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close this bookBioconversion of Organic Residues for Rural Communities (UNU, 1979)
close this folderBiogas generation: developments. Problems, and tasks - an overview
View the document(introduction...)
View the documentIntroduction
View the documentWhat is biogas?
View the documentMicrobiology of CH4, or bio-methanogenesis
View the documentThe biogas plant-some technical considerations
View the documentEnvironmental and operational considerations
View the documentDevelopments and processes for rural areas
View the documentCost-benefit analyses
View the documentHealth hazards
View the documentBottlenecks, considerations, and research and development
View the documentReferences
View the documentDiscussion summary

Cost-benefit analyses

There is no general answer to the economic feasibility of biogas production. National economic considerations play an important role. In Korea, wood is in short supply (27) and domestic fuel substitutes like rice and barley straw, and coal and oil could be conserved; wood could be a foreign-exchange earner in the field of handicrafts. In India, transportation costs of coal and oil to the rural areas is high and an extra burden on an already poor farmer.

The consumption of commercial and non-commercial energy for the whole of India, as determined for the period 1960 - 1971 by the Fuel Policy Committee Report, is provided in Table 3.

TABLE 3. Consumption of Commercial and Non-Commercial Energy in India

Year Coal

(Million Tons)


(Million Tons)


(Billion kwh)


(Million Tons)

Cow dung

(Million Tons)

Vegetable waste

(Million Tons)

1960 - 61 47.1 6.75 16.9 101.04 55.38 31.08
1965 - 66 64.2 9 94 30.6 111.82 61.28 34.41
1970 - 71 71 1 14 95 48.7 122.75 67.28 37.77

Sources: Report of the Fuel Policy Committee,1974; S.N. Ghosh, Invention Intelligence 12:63 (1977).

The rural share in the energy consumption of electricity and coal is not considerable because, as the Report of the Panel of the National Committee of Science and Technology on Fuel and Power indicates, the large towns and cities with populations of 500,000 and more accommodate only 6 per cent of India's total population but consume about 50 per cent of the total commercial energy produced in the country.

In the villages, however, kerosene is used for lighting, but it is clear that with increasing population, biogas generation seems to offer solutions in the areas of fuel availability, electricity, fertilizer for cash crops, and would provide other socio-economic benefits.

On the other hand, cost-benefit analyses of methane generation vary widely, depending upon the uses and actual benefits of biogas production, public and private costs associated with the development and utilization of methane, and on the technology used to generate methane. Several factors have been listed in the economics of biogas generation (14, 17 - 19, 28). An appropriate example is the fact that a village-model gas plant, which cost Rs 500 some years ago, cost Rs 1,500 in 1974 and Rs 2,000 in 1977. Hence, a significant problem is whether rural people who cannot spend Rs 2,000 can cope with increasing inflationary and digester construction material costs.

The Khadi and Village Industries Commission has helped to tackle the problem through rural community co-operation and a scheme of subsidies and loans to encourage individual families, groups of families, institutions, and communities to construct biogas plants. An analysis of cost and income for a plant producing 3m³/day is given in Table 4. The net annual income of approximately US$60 shows that the capital investment of US$340 can be recouped in about six years. There are also incidental advantages of hygienic improvement, the absence of smoke and soot in gas burning, convenience in burning, and the increased richness of manure.

TABLE 4. Cost-Benefit Analysis of Khadi and Village Industries Commission Plant (in US dollars)

a. Capital cost  
Gas holder and frame $ 93.5
Piping and stove $ 34 7
Civil engineering construction (tank, inlet and outlet, etc.) $210.1
Total $338.3
b. Annual expenditure  
The interest on investment at 9% $ 30.4
Depreciation on gas holder and frame at 10% $ 9.3
Depreciation on piping and stove at 5% $ 2.0
Depreciation on structure at 3% $ 6.3
Cost of painting, once a Year $ 6.7
Total $ 54,7
c. Annual income  
Gas 3m³ per day at $1.5 per 29m³ (1,000 cu.ft.) $ 50.3
Manure (7 tons, composted) with refuse 16 tons at $4 per ton $ 64.0
Total $114.3
d. Net annual income (b - c) $ 59.6

Source: ESCAP Document NR/EGNBD/4, 20 - 26 June 1978