors ... 79
Appendix VII. CASE 1: Interests ... 81
Appendix VIII. CASE 1: Dependencies ... 83
Appendix IX. CASE 1: Elucidation of dependencies ... 84
Appendix X. CASE 1: Transactions ... 86
Appendix XI. CASE 2: Ancillary actors ... 87
Appendix XII. CASE 2: Interests ... 89
Appendix XIII. CASE 2: Dependencies ... 91
Appendix XIV. CASE 2: Elucidation of dependencies ... 92
Appendix XV. CASE 2: Transactions ... 94
Appendix XVI. CASE 3: Dependencies ... 95
Appendix XVII. CASE 3: Transactions ... 96
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1 Introduction
1.1 Research context
Energy demand is increasing extensively the last decades and our main sources of energy are decreasing rapidly. To prevent a worldwide energy and climate crisis, the long-term solution to energy supply is conversion to renewable, non-polluting energy sources, which can include solar, nuclear, hydroelectric, geothermal, wind, biomass, and hydrogen. Solar, nuclear and hydrogen should become major power source in the 21st century (Edwards, 2001). However, within this energy transition, (bio)gas can also play an important and promising role since it contains certain qualities that other renewable energy resources lack. Biogas can play an important balancing role in future at local decentralized smart grids since it can be used as a “flexible” energy carrier that can be either stored in tanks, transformed into heat and electricity or upgraded to a higher quality green gas (GG) and injected in the regular gas grid. Thereby it helps to preserves non-renewable resources, contributes to energy supply security, and mitigates the greenhouse effect (Gold and Seuring, 2008).
The reasonably steady production of biogas throughout the year and its flexibility, make biogas very capable in balancing other more irregular decentralized renewable resources like wind and solar energy and giving it a pivotal role in the future smart grids. Concerning the gas supply chain, estimates advocate GG will replace almost 10% of natural gas (Welink et al. 2007). However, this needs developments to achieve this.
1.1.1 Flexigas developments
The Flexigas project is working towards sustainable integration of decentralized produced biogas into the future energy system. Therefore, the Flexigas project develops components of a flexible biogas chain to produce, transport, and use biogas efficient as possible in a biogas grid. In this grid, biomass, digestion, upgrading, conversion, storage, transport, and consumption are important steps. Flexigas investigates different ways of organizing this chain and performs experiments in collaborations with 15 companies and knowledge institutes.
One of the four research themes in Flexigas is ‘Optimization and management of the smart biogas grid’. TNO develops in line with this theme a simulation tool that is able to simulate and analyse systematically different configurations of a flexible biogas grid. The wide range of system components of a flexible biogas grid have to be dimensioned and designed according to levels of scale, flexibility, place in the chain, etc. System components or techniques can for example be the application of ‘virtual pipelines’ for transport of gas, buffering of gas for peak shaving, application of broadband burners to use a wider range of gas qualities, upgrading and using CO2, etc. (Flexigas, 2012). The model TNO is developing can help to gain further insights in these design questions and enhances the development. In the end, these developments will have an impact on the biogas industry and energy markets affecting energy producers, suppliers, distributers, consumers, regulators and other stakeholders. To realize such sustainable integration and developments in new (decentralized) energy sources and production techniques need some additional attention since it is not only a matter of ‘normal’ technological development.
1.1.2 Sustainable development
Within literature, ‘The World Commission on Environment and Development’ (1987) defines sustainable development as ‘ensuring the needs of the present generation without compromising the ability of future generations to meet their own needs’. Sustainable development directs at enhancing human living standards while improving the availability of natural resources and ecosystems for future generations (Ueda et al. 2009). According to Rotmans (2003), three characteristics of sustainability exists that are emphasized in the most definitions: (1) a long time span is needed: (2) Affects different levels of scale like regional, national, or international and (3) different domains are pivotal: the economic, environmental and social-cultural domain, and should be in balance. When one of the domains is leading over the others, these will suffer from it, and sustainable development is not achieved (Elkington, 1998; Rodriguez-Nikl, 2011; Rotmans, 2003).
12 because of this wide range of stakeholder involvement, which means higher complexity and such parties usually have contradictory interests and perceived values, which increase ambiguity.
Realizing sustainable development by adapting innovations often accompany (technological) innovations with high investments costs, which can have significant impacts on industries and the way of business. Therefor such developments can radically change the value creating process by the actors and stakeholders involved in such an industry (Battistella et al., 2012).
New developments adopt much easier if they add value and are in line with the interests of the most actors in a network of cooperating actors. Identifying such dominant actors, their interest, and the value creating logic in a specific industry can be very interesting. It can give insights in the inhibiters and enablers of value creation and provide directions for (technological) improvements. Besides, new (technological) innovations with well-developed business models that create value actors consider important will increase investments and the chance of successful implementation. As a result, knowledge about value creation can enhance the realization of sustainable development. In view of the energy transition, this can play an important role and help the energy transition from a non-sustainable to a sustainable industry.
1.1.3 Value and value creation
Value is not a clear concept and can be interpreted in different ways. In human systems, satisfaction is considered as the most important characteristic of value. Consumers judge the value of goods by the degree to which they are satisfied by consuming those (Konsti-Laako et al., 2012). In the business markets, the value of goods or services appears as a monetary price (Ueda et al. 2009). However, McWilliams and Siegel (2001) argue that value cannot be described in purely economic terms and financial value only. Think for example about environmental values of reducing greenhouse gasses, or enhancing fair trade.
In this research, the definition of Bowman and Ambrosini (2000) is used. They define value according to two components; use value and exchange value, see Figure 2: Value. Use value refers to the specific quality or usefulness of a job, task, product, or service as perceived by users in relation to their needs. The total monetary value is the amount the customer is prepared to pay for the proposed benefits (Lepak, Smith and Taylor, 2007; Bowman and Ambrosini, 2000). Exchange value is realized when the product, service, task or good is sold or exchanged. It is the amount paid by the buyer to the seller for the perceived use value (Bowman and Ambrosini, 2000). Inherent to this definition is the interaction between two actors to create these values, see Figure 1. Value is created when the exchange results in a more beneficial situation for both actors involved after the transaction is made. Hereby, the monetary exchange value must exceed the producer’s costs of creating this use value (Lepak, Smith, and Taylor, 2007). It is important to realize that both actors have to perform value added activities to create a situation that makes exchanges meaningful for each other. It does not necessarily mean that the buyer only has the benefits of the use value. A distinction is needed here between value creation and value capturing, recognizing that the actors involved in value creation not necessarily are the only ones capturing the created value (Lepak, Smith, and Taylor, 2007). A society benefitting from sustainable energy production and consumption clearly illustrates this. At last, different actors can experience value in different ways (Wheeler, Colbert, and Freeman, 2003).
1.2 Aim of the research
Literature is generous about topics of stakeholder theory, sustainable developments, supply networks, value creation, business modelling etc. However, such business orientated academic research focussing on the biogas industry is sparse. Most research and development in this industry focus on technical aspects, as is the case within the Flexigas project as well. Knowledge about the business environment i.e. the coherence of actors, interests, resources, interactions and the way of value creation, in which these technical developments will be applied is lacking. This makes it hard to improve the value creation of the industry effectively with new (technological) developments and realize sustainable developments. Causing problems for current actors to improve their value added activities effectively or new actors to enter the industry and leverage the co-creation
13 of value. Therefore, this research aims to generate knowledge about value creation of the biogas industry and attempts to fill this theoretical gap by seeking to identify the main drivers of value creation in this industry. ‘Drivers’ of value creation refer to any factor that can enhance or detriment the total possible value created in this industry (Amit and Zott, 2001). This aim will lead to the following research objective:
‘To analyse the value creation of the multi-actor biogas industry in order to determine the drivers of value creation.’
From a theoretical perspective, this research will add to the knowledge of value creation in the biogas industry and determines the main drivers of value creation of this industry. From a practical perspective, this is interesting, since it provides directions for effective sustainable developments. Insights can help to develop and improve value creation of the industry regarding the current actors and potential new actors to enter, to create additional value. Hence, it will contribute to the research done within Flexigas and the sustainable development of the industry in general.
1.3 Research question
From the above-mentioned research objective, the following main research question is formulated:
RQ: ‘How is value created in the multi-actor biogas industry and what are the main drivers of this value creation?’
1.3.1 Sub questions
Since this main research question contains different aspects that require a more detailed view, the following sub-questions and specifications are made. Answering these sub-questions will help to answer the main research question.
SQ 1: How does the macro-environment influence value creation in the biogas industry? a. What are the general socio-technical characteristics of the biogas industry? b. What macro-economic factors affect the biogas system?
SQ 2: How is value created at the actor level of the biogas industry? a. Which roles are fulfilled in the biogas industry?
b. What are the interest and purposes of actors in the biogas system? c. Which resources and capabilities of actors drive value creation?
SQ 3: How is value co-created by interaction at the network level of the biogas industry? a. Which interactions and transactions are performed to co-create value? b. What are the dependency structures between actors in the value networks? SQ 4: What are the main drivers of value creation in the biogas industry?
a. What are the enablers of value creation in the biogas industry? b. What are the inhibiters of value creation in the biogas industry?
1.4 Scope
Biogas production takes place all over the world. However, this does not automatically mean that the Dutch biogas industry is comparable with a biogas industry in other countries, like for example Germany or Denmark. Differences in for example taxes, governmental policies, regulations, gas and electricity network infrastructures make every country a specific case. To scope this research, three specific cases of biogas production within the Netherlands are selected (see methodology for elaboration of case selection).
1.5 Outline report
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Figure 3: Outline report
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2 Theoretical framework
This chapter elaborates on the theories applied and serves as the theoretical backbone for this research. It provides theoretical perspectives and definitions used during this research, input for the development of a research framework and support for the analysis of the data. Section one provides a short introduction. Section two deals with the general network perspective of value creation and the remaining three sections focus on specific levels of value creation of a value network; the actor level, the network level and forces from outside the network.
2.1 Introduction
Different theories exist about the creation of value, all focusing on specific sources or levels of analysis. For example by the network, explained by value network theories (Moore, 1996; Christensen, 2003; Allee, 2003), interactions between actors, explained by transaction cost economics (Williamson, 1975 & 1983), the resources and capabilities of actors explained by the resource based view (Barney, 1991, Amit and Schoemaker 1993) or Porters value chain (Porter, 1985).
Porter’s value chain model obtained a dominant position in the strategic analysis of multi actor industries. It provides a macro view of firms’ exchange analysis by considering the flow of goods and services from raw materials to consumption as unit of analysis and adopts a linear logic of value creation (Biem and Caswell, 2008). However, inter-firm relationships have increased in complexity in the past decades, and can no longer be classified neatly as customers, suppliers or competitors (Biem and Caswell, 2008). Often they are two or more of these dimensions simultaneously. In addition, as the economy is becoming more connected, more global, and more complex, other strategic tools are required to provide better insight into firm’s interactions and value creating potential (Biem and Caswell, 2008). Think for example about a decentralized energy producer like a farmer, who partly consumes his produced energy to reduce costs and partly sells it to make profit and is simultaneously involved in different businesses. In such an organisation there is no value chain of biogas production in its traditional linear perception (Porter, 1996), but rather there exists a value network (Tsvetkova and Gustafsson, 2012). The value network can involve a number of value chains in several industries: farming, transportation, waste management, and energy production and consumption. The connection of such different value chains forms an example of a multi-actor network, where the companies and industries involved benefit from being part of it (Tsvetkova and Gustafsson, 2012).
Hence, adopting a network perspective provides an alternative perspective that is more suited to new economy organisations (Peppard and Rylander, 2006) and is more suited to analyse inter-organisational exchanges and transactions (Biem and Caswell, 2008). Therefore, this perspective is more useful to analyse value creation of a multi actor industry, which is the aim of this research.
2.2 The network perspective of value creation
Different definitions and terminologies like value networks (VN), business networks (BN), business eco-systems (BES) exist in literature describing the coherent whole of actors cooperating and co-creating value. Moore (1993) states that innovative businesses cannot evolve in a vacuum and have to attract all kind of resources and collect capital, partners, suppliers and customers to create cooperative business networks. He suggests that a company should not be viewed as a member of a single industry but as part of a network or ‘business ecosystem’ that can cross a variety of industries, for example a farmer producing milk, sustainable energy and processing waste. They work cooperatively and competitively to support new products, satisfy customer needs and eventually incorporate innovations.
Moore (1996, page 26) has defined the business eco-system (BES) as; “An economic community supported by a
foundation of interacting organizations and individuals which produces goods and services of value to customers, who are themselves members of the ecosystem. Over time, they co-evolve their capabilities and
roles, and tend to align themselves with the directions set by one or more central companies. Those companies
holding leadership roles may change over time, but the community values the function of ecosystem leader because it enables members to move toward shared visions to align their investments, and to find mutually supportive roles.
16 and not part of the analysis. Therefore, to analyse such a business eco-system, a ‘picture’ of the current state of a business ecosystem of interacting actors has to be made, resulting in a static network of actors and transactions, useable for the value creation analysis. The sub-sections below elaborate on the basic concepts of a static network in order to come to a definition of a value network.
2.2.1 Networks in general
A network is a structure in which nodes interconnect and relate to each other by different threads to create an entire and complete set without loose parts (Rowley, 1997). Each thread connects two nodes and relates to a specific type of connection or relation. A business market or industry can be considered as a specific network where nodes represent different kind of organisations (e.g. manufacturers, traders, service providers, governmental agencies, regulatory authorities etc.) and the threads represent the interactions and relationships between those nodes (Hakansson and Ford, 2002). A network does not denotes to the actual process steps made in an industry, but the interactions between two actors acting in this
industry and the actors performing internal processes, to make transactions that add value. The thread or connection is important for both nodes, especially as a part of a larger structure (Hakansson and Ford, 2002). A link over a network requires the use of two or more network components and the crucial defining feature of the networks is the complementarity between the various nodes and links (Peppard and Rylander, 2006). Although a thread provides contact and transactions for both the actors, it can affect and have different impacts per actor involved, because each node has its own characteristics like resources and capabilities and connections to other nodes as well (Hakansson, 1997). This makes each node unique in the network. All the nodes and threads related to each other form interconnected relationships and determined the structure and behaviour of the total network (Gadde et al., 2003). The effect of any one thread on the nodes is affected by these dependencies with other threads (Hakansson and Ford, 2002; Freeman and Evan, 1990). These relationships affect the nature and the outcome of the firms’ actions and are their potential sources of efficiency and effectiveness that will lead to value creation (Hakansson & Snehota, 1995 and Wilkinson & Young, 2002).
2.2.2 The value network
For this research, a VN is defined as a set of relative independently managed, complementary actors and transactions that jointly co-create value by their interactions and cooperation (Peppard and Rylander, 2006). This happens in a framework of common principles and agreements (Peppard and Rylander, 2006), shared values and interests (Battistella et al., 2012) and some kind of a joint understanding or shared vision about what to achieve (Konsti-Laako et al., 2012). The individual actors determine which transactions are of interests and generate value and thus, which transactions are made. Christensen (1997) argues that the VN is the context within which a firm identifies and responds to customer’s needs, solves problems, procures input, reacts to competitors, strives for profit, and in the end, creates value.
Blankenburg-Holm, Eriksson, and Johansson (1999) argue that the evolution of a VN includes four stages before the network starts to create value. Initial business connection, mutual commitment, and mutual dependence, precedes the stage of value creation. At last, a VN has a specific structure in which economic, technical and social/ legal dimensions play a pivotal role and determine its structure and behaviour (Hakansson and Ford, 2002).
A VN has different dimensions to create value; the actors in the network interacting with each other, the activities those actors perform, and the resources available and used by the capabilities of actors to perform their activities (Gadde et al., 2003). Hence, to understand the creation of value by a VN, it is necessary not only to analyse the interaction and co-creation of value by the network solitary, but to focus on the actors as well. The resources used by the capabilities of actors in the network create the goods or services exchanged by the transaction in a network (Lansiti and Levien, 2004). Hence, to analyse value creation, it seems interesting to use theories focusing on value creation out of resources, capabilities, and transactions in the network. The Resource Based View (Barney, 1991) can explain value creation out of resources and capabilities and Transaction Cost Economics theories (Williamson, 1975) can explain value created out of the transactions between the actors. Using only such a perspective or theory in isolation ignores some crucial aspects of value creation. Analysing value creation on different levels and from different perspectives can thus provide better understandings (Amit and Zott, 2001). The analysis of a VN is called the value network analysis (VNA).
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2.3 The actor level creating value
As mentioned earlier, within sustainable development, stakeholders play an important role by the creation of value within a specific VN. According to Ananda and Herath (2003), stakeholders are any group of persons who share a common interest or stake in a particular issue or system, in this case the biogas VN.
Clarkson (1999) and Hall & Martin (2005) mention that stakeholders in general can be further divided into primary and secondary stakeholder. In this research, the primary stakeholder are called the actors of a network and secondary stakeholders just the stakeholders of a network. Making these different types of actors in a network clear can provide information about the roles fulfilled and the importance of an actor in a network. It helps thereby to scope the VN for a VNA. This is important since a VN lacks a clear border (Gadde et al. 2003). Actors
Actors are defined in this research as independent economic entities (Gordijn et al., 2000) or organisations who actively participate in a VN with transactions, for example producers, transporters, suppliers, etc. in case of a biogas network. Christensen (2003) goes even into more detail and makes distinction between primary and ancillary actors. Ancillary actors being the actors in a network that support a common business model within an industry. These actors are actively involved with interactions in the network by supporting the primary actor. Think for example about an inspection agency or subsidy provider who interacts with a farmer, a primary actor in the biogas value network. Often, the ancillary actors are non-commercial organisations.
By performing activities, actors add value to the VN. Priem (2007) states that the value creation process at the organizational level includes all activities that provide a greater benefit for the customer than the customer currently possesses without the activities performed by a specific actor. In a sound and viable VN, every actor is capable of adding and capturing value. Herewith, distinction is made between two types of primary actors: business actors and end-consumer actors since they differ in the way they add value to the network. Business actors such as traders, transporters, and producers buy objects of value, perform value-adding activities, and produce objects with a higher value (Gordijn et al., 2000). End consumers do not resell the objects of value they buy but consume the objects of value and are important for the generation of demand for a specific good or service (Gordijn et al., 2000). A hybrid form can exist as well, called the prosumer (Kotler 1986), like for example and farm both consuming and selling his produced energy.
Stakeholders
All others related to or affected by a VN, but not actively engaged with transactions in the network are defined as stakeholders of a network (Clarkson, 1999; Hall & Martin, 2005). Think for example about local residents from producers, business associations etc. It is important to notice that, however stakeholders are not actively involved in value creating transactions, they can still influence in the VNs behaviour and value creation, and can thus have an important role.
2.3.1 Interest and visions of actors
Within a network, interests and visions of actors play an important role. In this research, interests of actors are divided into two categories, the primary and secondary interest. The primary interests represent the goals to achieve or values to capture by participating in a specific network. The secondary interests explain what an actor needs to meet his primary interest and create and capture this value. Within the different actors acting in a particular VN, interests and values may differ. To clarify this more, distinction is made about economic and non-economic interests. The triple bottom line of Elkington (1998) specifies interest or values in an economic, social, and environmental dimension. The social dimension concerns the interests and values related to an effect on people or the society. The ecological dimension concerns the interests and values related to environmental effects of actions. Although, divided into three different categories, these are often intertwined and influence each other. Table 1 below provides some clear examples of the interests.
Different types of interest and values with examples Economic interests
Maximize profit, remain economic independency, create extra income, etc. Social interests
Enhancing local energy provision and energy transition, creating labour, secure supply energy etc. Environmental interests
Lowering CO2 emissions, energy neutral production process, etc.
18 Clarkson (1995) claims that actors in a network are more likely to have similar ‘interests, claims or rights’ because they may share goals/ visions and pressures associated with a relationship, and may have a clear concept of what is expected from that relationship. In contrast, stakeholder may have different goals compared with actors or other stakeholders. Often non-market concerns and pressures of stakeholders can drive or influence decisions of actors of a network (Hall and Martin, 2005).
Shared vision and interest, for example of a future situation about what to achieve, is of great important for actors to create mutually supportive roles that complement each other and leverage cooperation and the value creation (Moore, 1996). It is important to consider that a similar interest between two actors is not the same as a shared vision about what to achieve with the transaction and cooperation. If both actors have a purely financial interest and a shared vision is lacking about how to achieve this, this can cause troubles when cooperating with each other and creating value.
Actors may view the network, its scope, and the nature of exchanges and relationships all in quite different ways (Gadde et al., 2003). Different interests and perceptions, caused by the unique position of all actors in the network, mainly cause this. Because all actors have different expectations, relations have different characteristics and actors value and employ the relationship with other actors on varying ways (Gadde et al., 2003). Actors will evaluate the relationship with other actors in the network on the ability to add value to their own role and activities in the network (Kothandaraman & Wilson, 2001 and Konsti-Laako et al., 2012). To understand the considerations and actions of actors in a network, the structure, position, and interactions of an actor in a network is therefore significant (Hakansson and Ford, 2002). This is thus crucial for a fruitful and effective cooperation between actors.
2.3.2 Value creation from a RBV perspective
From a resource based view perspective, the resources and capabilities constitute the actors ability to create value and a sustainable competitive advantage. Actors in the network possess specific resources and capabilities that can thrive to value creation. The resource-based view explains how firm resources drive differences in firm performance (Finney et al., 2008) and views the firm as a package of heterogeneous and imperfectly mobile resources (Wade and Gravill, 2003). Hoopes et al. (2003) state that a resource is a tangible or intangible asset and can be valued and traded like for example as a brand, a patent, a parcel of land, or a license. With the biogas industry in mind, a specific resource can for example be the possession of own biomass for digestion. Distinction has to be been made between firm resources and firm capabilities (Amit and Schoemaker, 1993, Finney et al., 2008) since resources solitary ignore the differences in firm assets and firm abilities (Priem and Butler, 2001). A capability is a firm's capacity to undertake a specific activity and deploy resources in organisational processes (Amit and Schoemaker, 1993, Hoopes et al., 2003), like for example the ability to produce biogas in an efficient way and increase gas yields or improve methane content. Under the right conditions, the resources allow an organisation to achieve sustained competitive advantage (Wade and Gravill, 2003). The key point of the resource based view theory is thereby to identify the firm’s potential key resources and capabilities and to evaluate if they are; valuable, rare, in imitable, and non-substitutable. The theory reasons that the foundation for improved competitive advantages for organizations lies in sharing strategic resources and capabilities with other organisations instead of just reducing transactions costs (Wade and Gravill, 2003). This provides more or less a contradictory view of value creation compared with transaction cost economics. Amit and Schoemaker (1993) argue in line with this that resources are converted into final products or services by using a wide range of other firm assets and bonding mechanisms, like a biogas producer making use of the gas network of the distribution system operator (DSO). Connected firms can more easily share resources than unconnected firms (Wade and Gravill, 2003). From this, it can be concluded that a relation with network theory can be made and those theories can be complementary. This also provides a link to the following section.
2.4 The network level creating value
19 When analysing transactions between
actors, Hakansson and Ford (2002) argue it should be considered that ‘no one interaction, whether it is a sale, purchase, advice, delivery or payment can be understood without reference to the relationship of which it is part’. In addition, a relationship and transaction can only be understood when taking the perspective of the wider network into account in which both actors are acting. This means an actor in a network is not able to determine solely which transactions and roles are fulfilled, but is affected by the network of
interactive relations that link the resources and activities of other actors in the network (Håkansson & Snehota, 2006). Shafer et al. (2005) argued in line with this that neither value creation nor value capturing occurs in a vacuum between two actors, but in perspective of the whole network of actors who extend the actors own resources. In this way, play the relationships enjoyed by the firms and structure of the whole network an important role in firm’s competitive advantage and performance, and the way of value creation in a network (Madhavan et al. 1998).
A company’s relationship with other actors is one of the key sources to affect and influence other actors in the network (Gadde et al. 2003) and therefore used as a strategic tool to affect current and potential new partners in the network. At the same time, other actors in the network affect a company by the same relationships. Gadde et al. (2003) hence argues the paradox that a company itself is an outcome of those relationships and the developments in the network. Consequently, the role (and thus position in the network) an actor plays within a network is both defined by the relations and purposes of the actor itself, as the relations and purposes of the other actors in the network. This influences how much value the actor currently creates and can capture in future (Shafer et al., 2005).
2.4.1 Value creation from TCE perspective
The central notion in transaction cost economics is the transaction between two actors as a unit of analysis and the major source of value creation (Amit and Zott, 2001). Williamson (2005) state that transactions can be described according to three main dimensions; asset specificity, uncertainty, and frequency of a transaction. Asset specificity is the degree to which assets that support a particular transaction can transfer to a transaction beyond the exchange relationship (Schneider et al., 2013). Uncertainty describes the extent to which transactions are subject to disturbances that can hinder the transaction (Schneider et al., 2013). Concerning the biogas industry scarcity of biomass or changing requirements concerning injection of GG are examples of disturbances of transactions. Frequency describes the rate of reoccurrence of a transaction (Schneider et al., 2013). The reoccurrence of transactions can improve for example the efficiency of transactions and cooperation.
Important with the transactions is the governance of the transaction. The governance structure handles a transaction between two subsequent partners in a network. The governance of the transaction is responsible for coordinating the flow of materials, information, and services through steps in the value chain (Grover and Malhotra, 2003) and thus organising and influencing the transactions and interactions made by different actors.
Transaction efficiency is noted as a major source of value creation by interaction between actors since enhanced efficiency of transactions reduce cost and thus increase the value made by the transaction. Amit and Zott (2001) provide some practical examples of transaction costs; the time spent by managers and employees searching for customers and suppliers, communicating with counterparts in other companies regarding transaction details, the costs of travel, physical space for meetings, and processing paper documents, as well as the costs of production and inventory management
Williamson (1975) suggests in line that value creation can derive from the lessening of uncertainty, complexity, information asymmetry, and small-numbers bargaining conditions. In addition, reputation, trust, and transactional experience can lower the cost of exchanges between firms, and thus enhance the creation of value (Williamson, 1983).
20 2.4.2 Power and dependencies in a value network
Having tight relationships is necessary to survive in a network. Resources accessed by these relationships gain an important foundation for developments within an organisation and leverage value creating potential (Powell, 1990). However, these relations will also create power and dependencies in the network between different actors. Thompson (1967) states; ‘an organization is dependent upon some elements of its task environment in proportion to the organization’s need for resources or performances, which that element can provide’. In other words; actor A is dependent upon actor B in proportion to the need for resources of actor A which can be provided by actor B.
Pfeffer & Salancik (1978) elaborate dependency into more detail and define it according to three critical factors; the importance of a resource for continued operations and survival; the extent to which an organisation has discretion over the resource allocation and; the number of alternatives exists to obtain a specific resource. This definition and critical factors will be used in this research since it provides a clear description of concepts, suitable for measuring and analysis.
Boonstra and de Vries (2005) argue that if an organization is economically independent on actors in a network, its power is high over these actors, and if an organization is economically dependent on an actor in a network, its power is low. Thus, power and dependencies are the inverse of each other.
Powerful actors are able to influence the network and to align it with their interest and intentions (Moore, 1996). Power structures and the interest and intentions of actors in a VN can therefor explain behaviour in the network and influence the way of value creation. Networks with more evenly distributed power relations can be more beneficial for long-term success and enhance the sustainability of a network (Xia, 2011).
Dependencies within the network can create inertia between the cooperation of actors. This can hinder the adoption of innovations and alterations in the network (Hakansson and Ford, 2002). This is especially the case if one, or view actors in the network have high power and control and no interests towards specific innovations or changes. In line with this, describe Hakansson and Ford (2002) a kind of paradox, which states that companies aspire to gain control over the network. However, when achieved, the network will become less effective and innovative, since a network cannot develop faster than the company that controls the network. As a result of such a situation, other actors who are controlled by the controlling actor will develop faster in other networks and the controlled company will be lost-out (Tunisini, 1997).
2.5 Forces outside the network affecting value creation
The shape and structure of a network is not only the result from the interactions inside the network. Forces from outside the network, for example the macro-environment in which a specific network is operating can affect the actors with their activities and transactions and thus value creation as well (Utterback, 1984). Shifts in the macro-economic environment, for example caused by new technological innovations or changes in policies can affect the VNs value creation (Battistella et al., 2012). Specific technologies for example, may require regulatory frameworks and create specific industry structures (Utterback, 1984). In the sustainable energy industry, the macro-economic environment has a major influence in decentralized energy networks. Think for example about political decisions concerning subsidies or technological developments like shale gas drillings affecting energy prices. Analysing such external influences can hence explain why specific structures and patterns of transactions and interactions exist in a network and how this might affect value creation. This can be seen as the highest level of analysis concerning value creation of a multi actor industry.
2.6 Conclusion
21
3 Research methodology
This chapter elaborates on the applied methodologies of this research. This research is characterized as an explorative research with a qualitative approach to collect and analyse data. Within qualitative research, the emphasis is about interpreting people’s behaviour in terms of norms, values and culture of the subject being studied Bryman and Bell (2007). The core of this qualitative and explorative research will be three different case studies within the biogas industry.
The first section of this chapter introduces case study research as a methodological research strategy and the phases of this research. Subsequently the methodological steps, selection of the cases and data gathering will be discusses as well as the reliability and validity of the results.
3.1 Case study research
According to Yin (1993), five types of research strategies exist (experiment, survey, archival analysis, history, and case study) and three conditions determine which type of research is appropriate: form of the research question, required control of behavioural events and focus on contemporary events.
Case studies are appropriate when mainly ‘how’ and ‘why’ research questions are formulated about a contemporary set of events, over which the investigator has little or no control (Yin, 1993). Since this is the case within this research, a case study approach is applied. A case study is a story about something unique, special or interesting (Yin, 1994). The term case study does not only relate to the methodological choice, but also to the object studied (Locke, 2001). Case studies can provide detailed information useful for an intensive analysis of a case, which can for example be a specific event or organisation (Bryman and Bell, 2007). In this research, it will be three specific VNs.
As stated by Blumberg, Cooper, and Schindler (2005), case studies are not sufficient to support or reject a theory. Nevertheless, it is a useful approach to increase knowledge of a topic still under-investigated and it can assess theories very well (Gummesson, 2000). A lack of previous studies researching value creation within this industry supports the choice of a case study. Case studies are appropriate to provide context to other data, offering a more complete picture of what happened and why. Rather than using samples and following a rigid protocol to examine certain variables, case study methods can involve an in-depth examination of a single instance or event.
Figure 6 below visualizes the research framework used in this research and is based on case study method model of Yin (2003).
Figure 6: Research framework
3.1 Methodological steps
22
Figure 7: Methodological steps
3.1.1 Industry and cases selection
Select different cases of VNs to analyse in the biogas industry. See section 3.2 for the actual selection of the cases
3.1.2 Define macro-level Socio-technical system
First, a clear description has to be formulated which describes the general industry of which the specific selected VNs are part of, to make the context of the VNA more clear. Therefore, an analysis of the general socio-technical system of the industry is performed, since this gives a clear macro view of the intertwined socio and technical systems of the industry.
Macro-economic environment
The PESTE framework supports to systematically map and analyse the macro-economic environment of a VN. The PESTE framework, which stands for the political, environmental, social, technological and economic macro-environment is used to analyse key external factors that influence performance of organizations and industries and their creation of value (Oxford University Press, 2007).
3.1.3 Define actor level
To generate knowledge about the actors, the following topics are determined and examined. Primary and ancillary actors
Actors are labelled as primary and ancillary actors, denoting the role they fulfil in the network as explained in section 2.3. From the primary actors, their role in the network and value added activities are mapped, to analyse how the actor adds value by their activities and retain viable.
The nodes connected by the arrows represent the actors in the network. The bold nodes representing the primary actors and the nodes with a thin line the ancillary actors.
Interests of actors
Both primary and secondary interest, as defined in section 2.3, of
actors are mapped and analysed. Between the different actors of a particular VN, interests may differ. The triple bottom line of Elkington (1998) helps to clarify and categorize interests distinguishing social, economic, and environmental dimensions of actor’s primary interests.
Stakeholders
Besides the actual actors in the VN, stakeholder affected by the actors of the VN exists. These stakeholders can have an influence on the roles and interactions. Therefore, the most dominant stakeholders of the VNs are determined as well. The oval node on the edge in Figure 8 represents the main stakeholders of the network.
23 VN perimeter
A VN does not have a natural centre or clear boundaries (Gadde et al. 2002). However, to keep the VNA manageable, a VN perimeter has to be set. This perimeter is set after the primary and most important ancillary actors are determined. This is a rather rough selection process based on the interpretation of the researcher. The dotted-striped line represents the border of the VN as can be seen in the model above.
3.1.4 Define network level
This step is concerned with the types of interactions between actors in the network. Two main types of interactions will be analysed: transactions and dependencies.
Transactions
Transactions can be both tangible as intangible (Allee, 2003). The tangible value streams describing contractual transactions involving, goods, services, information, money (Allee, 2008). Intangible interactions describe knowledge, information, trust which support the core products, but are not contractual. Intangible transactions are much more difficult to analyse. During this research, the following transactions and interactions are mapped: goods, information, services, and money, to cover the most important and common interactions and transactions. Figure 9 depicts an example with every type of transactions its own colour.
Dependencies
Different scholars have written about power and interdependencies of actors and different methods of measuring it exist. Jansen (2012) proposes a method of identifying power within inter-organisational relationships, bases on the resource dependence theory of Pfeffer & Salancik (1978) as explained in section 2.4. Pfeffer & Salancik (1978) define dependency according to three critical factors: importance, discretion, and alternatives of a specific resource for an actor. The method of Jansen (2012) propose to score the three critical factors of Pfeffer & Salancik (1978) on a 5 points likert-scale to the degree to which this counts for a specific focal company with actors it
interacts with. Concluded with an overall dependence measure can this subsequently be modelled as in Figure 10. The direction indicates to whom the focal actor under consideration is dependent, and the thickness of and number in the arrow the degree of dependency, 1 being independent and 5 being highly dependent.
3.1.5 Analyse data
The aim of this step is to use the obtained data for the analysis of the VNs. Tools
When the necessary data is gathered, it is put in the right way to preserve and analyse. Therefore, the (qualitative) data gathered by the interviews need some sort of coding or categorization (Richards and Morse, 2007). Three different techniques of processing data are presented by Richards and Morse (2007); descriptive coding, topic coding and analytic coding. Descriptive coding focusses on the storage of information, topic coding concerns the collection and aggregation of data by the same topic and analytic coding is best applied when the developments of concepts is the main aim of the coding process. In this research, the first and second types are most used to categorize, assemble, and analyse the data obtained. Subsequently, data is transformed into tables and graphical models to visualize it in a clear manner and enhance the analysis. Graphical models are made about the relationships of all actors in the network specified by the transactions and dependencies.
Analysis and conclusions
Chapter 2 concludes about three different levels of analysis; the actor, the network and the macro level. With the rationale of RBV, TCE, network theory and some common sense, the data is analysed and conclusions are
Figure 9: Transactions
24 made. As a conclusion of the analysis over the different levels, the main enablers and inhibitors of value creation per case will be discussed. As a cross case conclusion and result of the research, the main drivers of value creation are distilled and abstracted from the inhibiters and enablers from the individual analysed cases. Related to the main inhibitors and other findings of this research, suggestions for improvements are made.
3.2 Case selection
Selecting the right and interesting cases is of great importance when using case studies as a research strategy (Flyvbjerg, 2006 and Ragin & Becker, 1992). Strategic selection of cases can increase generalizability of case studies (Flyvbjerg, 2006). Instead of a representative case or a random sample critical, extreme or atypical cases can reveal more information because they can activate more actors and more basic mechanisms in the situation studied (Flyvbjerg, 2006). Therefore, Flyvbjerg (2006) proposes an information oriented selection, based on maximum variation within cases, to obtain information about the significance of various circumstances for case process and outcome e.g., three to four cases that are very different on one dimension: size, form of organization, location, budget, etc.
For this research, a long-list of 22 biogas cases in the Netherlands has been established (Appendix I). The number of cases selected during this research are limited to three cases, to keep the research manageable but enough to obtain sufficient variation within the cases. Due to similar cases, this list has been clustered and reduced into 8 different types of cases with regard to; type of digestion, type of company producing it and the end products produced. From these 8 clusters, 3 cases of different clusters are chosen to create a maximum of variety within the cases, these are:
Case 1: Farm-scale co-digester producing heat and electricity
Since this is the most common case of digestion, it makes this case interesting for analysis. Case 2: Industrial digester producing GG
The production of GG at an industrial company, using their own residual flows makes this case rather unique in the biogas industry and complete different from the others cases and thus interesting to analyse.
Case 3: Open biogas hub
This case is interesting since it is the only open biogas grid in the Netherlands in which raw biogas of different producers is utilized by different processors with a dedicated biogas grid. Nevertheless, this case is not yet completely running, it can already reveal interesting insights since it is completely different compared to the other selected cases.
3.3 Data gathering
In-depth interviews with actors and domain experts of the biogas industry form the main source of data gathered. In addition, secondary data has been gathered and analysed to support the primary data.
3.3.1 Primary data
In total, twenty-seven persons are interviewed, representing different actors active in the VNs of the three cases and some domain experts of the industry. The actors and domain experts include biogas producers, DSOs, energy retailers, suppliers of equipment, local and regional governments, regulative enforcement authorities, researchers, network/ interest organisations and advice & consulting firms. Appendix II provides a complete and detailed list of interviewed persons. The selection of interviewed actors is based on the roles fulfilled in the network of the cases. The main principle was to interview the primary actors in the networks of the different cases.
25 3.3.2 Secondary data
In addition to interviews, secondary data is used to create a holistic perspective of the main case studies. This secondary data comes from different sources such as; organizational documents, company websites, academic articles and applied research of companies focusing on the biogas industry, legislative acts, plans of regional developments etc.
3.4 Reliability and validity
Reliability in scientific research concerns the issue if the research will be repeated, the same results will be obtained, and thus results are stable. A drawback of interviewing is the bias of the interviewee towards the topic interviewed about. Therefore, to create stable and reliable as possible research results, different sources of information are used to triangulate.
3.4.1 Internal validity
Internal validity is the property of scientific research that focusses on the quality of the research concerning the extent to which causal conclusions can be defensible. To secure the validity of this research, different cases are used and different types of persons are interview, including both actors acting in the network as well as domain experts. In addition, the research results are presented and discussed during a meeting with different persons active in the biogas sector (some had already been interviewed). See Appendix II for persons attending the validation meeting.
3.4.2 External validity
