KITE Report Biogas Ghana 2008

FEASIBILITY STUDY REPORT ON DOMESTIC BIOGAS IN GHANA –REVISED DRAFT

Submitted by KITE to the

Shell Foundation

March, 2008

KITEKITE....innovating clean energy solutions….

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Table of Content

Table of Content ..................................................................................................................................... i List of Tables ........................................................................................................................................ iii List of Figures ....................................................................................................................................... iv List of Acronyms and Abbreviations ...................................................................................................... v Executive Summary ..............................................................................................................................vii

1 INTRODUCTION............................................................................................................................... 1

1.1 BACKGROUND TO THE STUDY ...................................................................................................... 1 1.2 OBJECTIVES ................................................................................................................................. 3 1.3 RESEARCH METHODOLOGY ......................................................................................................... 4 1.4 THE SCOPE OF THE STUDY ........................................................................................................... 4 1.5 BRIEF PROFILE OF HOUSEHOLDS .................................................................................................. 5

2 COUNTRY CONTEXT ...................................................................................................................... 7

2.1 GEOGRAPHIC AND DEMOGRAPHIC CHARACTERISTICS ................................................................. 7 2.2 AGRICULTURE SECTOR OVERVIEW .............................................................................................. 9 2.3 ENERGY SECTOR OVERVIEW .......................................................................................................10

3 BIOGAS TECHNOLOGIES IN GHANA .......................................................................................15

3.1 HISTORICAL OVERVIEW ..............................................................................................................15 3.2 TYPES OF BIOGAS DIGESTERS IN GHANA ....................................................................................16

3.2.1 The Floating Drum Digester .................................................................................................16 3.2.2 The Fixed Dome Digester ......................................................................................................17 3.2.3 The Puxin Biogas Digester ....................................................................................................19 3.2.4 Conclusion .............................................................................................................................20

3.3 BIOGAS SERVICE PROVIDERS ......................................................................................................20 3.4 THE COST OF BIOGAS DIGESTERS ...............................................................................................21 3.5 LIKELY CHALLENGES TO BE FACED BY THE BIOGAS INDUSTRY ..................................................23

4 MARKET POTENTIAL OF BIOGAS IN GHANA .......................................................................24

4.1 TECHNICAL POTENTIAL OF BIOGAS .............................................................................................24 4.1.1 Resource Availability .............................................................................................................24 4.1.2 Access to Water .....................................................................................................................27

4.2 WILLINGNESS AND ABILITY TO PAY ...........................................................................................28 4.2.1 Willingness to Adopt and Pay for Biogas ..............................................................................28

4.3 ABILITY TO PAY FOR BIOGAS PLANT ..........................................................................................30 4.4 FINANCIAL ANALYSIS ..................................................................................................................34 4.5 ECONOMIC ANALYSIS .................................................................................................................37

5 STAKEHOLDERS ANALYSIS .......................................................................................................38

5.1 PUBLIC SECTOR INSTITUTIONS ....................................................................................................38 5.1.1 Ministries, Departments and Agencies ..................................................................................38 5.1.2 Research Institutions .............................................................................................................40

5.2 CIVIL SOCIETY ORGANISATION (CSO) ........................................................................................40 5.2.1 Non-Governmental Organisations (NGOs) ...........................................................................40

5.3 THE PRIVATE SECTOR .................................................................................................................42 5.3.1 Micro Finance Institutions ....................................................................................................42 5.3.2 Bio-digester Construction Companies ...................................................................................42 5.3.3 End Users ..............................................................................................................................43

6 ASSESSMENT OF THE SUPPLY CHAIN.....................................................................................44

6.1 RESEARCH AND DEVELOPMENT ..................................................................................................44 6.2 DESIGN AND CONSTRUCTION ......................................................................................................45

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6.2.1 Technical Experts ..................................................................................................................45 6.2.2 Availability of construction materials ....................................................................................45 6.2.3 End-use Appliance .................................................................................................................46

6.3 MONITORING AND MAINTENANCE ..............................................................................................46 6.4 FINANCING DOMESTIC BIOGAS SYSTEMS ....................................................................................47

7 BUSINESS MODEL FOR PROMOTING DOMESTIC BIOGAS IN GHANA ..........................49

7.1 INTRODUCTION............................................................................................................................49 7.2 PROPOSED BUSINESS MODEL FOR GHANA ..................................................................................50

8 CONCLUSIONS AND RECOMMENDATIONS ...........................................................................54

8.1 CONCLUSIONS .............................................................................................................................54 8.2 RECOMMENDATIONS ...................................................................................................................56 REFERENCE ...............................................................................................................................................58 ANNEXURE ................................................................................................................................................60

Annex 1: Study Methodology ...............................................................................................................60 Annex 2: Biogas Initiatives in Ghana ..................................................................................................64 Annex 3a: Cost Breakdown of Fixed Dome Digesters .........................................................................68 Annex 3b: Cost Breakdown of Fixed Dome Digester...........................................................................69 Annex 3c: Cost Breakdown of 10m3 Fixed Dome Digester .................................................................70

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List of Tables

Table ‎1-1: Regional Distribution of Respondents .................................................................................... 5 Table ‎2-1: Contribution of Agriculture to GDP (2000-2006) .................................................................. 9 Table ‎2-2: Livestock Production in Ghana (Values in 1,000s) ................................................................ 9 Table ‎2-3: Percentage Contribution of Biomass to Total Energy Consumption by Selected Sector 10 Table ‎3-1: Profile of Selected Biogas Service Providers .........................................................................21 Table ‎3-2: Cost Breakdown of 6m³ Fixed-dome Biogas Digester .........................................................22 Table ‎4-1: Distribution of Cattle Population in Survey Regions ..........................................................24 Table ‎4-2: Household Use of Cow Dung .................................................................................................26 Table ‎4-3: Willingness to Release Dung for Biogas Production ...........................................................27 Table ‎4-4: Household Access to Water in the Survey Regions .............................................................27 Table ‎4-5: Household Knowledge about Biogas Technology ...............................................................28 Table ‎4-6: Household Willingness to Pay for Bio-digesters ..................................................................29 Table ‎4-7: Reasons for Indecision .............................................................................................................30 Table ‎4-8: Purchase of durable household product in the past year ...................................................33 Table ‎5-1: Potential NGOs and Possible Roles........................................................................................42 Table ‎6-1: List of Micro-Finance Institutions in Surveyed Regions .....................................................47

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List of Figures

Figure ‎2-1: Map of Ghana Showing Administrative Regions................................................................ 7 Figure ‎2-3: Electrification Trends in Ghana ............................................................................................14 Figure ‎3-2: Schematic Drawing of Chinese Fixed Dome (Left) & Completed CFD Digester in Accra .............................................................................................................................................................18

Figure ‎3-3: CFD Digester under Construction (left) and CFD Being Repaired (Right) (Courtesy

REES) ............................................................................................................................................................19

Figure ‎3-4: Set up of Puxin Digester (left) Schematic Description of Puxin Slurry-based Digester

(right) ............................................................................................................................................................19 Figure ‎3-5: Construction of 10m3 Puxin Digester at Private Residence in Accra (Courtesy Beta Construction Ltd) .......................................................................................................................................20 Figure ‎4-2: Sensitivity of FIRR to Price of Biomass ................................................................................36 Figure ‎4-3: Sensitivity of FIRR to Subsidy ...............................................................................................37

Figure ‎7-1: Business Model for Promoting Domestic Biogas in Ghana ..............................................50

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List of Acronyms and Abbreviations

ADB African Development Bank

AIF Agriculture Investment Fund

AREED African Rural Energy Enterprise Development

ARI Animal Research Institutes

CSIR Council for Scientific and Industrial Research

CWSA Community Water and Sanitation Agency

CSO Civil Sector Organisation

DANIDA Danish International Development Agency

DfID Department for International Development

FGD Focus Group Discussion

EC Energy Commission

EIRR Economic Internal Rate of Returns

EPA Environmental Protection Agency

FAO Food and Agriculture Organisation

FIRR Financial Internal Rate of Returns

GAMA Greater Accra Metropolitan Authority

GCSS Garden City Special School

CDM Clean Development Mechanisms

GDP Gross Domestic Product

GHG Green House Gasses

GIMPA Ghana Institute of Management & Public Administration

GNADO Gia/Nabio Agro Forestry Development Organisation

GPOBA Global Partnership on Output Based Aid

GPRS Growth and Poverty Reduction Strategy

GLSS Ghana Living Standard Survey

GNA Ghana News Agency

GoG Government of Ghana

GRATIS Ghana Regional Appropriate Technology Industrial Service

GSS Ghana Statistical Service

GTZ German Technical Cooperation

HIPC Highly Indebted Poor Countries

IAP Indoor Air Pollution

ICT Information & Communications Technology

IDA International Development Agency

IIR Institute of Industrial Research

ITTU Intermediate Technology Transfer Units

KfW German Bank for Reconstruction

KITE Kumasi Institute of Technology, Energy and Environment

KNUST Kwame Nkrumah University of Science and Technology

KVIP Kumasi Ventilated Improved Project

LPG Liquefied Petroleum Gas

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MASLOC Micro Finance and Small Loans Centre

MDG Millenium Development Goals

MFI Micro Finance Institutions

MLGRDE Ministry of Local Government, Rural Development and Environment

MoE Ministries of Energy

MOFA Ministry of Food and Agriculture

MOFEP Ministry of Finance and Economic Planning

NDPC National Development Planning Commission

NGO Non Governmental Organisation

NPO Non Profit Organisation

RTIP Roots and Tuber Improvement Program

RTTC Regional Technology Transfer Centres

SARD Sustainable Agriculture and Rural Development

SEND Social Enterprise Development

SMIDO Suame Magazine Industrial Development Organisation

SNV Netherlands Development Organisation

SPSS Statisitical Package for Social Scientist

UDS University for Development Studies

UER Upper East Region

UNDP United Nations Development Programme

UN-ESCAP United Nations Economic and Social Commission for Asia and the Pacific

US United States

UWR Upper West Region

VALCO Volta Aluminium Company

WFP World Food Programme

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Executive Summary

Harmful environmental, health and social effects associated with the use of traditional

biomass as cooking fuel within poor households have led to the search for alternative

cleaner burning fuels. Domestic biogas is one such technology that has been

successfully promoted as substitute for woodfuels in several developing countries in

Asia. This report presents the finding of a study conducted by the Kumasi Institute of

Technology and Environment (KITE) to assess the feasibility of pursuing a market-

based, enterprise-centred approach to the large scale deployment of domestic biogas

plants in rural Ghana with emphasis on the three northern regions, and the Ashanti

Region. These four regions were selected after a pre-feasibility study conducted in

April 2007 by KITE puts them on top as the regions with the highest potential for

domestic biogas systems.

A combination of quantitative (household surveys and new analysis of nationally

representative data) and qualitative survey techniques (focus groups discussions and

key informant interviews) were employed to gather and analyse the information used

in preparing this report.

The main conclusions of the study are as follows:

It is technically possible for about 80,000 households in the four regions to

install at least one 6m3 fixed dome digesters in their homes to take care of their

daily cooking energy needs. The market potential (estimated based on the

ability and willingness to pay) is however lower representing about 10%

(8,000) of the theoretical potential. However, this market potential does not

currently exist and will have to be developed and grown.

The price of the 6m3 fixed dome digester in Ghana ranges between US$1,200

and US$2,600 according to quotations given by 4 biogas service providers. The

investment cost is several times higher than in several Asian and Eastern

African countries where the technology has been commercialised.

A customer investing US$2,600 in a 6m3 domestic digester and making an

annual savings of US$245 will earn a FIRR of -2% over the 15 years lifespan of

the digester assuming an interest of 10% compared to a FIRR of 21% to be

earned by his counterpart investing US$1,200 in a digester of the same

capacity. This means that there is an inverse relationship between the

investment cost of biogas digesters and the profitability (defined by the FIRR)

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of the investment. The FIRR is more sensitive to variations in the cost of the

plant than it is to the variations in the expected benefits of the investment.

There is very little or limited in-country experience with regards to domestic

biogas plants as majority of existing biogas plants are bio-sanitation projects

located in urban centres.

The current supply chain for biogas digester is weak and characterised by few

entrepreneurs located in two major cities. The manpower base (the number of

trained technicians/artisans) is also weak and appears inadequate to handle

huge volumes of demand for the digesters.

On the basis of current lack of existing demand for biogas digesters, the high

digester costs and weak supply chain, it can be concluded that

commercialisation of domestic biogas systems in the survey area in particular

and Ghana in general is not feasible at the moment. However, the decision to

invest in the biogas technology should not only be based on the profitability or

otherwise of the investment since the non-direct financial benefit to the

household and the overall benefits to the society at large provide the economic

justification for public intervention that will create the necessary enabling

environment to kick-start the development of the domestic biogas market.

A social business model focusing on technical training, business development,

financing and market facilitation as its main components and based on the

concept of private-public partnership (PPP) is recommended as the way

forward for Ghana towards harnessing and commercialising its biogas

potential.

In addition to the above recommendation regarding the adoption of PPP, the

following recommendations are also worthy of consideration:

There is the need for comparative research study to be conducted as a matter

of urgency to assess the relative costs and benefits associated with the

promotion of LPG as a cooking fuel in the rural areas vis a vis those of biogas

systems. The findings of this evidenced-based study should be used as a policy

advocacy tool to lobby government to assign the promotion of domestic biogas

in rural areas as a substitute for woodfuels a central role in the country‟s rural

household energy programme.

We recommend that research should be carried out by the Institute of

Industrial Research (IIR) and other research institutions to come up with a

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standardised digester type suitable for adoption in a national domestic biogas

programme. If it is established that the fixed dome digester is the cost effective

model as the study has shown, then further research and development work

would have to be carried out to help reduce the investment cost without

compromising on output, reliability and durability.

( I can see why this is important for a programme based approach, however in a

consumer led, market based economy the consumer often wants choice and variety

and therefore one biogas digester wouldn‟t meet everyone‟s needs)

There is also the need for the design and institutionalisation of a

comprehensive tailor-made training programme for technicians, artisans and

owner operators who are going to be involved in the design, construction,

operation and maintenance of the biogas digesters once constructed. This is

intended to produce a critical mass of manpower resources that will be

required to support large scale roll out of domestic biogas digesters in Ghana.

In the medium to long term, a short course on biogas technology should be

included in the curriculum of engineering and technical students in the

Polytechnics and Technical institutes to help train middle level technicians to

become supervisors.

The national biogas programme should be packaged as a CDM project to help

attract carbon funding, which could be used, inter alia, as seed capital for

micro-financing and/or other loans and credit schemes to be instituted under a

biogas promotion programme.

Finally it is highly recommended that a „champion‟ should be identified and

designated to play the role a of a market facilitation organisation tasked with

the responsibility of initiating and coordinating the implementation of the

recommendation s from this feasibility report.

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1 INTRODUCTION

1.1 Background to the Study

An estimated 2.4 billion people, representing more than a third of the world‟s

population, rely on biomass (wood, charcoal, crop residue and dung) for cooking and

heating. Current trend suggests that another 200 million people will be dependent on

biomass to meet their thermal energy needs by 2030 (Warwick and Doig, 2004). The

heavy dependence of a large segment of the population on biomass fuels has been

recognized as a major obstacle to their socio-economic development. One major

problem associated with the excessive reliance of woodfuels is indoor air pollution

(IAP) caused by smoke generated as a result of incomplete combustion of woodfuels.

The thick acrid smoke from stoves and fires inside homes is one of the four leading

causes of death and disease in the world‟s poorest countries. The main victims of

death from exposure to IAP are women and children. Smoke from cooking is

estimated to cause 10 million premature deaths among women and children in

African by 2030 (Science, 2005).

Apart from the health hazards the traditional use of woodfuels inflict on women and

children, rural women and their families are known to pay a high economic price for

keeping the “fire burning” in their homes. It is estimated that a minimum of two to

three mornings a week is spent by many rural women collecting wood fuel. The

situation is getting worse with stock of woodfuel resources, including agricultural

waste and residue rapidly declining. Although the time spent collecting wood fuel

may not cost them money in real terms, it has been established that this perpetual toil

casts a long shadow over their lives. It denies poor rural women the chance to be

more productive through paid work that would raise their family‟s income, improve

the standard of living and enhance their nutritional and health status.

The over-dependence and utilization of woodfuels is also known to have contributed

partly to deforestation and emission of some greenhouse gases. According to a study

by the University of California, Berkeley and the Harvard School of Public Health1,

smoke from cooking fires will release about 7 billion tons of carbon in the form of

greenhouse gases to the environment by 2050 in Africa alone. That is about 6% of the

total expected greenhouse gases from the continent.

1 See April 1 issue of the Journal “Science”

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There are a number of options for ameliorating the myriad of harmful effects

associated with traditional uses of wood fuels, including behavioural change,

improved kitchen ventilation, sustainable production of biomass, efficient

wood/charcoal stoves and the use of cleaner fuels. However, the most effective way of

dealing with the problems, especially that of IAP, is to switch to cleaner burning

fuels, such as Liquefied Petroleum Gas (LPG) and kerosene that produces significantly

lower emissions. And although switching to cleaner fuels offer the first-best solution,

current economic conditions and energy infrastructure in developing countries, such

as Ghana, make petroleum-based fossil fuels an unlikely option; commercial fuels,

such as LPG, are in most cases deemed more expensive and not always available.

Consequently, affordable alternatives that are cleaner and more sustainable, and also

reduce women's workload are needed.

Biogas digesters, which convert animal dung, human excrement and other organic

materials into combustible biogas, offer one such technically feasible alternative, since

the gas generated can be used in simple gas cooking appliances. Substituting

conventional cooking material such as woodfuel, briquettes or dung cake, with biogas

not only saves money, but also reduces the workload of mostly women and girls

involved in collection or preparation of these traditional energy sources. Equally

important is the virtual elimination of the IAP associated with the use of traditional

cooking fuels and appliances. Furthermore, the bio-slurry discharged from the biogas

installation retains all nutrients as originally present in the feeding material, and is an

excellent organic fertilizer. The bio-slurry can either be used directly or composted

with other organic farm residue. Thus a biogas plant can improve the health and

living conditions of women and children, reduce the use of firewood, enhance soil

fertility and agricultural production, reduce the emission of greenhouse gases and

creates new jobs and a new business sector.

It is the fascinating prospects of these multiple benefits accruing to households and

communities (mainly in rural areas) that inspired the development and launching of

the “Biogas for Better Life: the African Initiative” in October 2006. The vision of the

initiative is to succeed in African countries, as a market oriented partnership with

governments, private sectors, civil society agents and international development

partners. It aims to provide 2 million households by 2020 with biogas digesters,

business opportunities, improved household livelihood (good health, sanitation, food

security, environment and new jobs). It offers households opportunity to own,

control and operate sustainable energy for their own kitchens at affordable costs. The

very essence of the initiative consists of companies selling biogas plants to households

who are willing to buy. The initiative will support the supply chain as well as

stimulation of demand.

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The Biogas for Better Life initiative will focus on programmes in countries / provinces

in Africa that provide the best market opportunities, in “pockets of opportunity” with

an ultimate aim of developing a sustainable, commercial biogas sector so as to enable

households to have a better life. One important criterion for selecting countries to

benefit from the initiative is the existence of a short-term technical potential for the

establishment of between 10,000 and 20,000 biogas plants over a period of 5 years.

Preliminary analysis by the Netherlands Development Organisation (SNV) has shown

that 24 countries in Africa, including Ghana, have the technical potential for building

a minimum of 100,000 biogas plants; total technical potential for all 24 countries is

estimated at 17.5 million biogas digesters. Based on availability of domestic cattle,

presence of water, scarcity of woodfuel, population density and temperature, the SNV

study estimates that Ghana has a technical potential for establishing 278,000 biogas

digesters (Biogas for Better Life: an African Initiative, Business Plan 2006-2020, May

2007).

A pre-feasibility study conducted by KITE in April 2007 revealed that the three

Savannah regions – Northern, Upper East and Upper West – by virtue of the fact that

they are the leading producers of cattle in Ghana, have the greatest potential for

promoting domestic biogas systems. The pre-feasibility consequently recommended

that full feasibility study should be conducted in these areas to ascertain the full

market potential in these regions as well as in the Ashanti Region. Although the

Ashanti region did not have a lot of cattle, it was included mainly because of its large

commercial poultry production and the relatively high income levels of households.

1.2 Objectives

The purpose of the study is to evaluate the feasibility of pursuing a market-based,

enterprise-centred approach to the promotion of biogas plants in Ghana with

emphasis on the three northern regions, and the Ashanti Region. The study will also

help to assess the macro environment factors that would impact the biogas business.

The study has the following specific objectives:

i. To understand who the target market are, what their profiles – gender, current

fuel usage, geographic location, income, product usage, demographics, buying

behaviours and needs of this customer segments – are in order to develop an

appropriate market segmentation strategy;

ii. To assess competing sources/supply chains of other energy sources for the

target market;

iii. To calculate both the Financial and Economic Internal Rate of Return

(FIRR/EIRR) on the biogas plant;

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iv. To analyse current supply chain capacity and propose a number of potential

business model options that would best meet the target consumer demands

and needs that have been identified;

v. To appraise the support mechanisms and systems required to foster the biogas

market. These mechanisms/systems could include appropriate financing

options (such as credit and subsidy schemes, where necessary), business

development assistance for supply chain partners, fiscal incentives such as tax

breaks/concessions, and an enabling policy and regulatory environment that

ensure a level playing field.

vi. To design a marketing and financial strategy for pursuing an enterprise-

centred approach to the promotion of biogas in the four regions, with a view

to expanding the market throughout Ghana wherever market opportunities

exist if the outcomes of the feasibility study is a win-win situation.

1.3 Research Methodology

The study combined both quantitative and qualitative methods of research and

analysis. Due to resource and time constraints, limited household surveys were

conducted in the regions. The results of the household surveys were augmented with

findings from key informant interviews and focus group discussions with specific

stakeholder groups. New analysis of existing nationally representative data was also

conducted to validate the information collected through the limited household

surveys. Detailed description of the methodological approach used to conduct the

feasibility study can be found in Annex 1 in the Annexure.

1.4 The Scope of the Study

The feasibility study covered 206 households drawn from 26 predominantly rural

communities in 18 districts in the four study regions. Table 1-1 gives the regional

breakdown of the survey communities. In addition to the household surveys, a total

of 6 focus group discussions (2 discussion groups per community) involving a total of

45 livestock holding households were held in three additional communities selected

at random in the three northern regions. These communities, which were not

covered in the household surveys, are Sang in the Yendi District in the Northern

Region, Wiaga in the Builsa District in the Upper East Region, Sabuli in the Jirapa

District in the Upper West Region. Key informant interviews involving over 25

individual experts and representatives of NGO‟s such SNV, NewEnergy, etc and

technical institutions such as GRATIS Foundation, IIR, Endurance Works, etc were

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also conducted as part of the study. The list of institutions and individuals

interviewed is presented in Table A-1 in the Annexure. Table 1-1: Regional Distribution of Respondents

Region District Communities No. of Respondents

Upper West Wa East Bulenga 14

Nadowli Bussie 11

Fian 4

Sissala West Jeffisi 11

Sissala East Kong 6

Wallembele 15

Upper East Garu-Tempane Kugzua 11

Builsa Batuisa 2

Buadam 5

Fumbisi 9

Kassena-Nankana Doba 6

Chiana 12

Chuchuliliga 8

Bawku West Tilli 13

Northern West Gonja Kapilbe 4

Bussunu 8

Monpani 5

Zabzugu Kandin 5

West Mamprusi Nasia 10

Central Gonja Fufulso 9

Tolon-Kungbugu Lungbunga 7

Ashanti Atwima Nwabiagya Akropong 4

Kumasi Metropolitan

Assembly

Nsenie 6

Ejisu-Juaben Onwe 13

Ahafo Ano North Mabang 5

Bosomtwe- Kwanwoma Twindurase 3

Total 18 26 206

Source: KITE Survey 2007

1.5 Brief Profile of Households

Majority (90%) of the household heads were male with the rest being females. Fifty

percent (50%) of the household heads were stark illiterates, 44% were educated up to

the secondary level, with 4% having acquired tertiary education. About 96% of the

household heads were engaged in one form of agriculture related activity or the other

as the main occupation; only 4% indicated that there were civil servants or private

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entrepreneurs. Agriculture is the main source of income for about 86% of the

household heads. The remaining 14% are engaged in other income earning activities

such as petty trading, artisans (masonry, hairdressing, etc) and bar operators in

addition to farming or animal husbandry. Majority (83%) of the household heads

lived in their own houses majority (64%) of which had mud/earth as the main

flooring material with 30% having concrete floors. Sixty-two percent of the houses

are roofed with corrugated iron sheets while 29% had thatch roofing.

In keeping with nationally representative statistics, groundwater (exploited through

boreholes and hand-dug wells), followed by water from natural sources (rainwater,

rivers and streams) and pipe-borne water are the three main sources of water supply

among the households. Similarly the energy consumption pattern of the households

was consistent with national data with 98% of households relying on woodfuels –

firewood (79%) and charcoal (19%) as their main cooking fuel. In the case of lighting,

60% of the households rely on kerosene for lighting with 38% relying on grid

electricity.

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2 COUNTRY CONTEXT

2.1 Geographic and Demographic Characteristics

Ghana (formerly known as the Gold Coast) is located near the equator and on the

Greenwich meridian between latitude 40 and 120N and longitude 300W and 10E. It is

bounded by the Atlantic Ocean to the south, Cote d‟Ivoire to the west, Burkina Faso

to the north and Togo to the east. Ghana has a total land area of 238,540km which is

demarcated into ten administrative regions with Accra as the capital as shown in

Figure 2-1.

Figure 2-1: Map of Ghana Showing Administrative Regions

The country is divided into six agro-ecological zones on the basis of their climate,

reflected by the natural vegetation and influenced by the soils. These agro-ecological

zones from north to south are: Sudan Savannah Zone, Guinea Savannah Zone,

Transition Zone, Semi-deciduous Forest zone, Rain Forest Zone and the Coastal

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Savannah Zone. The four regions covered in the feasibility study are located in

savannah (Northern Region – Guinea Savannah; Upper East and West – Sudan

Savannah) and semi-deciduous (Ashanti) zones.

Climatic conditions differ for each of

the different agro-ecological zones. The

Tropical Eastern Coastal Belt is warm

and comparatively dry, the southwest is

hot and humid and the north is

relatively hot and dry, compared with

the other parts of the country. Mean

annual temperature in Ghana rarely falls

below 25°C, which is very ideal for the

production of biogas.

Rainfall in Ghana generally decreases

from South to North with mean annual

rainfall ranging from 800 mm in the

Coastal Savannah to 2,200 mm in the

Rain Forest. The rainfall pattern is uni-

modal in the Sudan and Guinea

Savannah Zones and bi-modal in all the

other zones.

The 2000 Population and Housing Census, puts Ghana‟s population at 18.9m, an

increase of 53.8% over the 1984 population of 12.3m, which translates into an

intercensal growth rate 2.7% (GSS, 2002). Ghana has a population density of 79.3

persons per sq/km. While the figure suggests no great pressure of population on land,

it obscures regional and district differences in concentration of the population and a

different picture emerges when regional figures are considered. For example, the

population densities of the three most densely populated regions are as follows:

Greater Accra Region (895.5), Central Region (162.2) and Ashanti (148.1) persons per

square kilometre respectively. The population densities for the three other study

regions are Upper East – 104.1, Upper West – 31.2 and Northern – 25.9. Majority of

the population of Ghana (56%) live in rural areas with the remaining 44% living in

urban areas. Apart from Greater Accra (87.7%) and Ashanti (51.3%), the rest of the

country remains predominantly rural, in spite of the substantial increase in the level

of urbanization since 1984 (43.8% compared to 32% in 1984)2 (GSS, 2000).

2 Indeed, none of the remaining 8 regions has a level of urbanization that is above the national average.

Figure 2-2: Agro-Ecological Zones in Ghana

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2.2 Agriculture Sector Overview

Agriculture is the mainstay of the Ghanaian economy, accounting for an average of

36% of GDP and 35% of export earnings since 2000. The sector is also a major source

of livelihood for up to 60% of the country's labour force who are predominantly

engaged in subsistence agriculture. Crops and livestock, followed by the cocoa sub-

sector have consistently accounted for the bulk of the share of agriculture to GDP as

shown in Table 2-1.

Table 2-1: Contribution of Agriculture to GDP (2000-2006)

2000 2001 2002 2003 2004 2005 2006

Crops And

Livestock 22.01 22.25 22.43 22.35 22.12

23.8 23.8

Cocoa Sub-sector 4.81 4.58 4.36 5.77 7.60 4.6 4.7

Forestry &

Logging 3.89 3.92 3.94 3.95 3.98

3.6 3.4

Fishing 4.57 4.49 4.42 4.30 4.24 4.1 4.0

Total 35.27 35.24 35.15 36.38 37.94 36.0 35.8

Source: GSS/MoFEP, 2007

Ghana is the second leading producer of cocoa globally and until recently when cocoa

was displaced by gold, the commodity had been the major foreign exchange earner

for the country. The livestock industry is a major sub-sector in the agricultural sector

contributing an estimated 7% (in direct product) to the agricultural GDP (FAO,

2006). Cattle, sheep, goat, pigs and poultry are the main livestock produced in Ghana,

with the poultry industry being the largest and most successful. Although both large

and small-scale livestock production exists in Ghana, the latter dominates animal

husbandry in Ghana. Large farms are more prevalent in the country‟s middle and

coastal belts as well as near large urban centers. Table 2-2 shows the total livestock

population in Ghana from 1980 to 2006.

Table 2-2: Livestock Production in Ghana (Values in 1,000s)

Species Year

1980 1990 2000 2002 2006

Cattle 804 1,145 1,302 1,330 2,750

Sheep & Goat 3,875 4,242 5,820 6,150 13,297

Pigs 379 474 324 310 1,463

Poultry 11,500 9,686 20,474 24,251 22,984

Total 16,558 15,547 27,920 32.041 40,494

Source: FAO, 2005a and GSS, 2008

10

The table shows that total livestock in Ghana as at 2006 is a little over 40 million and

that poultry, sheep and goat, and cattle are the three most dominant species. The table

is also a pointer to the availability of feedstock for the generation of biogas through

anaerobic digestion.

2.3 Energy Sector Overview

Ghana‟s energy sector is characterized by huge dominance of traditional biomass

resources. In terms of endowment and utilization, biomass (mainly woodfuels –

firewood and charcoal – and to a lesser extent crop residues) is the most important

primary energy resource in Ghana accounting for an average of 69% of total primary

energy and 63% of final energy consumed in Ghana between 2000 and 2003 (Energy

Commission, 2005).3 The dominance of biomass in Ghana‟s energy balance is also

evident in all key sectors of the economy as shown in Table 2-3.

Table 2-3: Percentage Contribution of Biomass to Total Energy Consumption by Selected Sector

Sector

Year

2000 2001 2002 2003

Residential 90.4 90.5 90.3 90.0

Commercial & Service 77.4 78.5 79.2 78.9

Industrial 66 62 61 61

Agriculture and Fisheries 3.6 3.9 4.0 4.2

Source: Energy Commission, 2005

Biomass is used almost exclusively for food processing in all the sectors with

unprocessed firewood being the most dominant fuel followed by charcoal and to a

limited extent crop residue. The bulk of woodfuels (90%) used in Ghana is obtained

from the natural forest with the remaining 10% coming from wood waste

(logging/sawmill residue and planted forest).

The woodfuel industry is also a major source of employment for most rural and the

urban poor people. It has been estimated that about 0.45 million people are directly

involved in the production, transportation and marketing of fuels in the country as a

primary occupation, while over 2 million people engage in the trade as secondary

occupation. Although usually unrecognised in the national income accounts, the

3 It is important to note that the percentage contribution of biomass to Ghana‟s energy balance has

averaged approximately 71% between 1974 and 2001.

11

woodfuels help conserve an estimated US$560 million in foreign exchange annually,

which would have been used to import other forms of energy (MoEN, 2002)

However, Ghana‟s woodfuel resources are depleting at an alarming rate (3% per

annum) owing to the unsustainable exploitation and management of the resources.

Annual woodfuel supply is estimated to be 18 million tonnes and growing, with

demand expected to outstrip supply by the end of 2008 when annual demand is

estimated to top 21 million tonnes. A total supply shortfall of 13 million tonnes is

projected to occur by 2020 in a business-as-usual scenario. The projected shortfall in

supply will create significant access constraints for households using woodfuels for

cooking. Switching over to cleaner burning fuels such as biogas can, inter alia, help

stem the depletion of the biomass energy resource.

Petroleum is the second most widely used form of energy in Ghana accounting for

27% of total final energy consumed in 2003 (Energy Commission, 2005). Ghana

imports all its crude oil needs and finished petroleum products. The crude oil

imported is refined at the Tema Oil Refinery (TOR), which is wholly owned by the

Government of Ghana, with capacity of 45,000 Barrels per Stream Day (BPSD).4

Currently, there are 26 licensed Oil Marketing Companies (OMCs) who until recently

were primarily responsible for retailing of petroleum products. However following

the ongoing deregulation of the petroleum sub-sector, these OMCs are allowed to

import refined and unrefined petroleum products into the country. The prices of

petroleum products, which are supposed to be uniform throughout the country, are

fixed by the National Petroleum Authority (NPA). The final retail price for the

various products is a build-up of the ex-refinery prices, margins for the various

portions of the supply chain – primary distributors, dealers and marketers – and

several other taxes/levies.5

Electricity is the third most important energy source in Ghana accounting for 7% of

the estimated 6.1 million tonnes of oil equivalent (MTOE) of total final energy

consumed in Ghana in 2004. The electricity sector in Ghana is a public monopoly,

with generation and transmission vertically integrated in the Volta River Authority

(VRA) while the Electricity Corporation of Ghana (ECG), a fully state-owned

enterprise, and Northern Electricity Department (NED), a subsidiary of VRA, handle

distribution. Electricity is produced from two main sources: hydro and thermal. Two

hydro power plants, located at Akosombo and Kpong, with a total installed capacity

4 The GoG has however dropped the hint in June 2006 of its intention of privatising the TOR through

the public flotation of shares on the Ghana Stock Exchange 5 i. e. excise duty specific, debt recovery fund levy, social impact mitigation levy, road fund levy,

energy fund levy, exploration levy and strategic stock levy

12

of 1,180 MW provide the bulk of electricity produced in the country. Thermal power

generation sources comprise two plants of 330MW and 220 MW. To meet total

system demand, these power plants are supplemented with imports (up to 250 MW

when available) from neighbouring La Cote D‟Ivoire. Total generation capacity in

Ghana was 1,895 MW in 2005, of which 1,140 MW was from hydropower, and 570

MW from thermal plants. In addition, 185 MW was contracted from Côte d‟Ivoire

through imports.

Although, Ghana is endowed with a lot of renewable energy resources, especially

solar, virtually all these resources remain untapped. The development of the

renewable energy resources, including biogas, is therefore a key policy objective of

the government of Ghana. The development of Ghana‟s bioenergy resources comes

under three main energy policy objectives of the government, which are as follows:

Secure and increase future energy security by diversifying sources of energy

supply;

Accelerate the development and utilisation of renewable energy and energy

efficiency technologies; and,

Minimise the environmental impacts of energy production, supply and usage.

The government long-term policy objective for renewable energy is to achieve 10%

penetration of renewables in the national energy mix by 2020. Biogas, mainly from

municipal solid waste, has been mentioned as one of the technologies being

considered to achieve this ambition target. The Ministry of Energy has oversight

responsibility over the energy sector. The Energy Commission, the Public Utilities

Regulatory Commission and the National Petroleum Authority are the other public

sector bodies regulating the energy sector operations.

As mentioned earlier, biomass is the predominant cooking fuel among Ghanaian

households. The use of modern cooking fuels such as LPG and kerosene combined is

less than 10% and this is after nearly two decades of promoting LPG as substitute for

woodfuel. Table 2-4 shows the main sources of cooking fuels for households in

Ghana. The table confirms the heavy dependence of households on traditional

cooking fuels, revealing that an average of 87% of households in Ghana use firewood

(56.6%) and charcoal (32%) as their main cooking fuels. It is important to flag that

more than 90% of households in each of the four study regions rely on traditional

cooking fuels with as high as 98% of households in Northern and Upper West regions

using woodfuels as the main cooking fuel. Although only 65% of households in the

Upper East region are reported to depend on woodfuels, 32% of the remaining

households use agricultural residue as their main cooking fuel bringing the regional

13

dependence on biomass to 98%. Obviously, the successful deployment of biogas

systems in the survey regions will go a long way to change the cooking energy mix of

households in the regions.

Table 22-4: Household Source of Cooking Fuel in the Region

Region

Fuel Type (%)

Non-Woodfuels Woodfuels

Electricity LPG Kerosene Agric

residue

Others Firewood Charcoal

Ashanti 0.6 7.5 0.7 0.1 0.7 50.6 39.9

Northern 0.1 1.3 0.2 0.2 0.1 81.8 16.4

Upper East 0.4 1.2 0.0 32.8 0.2 55.0 10.4

Upper West 0.0 1.1 0.2 - 0.3 80.2 18.2

Western 0.2 6.3 0.3 0.0 0.6 65.2 27.3

Central 0.1 4.6 0.9 0.1 0.2 63.1 31.1

Gt. Accra 0.3 29.4 2.1 - - 7.2 59.8

Volta 0.1 2.3 0.4 0.2 0.1 73.2 23.7

Eastern 0.3 4.6 0.5 0.4 - 71.2 22.9

Brong-Ahafo 0.1 2.7 0.3 0.2 0.6 77.6 18.5

Ghana 0.3 8.5 0.7 1.3 0.5 56.6 32.0

Source: Ghana Statistical Service, 2005

Table 2-5 on the other hand shows the main source of fuel for lighting in Ghana.

Table 22-5: Main Source of Fuel for Lighting

Region

Fuel Type (%)

Grid

Electricity

Kerosene Gas Genset

Battery Candles Others

Ashanti 58.5 40.9 0.1 0.1 0.0 0.3 0.0

Northern 28.0 71.1 0.0 0.0 0.0 0.1 0.7

Upper East 14.0 84.7 - 0.0 0.6 - 0.7

Upper West 17.0 78.2 - 0.1 0.1 0.2 4.3

Western 49.3 50.2 - 0.2 0.0 0.2 0.0

Central 46.1 53.3 0.1 0.1 0.0 0.3 0.0

Gt. Accra 78.9 18.7 1.3 0.1 0.1 0.7 0.3

Volta 35.4 64.2 0.1 0.1 0.1 0.0 0.1

Eastern 41.0 58.7 0.1 0.0 0.0 0.1 0.1

Brong-Ahafo 41.9 57.6 0.1 0.0 0.0 0.1 0.3

Ghana 48.9 50.1 0.3 0.1 0.1 0.2 0.3


14

The table reveals that although access to grid electricity in Ghana (49%) is relatively

high (compared to access rates in the African region), fuel-based lighting using

kerosene is still the main source of night illumination among Ghanaian households. It

is also evident from that table that access to modern lighting services is lowest in the

three northern regions with the Upper East region having the least number of

households (14%) with access to grid electricity. Access to electricity is even much

lower among rural households (27%) compared to 79% level of access within urban

households.

Fuel-based lighting systems are known to be inefficient solutions to meeting the

lighting energy needs of households and hinder development. Ghana has since the

early 1990 been embarking on an ambitious National Electrification Programme,

which seeks to extend the national grid to all households in Ghana by 2020.

Although significant strides have been made since 1990 as shown in Figure 2-1,

further extension of grid network to remote rural locations has increasingly become

expensive and impossible to be carried out. Off-grid, decentralised power systems

therefore remain the only hope for rural households to gain first-time access to

modern lighting services. Biogas systems can help improve access of rural households

to improved lighting services.

6978 79

9

202730

4149

0

20

40

60

80

100

1991/92 1998/99 2005/06

Year

Le

ve

l o

f A

cce

ss (

%)

Rural Urban Total

Figure 2-2: Electrification Trends in Ghana

15

3 BIOGAS TECHNOLOGIES IN GHANA

3.1 Historical Overview

The conventional use of cow dung as source of fuel for cooking has been a common

practice for many years in Ghana, especially in the northern savannah regions where

there are usually scarcity of firewood and charcoal for household cooking. However,

the development of anaerobic digestion systems for conversion of waste to biogas for

cooking and lighting became popular in Ghana only in the 1980s when the

government and its environmental agencies became alarmed about the rapid

devastation of large tracts of forest land for charcoal and firewood production.

Ghana‟s forest cover has dwindled from 8.13 million hectares at the beginning of the

last century to 1.6 million hectares today at a net annual rate of 3%. The rapid

depletion of the woodfuel resource base coupled with projected increase in the

demand for woodfuels in future with its attendant social and environmental effects

brought into sharp focus the need for alternative cooking fuels sources to be

developed and exploited. The biogas technology was consequently selected as one

such option.

The first biogas demonstration plant – a 10m3 Chinese fixed dome digester - was

constructed in 1986 by the Ministry of Energy at the Shai Hills cattle ranch in the

Greater Accra Region, with the support from the Chinese government. A year later in

1987 the United Nations Children Fund (UNICEF) supported the construction of a

couple of domestic biogas demonstration plants at Jisonayilli and Kurugu in Northern

region. The Ministry of Energy in the same year also established one of the first major

comprehensive biogas demonstration projects in Ghana - the “Integrated Rural

Energy and Environmental Project” at Apollonia, a village located some 46 kilometres

from Accra. The Apollonia Biogas Plant used animal dung and human excreta to

generate 12.5 kilowatts of electric power for street and home lighting as well as

cooking, while the bio-slurry was used for agriculture. The Catholic Mission in Ghana

also constructed 3 biogas plants (2 in the Eastern Region and 1 in the Volta Region) at

as many hospitals between 1994 and 1995.

Apart from these isolated, largely donor-driven initiatives, there has not been any

systematic attempt at promoting the biogas technology on a large scale in Ghana. In

1996 the Ministry of Energy commissioned a study – the National Biogas Resource

Assessment (NBRA) Project6 to be conducted. The objective of the study was to assess

6 Ampofo, Kwame (RESDEM Ltd.): National Biogas Resources Assessment, (MoEN, 1996)

16

the biogas energy potential of various geographical areas of the country, with the aim

of promoting the dissemination of biogas technology nationwide to suitable rural

communities, as a means to supplement their energy resource base and through that,

help improve their socio-economic well being. This study was intended to be the first

step in the planning and the development of a nationwide biogas programme.

However, after over more than a decade since the study was completed and the report

submitted to the Ministry, there is no sign that a national biogas programme to

promote domestic biogas systems is in the offing. In 2007, the government announced

in the budget statement a plan to increase the production and utilization of biofuels in

the national energy mix. However, this was only targeting the production of jatropha

oil as a substitute to crude oil.

Notwithstanding the absence of a clear-cut strategy for the promotion of the biogas

technologies in Ghana, a number of systems have been built since 1996. Interviews

conducted with the entrepreneurs involved in the construction of biogas plants

during the study indicate that a little over 100 biogas plants have been installed in

Ghana till date. Table A-3 in the annexure contains a profile of selected biogas

installations. The table shows that majority of these plants are bio-sanitation

interventions such as waste/effluent treatment plants and biolatrines, which are

largely, located in educational and health institutions in predominantly urban areas.

It is also evident from the table that there are very limited number of domestic biogas

plants in Ghana and that apart from the few donor-funded systems in Jasonayilli and

Okushibli, none of the domestic biogas plants built so far can be found in rural areas.

3.2 Types of Biogas Digesters in Ghana

Three main types of digesters – the Indian Floating Drum, the Chinese Fixed Dome

and the Puxin Biogas Digesters – have been designed, tested and deployed in Ghana.

3.2.1 The Floating Drum Digester

The floating drum digester (popularly called the Gobar Gas Plant) is believed to be

have been developed by an Indian, Jashu Bhai J Patel, in 1956. In this design, the

digester chamber is usually made of brick masonry in cement mortar. A cylindrical

shaped mild steel drum is placed on top of the digester to collect the biogas (gas

holder) produced from the digester. Thus, there are two separate structures for gas

production and collection. As the biogas is produced in the digester, it rises vertically

and gets accumulated and stored in the gas holder at a constant pressure of 8-10 cm of

17

water column. Figures 3-1 shows cross-sectional schematic diagram of the floating

drum digester and 10m3 digester at Appolonia respectively.

Figure 3-1:Cross-Sectional Schematic of FDD (left) and 10m3 Digester at Apollonia (right)

Although the floating drum technology has some advantages such as ease of

construction, ease of determining the level of gas in the tank and guaranteed gas

pressure, the technology is less preferred because it is relatively more expensive

(because of the steel drum), has a shorter lifespan due to problems with corrosion and

associated with high maintenance cost. The technology has become largely obsolete

with the advent of the Chinese fixed dome with the Appolonia plant being the only

known biogas installation in Ghana where the floating drum technology has been

used so far.

3.2.2 The Fixed Dome Digester

The fixed dome model biogas plant (also called drumless digester) was built in China

as early as 1936. The Chinese fixed dome plant is the archetype of all fixed dome

plants. A fixed-dome plant comprises of a closed, dome-shaped digester with an

immovable, rigid gas-holder and a displacement pit, also named 'compensation tank'.

It basically consists of an underground brick masonry compartment (fermentation

chamber) with a dome on the top for gas storage. In this design, the fermentation

chamber and gas holder are combined as one unit as shown in Figures 3-2. This

design eliminates the use of costlier mild steel gas holder which is susceptible to

corrosion. The life of fixed dome type plant is longer (from 20 to 50 years) compared

to floating drum plant.

18

Figure 3-1: Schematic Drawing of Chinese Fixed Dome (Left) & Completed CFD Digester in

Accra

The CAMARTEC7 fixed dome digester is by far the most popular biogas digester

deployed in Ghana as can be seen from Table A-3 ( or is it 2?). The model, which has

a simplified structure of a hemispherical dome shell based on rigid foundation ring

and a calculated joint of fraction, was developed in the late 1980s in Tanzania. Quite a

number of the CAMARTEC fixed dome digesters are fitted with external balloon gas

holders for storage of gas produced.

The fixed dome plants have a number of advantages, which include low initial costs

and long useful life-span; no moving or rusting parts involved; compact basic design;

saves space and well insulated; and creates local employment during construction.

However, it has its own demerits notable among which is the requirement of high

technical skills to ensure air-tight construction as poor masonry work results in gas

leakages. Similarly, the fluctuating gas pressure tends to complicate gas utilisation and

makes fixed dome unsuitable for many other applications.

7 CAMARTEC is the acronym for Centre for Agricultural Mechanisation and Rural Technology

based in Arusha, Tanzania.

19

Figure 3-2: CFD Digester under Construction (left) and CFD Being Repaired (Right) (Courtesy

REES)

3.2.3 The Puxin Biogas Digester

The Puxin Biogas Digester (PBD) is an innovation of the Shenzhen Puxin Science and

Technology Co. Ltd. of China, and an emerging bio-digester technology in Ghana.

The technology, which is based on the floating dome principle and application of

slurry based feedstock, is reputed to have inherited all the advantages of the fixed

dome and the floating drum digesters while at same time overcoming their main

disadvantages. The PBD is a hydraulic pressure biogas digester, composed of a

fermentation tank built with concrete, a gas holder made with glass fibre reinforced

plastic and a digester outlet cover made with glass fibre reinforced plastic or concrete.

The gasholder is installed within the digester neck, fixed by a component; the

gasholder and digester are sealed up with water.

Figure 3-3: Set up of Puxin Digester (left) Schematic Description of Puxin Slurry-based

Digester (right)

20

More than 10 Puxin plants have been built since 2007 when it was first introduced in

Ghana. Figure 3-5 shows a 10m3 Puxin plant under construction in Accra, Ghana.

Figure 3-4: Construction of 10m3 Puxin Digester at Private Residence in Accra (Courtesy Beta Construction Ltd)

3.2.4 Conclusion

Several stakeholders were asked during the study to indicate which of the various

types of biogas digesters should be recommended for a national domestic biogas

promotion programme. The Chinese fixed dome was picked by the overwhelming

majority of respondents on the basis of its durability and relative cost advantages. It

was also established during the study that a 6m3 fixed dome digester with estimated

daily gas production 1.4 m3 will be able to supply the daily cooking energy needs of a

household of 5-8 individuals.

3.3 Biogas Service Providers

The feasibility study has revealed that there are at least 10 private registered

companies who are actively involved in the design and installation of biogas systems

in Ghana. Some of these companies, in addition, offer consultancy services to other

service providers. Table 3-1 contains a brief profile of a selected number of biogas

service providers who were interviewed during study. As can be seen from the table

some of the service providers have over 10 years experience in the construction of

biogas systems. Although Beta Civil Construction Ltd appears to be the oldest among

the lot, it should be noted that the company only ventured into biogas construction in

2006.

21

Table 3-1: Profile of Selected Biogas Service Providers

Company Date

Established

Workforce

(Full

Time)

Type of Biodigester

Installed

Number of

Digesters

Installed

Biogas Engineering Ltd 2002 6 CAMARTEC fixed dome

type, and effluent

treatment plants

10

Biogas Technologies West

Africa Limited (BTWAL)

1994 148 Fixed dome and effluent

treatment plants

35

RESDEM 1996 Mostly bio-latrine

digesters

25

UNIRECO 2001 5 Mostly bio-latrine

digesters

Global Renewable Energy

Services

1996 4 Traditional Fixed Dome

with external gas holders

20

Beta Civil Construction

Ltd.

1975 25 Puxin Biogas Digesters 12

Renewable Energy and

Environmental Systems

(REES)

2002

Source: KITE Survey, 2007

BTWAL appears to be largest of the companies with current staff strength of about

148 full time employees and 102 casual labourers. The company also has the highest

number of installations to its credit. Almost all the service providers are based in

Accra.

3.4 The Cost of Biogas Digesters

Majority of the service providers interviewed were generally hesitant to provide

typical cost of biogas digesters when the question was posed to them for the simple

reason that cost is location and site specific. In their opinion, standardisation of cost

could be misleading. However, when pushed further to gain a rough idea of the

typical cost of digesters, a figure of between US$200 and US600 per m3 capacity was

given as the rule of thumb cost estimate of digesters in Ghana. Quotations for the

construction of 6m3, 8m3 and 10m3 capacity Chinese fixed dome digesters and 6m3

Puxin digester were collected from four major service providers – UNIRECO, REES,

the IIR and Beta Construction.

Table 3-2 shows the current cost of constructing the listed digesters while Annex 3

shows the cost breakdown of some of the biogas plants. The table indicates that the

22

cost of 6m3 Chinese fixed dome digester ranges between US$1,200 and US$2,600

while that Puxin digester of the same capacity is estimated at approximately

US$2,700. The lower estimate of US$1,200 was quoted by the IIR, which is a division

of the Council for Scientific and Industrial Research (CSIR), a public sector institution

charging lower rates for labour and project supervision than the two private sector

service providers. Table 3-3 also shows significantly different estimates being quoted

by REES and UNIRECO, both private sector concerns. As can be seen from Annex 3,

the cost differential is attributable to the fact that UNIRECO proposes to use fewer

blocks and less costly labour in the construction of the digester.

Table 3-2: Cost Breakdown of 6m³ Fixed-dome Biogas Digester

Name of Company

Cost Breakdown (US$)

Digester Size

6m3 8m3 10m3

UNIRECO

Materials 990 1,064 1,190

Labour 496 596 794

Supervision 199 298 298

Other cost 60 99 99

Total cost 1,745 2,056 2,382

Renewable Energy and

Environmental Systems

(REES)

Materials 1,232 1,683

Labour 798 1,137

Supervision 300 500

Others 270 240

Total cost 2,600 3,660

Institute of Industrial

Research (IIR)

Materials 840 1120 1,736

Labour 180 240 300

Supervision 60 80 100

Others 120 160 200

Total cost 1,200 1,600 2,336

BETA Construction Ltd

(Puxin Digesters)

Materials 1,938

Labour 400

Supervision 300

Others 48

Total cost 2,684

Source: Authors‟ Construct based on Key Informant Interviews

Table 3-2 further reveals that the investment cost of biogas systems in Ghana is

higher than in Asia and other parts of Africa. For example, while the investment costs

of an 8m3 fixed dome digester in Ghana range between $1,600 and US$2,000, similar

plants can be procured for US$574 in Kenya (about three times less), US$960 in

Uganda, US$417 in Nepal and US$245 in Vietnam (Source: ETC Group, 2007).

23

3.5 Likely Challenges to be faced by the Biogas Industry

Limited availability of feedstock, poor design quality, lack of technical know-how,

high operating and maintenance cost, and lack of access to financing have been found

to be some of the challenges that have confronted some of the past biogas initiatives

presented above.

a) Raw Material Availability: Lack of adequate quantities of cow dung is reported

to be one of the key problems that led to the collapse of the Apollonia and

Jasonayilli domestic biogas plants. In some cases additional dung had to be found,

collected and transported to the two plants to augment the dung collected overnight

from the kraals. This led to high O&M cost. To address this challenge, future

promotional programmes on biogas should ensure that all targeted households have

enough cattle to produce the daily dung requirements of the digesters to be built.

b) Lack of Technical Expertise: It has been found that the owner-operators of

past biogas systems lacked the basic skills required for everyday operation of the

plants. No training on how to operate and maintain a biogas system was provided for

their domestic and institutional beneficiaries neither were there any operating

manuals for the plants. Technicians who were supposed to provide post-installation

support service lived several kilometres from the location of the plants hence were

not readily available when needed. Training of endusers and/or the preparation of

easy-to-read and user-friendly operating manuals would therefore have to be made a

major component of future biogas programmes.

.

c) High Investment Cost: The initial cost estimate for the acquisition of a 6m3

fixed dome biogas digester (US$1,200-US$2,600) could be a key inhibiting factor for

majority of potential households willing to switch over to biogas. According to the

GEF Small Grant Programme, „brick-lined underground fixed dome is too expensive

for the rural poor and that a cheaper design needs to be developed‟ (GEF, 2006).

Unfortunately, the fixed dome is the preferred digester type as indicated in section

3.2.4. Further investigation should be carried out to understand why the cost of the

technology with the same specifications is cheaper in other countries but so

expensive in Ghana. Service providers think that the cost would be significantly

reduced once there is demand for commercially challenging volumes of domestic

biogas digesters due to economies of scale.

There were some other challenges in the last draft – financing and alternative

energy. Also had key lessons learnt in the last draft

24

4 MARKET POTENTIAL OF BIOGAS IN GHANA

4.1 Technical Potential of Biogas

The technical potential for domestic biogas plants in the surveyed regions has been

estimated based on the number of households that satisfy two basic (but critical)

requirements – sufficient availability of cow dung and water to run a biogas

installation. The assessment of the biogas potential is underpinned by the following

key assumptions:

Cow dung is the main feedstock8;

Rural households with cattle and practicing zero grazing or at least night-

stabling are the initial target market;

Only energy for cooking is being considered

4.1.1 Resource Availability

Provisional results from the fifth round of Ghana Living Standard Survey (GLSS 5)

put the total cattle population in the 4 survey regions at approximately 2.3 million

heads representing 82% of the total cattle reared in Ghana in 2005/06. The cattle are

owned by a total of over 180,000 households, 84% of which (153,000) are agricultural

households yielding an average cattle holding per agricultural household of 14.8% as

shown in Table 4-1.

Table 4-1: Distribution of Cattle Population in Survey Regions

Region Cattle Pop. No. of Cattle

owning

Households

No. of Cattle

Owning Agric.

Households

Av. Cattle per

household

Northern 982,847 98,090 85,142 11.5

Upper West 787,681 28,250 23,645 33.3

Upper East 454,112 47,577 39,441 11.5

Ashanti 36,355 6,455 4,874 7.5

TOTAL 2,260,995 180,372 153,102 14.8

Source: Ghana Statistical Service, GLSS 5 Provisional Results, 2008

8 Although there are other species of livestock in Ghana, the estimation of the technical potential has

been based only on cow dung because according to Ampofo (1996), cow dung appears to be the only

feedstock in all the regions that has practical utility for the economic production and application of

biogas based on available technology and technical know-how.

25

The table indicates that majority of the cattle holding in the surveyed regions can be

found in the three savannah, with the Northern region alone accounting for at least

44% of them.

For a domestic biogas plant to work properly, the household should typically have a

minimum of 20-30 kg of fresh dung available on a daily basis. This minimum daily

dung production can typically be produced by 2-3 domestic cattle (at least stabled at

night). However, given that the cattle breeds reared in Ghana (just as in many other

West-African countries) are small and undernourished, more cattle heads or days of

night stabling will be needed to produce sufficient dung required for the daily

production of gas to meet cooking energy needs of each household. In an interview

conducted during the surveys with research scientists at the Animal Research

Department at Navrongo Campus of the University for Development Studies (UDS), it

was revealed that 7-10 heads of the Ghana short-horn cattle (the predominant cattle

breed in Ghana) will be needed to produce the required 20kg of dung overnight while

the same number of the Crosses and the Zebus will produce 25kg in an overnight

kraaled situation.

On the basis of this finding and with specific reference to the average number of

cattle per agricultural household given in Table 4-1, it can be concluded that each of

the agricultural households in the regions covered in the study, will have the requisite

number of cattle needed to produce sufficient dung on a daily basis to run a typical

domestic biogas since average cattle holding per household is equal or more than 7 in

all the regions.. Thus, the theoretical potential of biogas in the surveyed regions

could be put at 153,000 biogas digesters.

The actual technical potential of biogas digesters in the four regions is estimated by

multiplying the number of cattle owning agricultural households by a cattle holding

factor (chf), which is determined by the average cattle holding of the country.

According SNV (2006?), a chf of 0.75 is applicable for countries with average domestic

cattle holding of more than three heads per agricultural household; Ghana‟s is 12.7.

The technical potential of domestic biogas in the surveyed region is therefore

estimated at 114,827 (153,000 X 0.75) installations. Given that the target market is

rural households coupled with the fact that 71% of all cattle owned by households are

concentrated in predominantly rural areas (GSS, 2000), the technical potential of

biogas can be downgraded further to 81,5279 installations.

9 This represent 71% of the theoretical potential

26

The estimation of the technical potential for biogas has been based on the assumption

that all the dung to be produced by the cattle will be available and accessible for the

generation of biogas. However, according to Ampofo (1996), „cow dung has a high

opportunity cost and occupies a very important place in some village economies,

particularly those of the Upper East and Upper West regions”. In these areas cow

dung is used, inter alia, as manure, building material (for plastering and binding),

cooking and as bait for termites used to feed poultry. Such is the importance of dung

to some rural households that some women in the Upper East region were reported to

literally follow cattle, to pick up their droppings for use either at home or on the farm

(Ampofo, 1996). This means that there are (and likely to be) competing uses for the

dung, which could further reduce the technical potential for biogas.

The household survey confirms that there are indeed alternative and multiple uses for

dung at the moment as shown in Table 4-2. The table indicates that the predominant

use of cow dung in the households visited is its application as manure on the farms

and that only 8% of the respondents said they did not have any use for the dung,

hence disposing of it.

Table 4-2: Household Use of Cow Dung

Uses of animal waste % respondents

Farm manure 50.5

Manure and binding material 28.4

Dispose off 8.3

Manure and plastering 7.8

Manure, binding and plastering 2.0

Binding material 1.5

Manure, energy, binding and

plastering 1.5

Total 100


However, an overwhelming majority (98%) of the household respondents indicated

their willingness to release the dung for the production of biogas as shown in Table 4-

3. Although these are only verbal and non-binding assurances from the sampled

households, the fact that majority of them are mainly using the dung as manure

effectively reduces any potential non-supply risk since the slurry to be produced from

the biogas plants will give the household manure of a better quality.

27

Table 4-3: Willingness to Release Dung for Biogas Production

No. of respondents % respondents

Yes 200 98.0

No 4 2.0

Total 204 100


4.1.2 Access to Water

Apart from having adequate collectable feedstock to feed the biogas plants on a daily

basis, access to reliable water supply is also a major prerequisite that has to be met due

to the fact that the dung has to be mixed with roughly equal amounts of water and/or

urine to enable both the installation‟s microbiological process as well as the hydraulic

functioning. Although the process water does not have to be potable, the significant

amount needed daily means that water should be available in the vicinity of the

household; within typical a distance of say 20-30 minutes of the installation(s). Access

to water (defined as the proximity to nearest water source – measured in terms of

time taken to reach the nearest water source) in all the regions covered in the survey

is relatively high as shown in Table 4-4.

Table 4-4: Household Access to Water in the Survey Regions

Region Level of Access (%)

Rural Urban Total

Ashanti 97.4 99.3 98.4

Northern 74.4 92.9 80.2

Upper East 89.6 92.2 90

Upper West 88.1 97.0 87.7

Ghana 83.1 94.9 94


The table indicates that averagely, 94% of households in Ghana take less than 30

minutes to reach their nearest water source. An important aspect of the statistics

presented in Table 4-4 is the high level of access to water (averaging 86%) among

rural households (the targeted market) in all the surveyed regions. This suggests that

access to process water required for the biogas plant might not be a major constraint.

constraint. ThisThis fact notwithstanding, it should be borne in mind that the

introduction of biogas plants on the scale that is being envisaged could put further

strain on the water resources of the regions, especially in the three northern regions,

where the water resources appear to be overstretched already. Evidence of this fact is

28

immediately

67%

in three

months

23%

in six

months

3%

in a year

4%

not sure

3%

the falling groundwater levels being observed in the Upper Regions for example

(FAO, 2007).

4.2 Willingness and Ability to Pay

4.2.1 Willingness to Adopt and Pay for Biogas

Although majority of the household respondents (94%) knew practically nothing

about the biogas technology prior to the household surveys (see Table 4-5), a large

proportion of them became fascinated and excited about the technology after the

research team had taken time to introduce it to them. Consequently, majority of the

respondents (90%) expressed their willingness to switch over from woodfuels to

biogas, with 67% indicating their preparedness to adopt the technology immediately

as shown in Figure 4-1.

Table 4-5: Household Knowledge about Biogas Technology

Knowledge level No. of respondents % respondents

Has some knowledge 12 5.8

Has no knowledge 194 94.2

Total 206 100


Figure 4-1: Willingness to Switch to

Biogas

Not only did the households say

they were willing to go in for

the switch, but an

overwhelming majority (99%)

were also willing to pay for the

technology as indicated in Table

4-6. The table also reveals that

about 10% of the households

were willing to pay between one

and a half and three times their

current cooking energy bill10 to

acquire the biogas digesters under one of the scenarios they were presented with; a

10 This works up to between US$432 and 1440 for firewood users and $342 and 1140 for charcoal users.

29

greater majority (89%) however did or could not indicate how much they are willing

to pay for their revealed preference for biogas. It should be noted however that the

findings of this qualitative analysis can at best be described as indicative since the

sample size does not allow for generalisaton of the regional household populations.

Majority (87%) of respondents who were unable to indicate their preferences for

either of the scenarios attributed their “indecision” to the fact that they are not

currently spending on cooking fuels (hence had no basis of comparison) as shown in

Table 4-7. It came out strongly during a number of interviews with such households

that they will be more willing to pay for the biogas plant if it were to provide lighting

as well since their expenditure on lighting was significant. Although a 10m3 digester

will be able to provide lighting, its investment costs is higher than that of the 6m3

digester (see Table 3-3) which will most likely be unaffordable by the household. It is

also evident from Table 4-7 that another 12% of the respondents did not pick any of

the scenarios because in their view the technology was too expensive.

Table 4-6: Household Willingness to Pay for Bio-digesters

Willingness to pay

No. of

respondents %

Yes 204 99

No 2 1

Total 206 100

Scenario 1

twice current energy bill for maximum of 5 years 8 4.1

thrice current energy bill for 5 years 9 4.6

1.5 times more 3 1.5

none of the above 175 89.7

Total 195 100

Scenario 2

same price as septic tank (equivalent of US$

2550) 3 33.3

half the price of septic tank 1 11.1

one-third the price of septic tank 4 44.4

none of the above 1 11.1

Total 9 100

Scenarios 1 and 2

One of the available options 28 13.7

None of the above 176 86.3

Total 204 100


30

Table 4-7: Reasons for Indecision

Reasons %

Expensive 11.9

may move away 0.6

more than 3times 0.6

no cooking fuel expense 87.0

Total 100.0


Meanwhile, the fact that 87% of the households interviewed indicated that they do

not pay for the use of firewood raises questions about their declared willingness to

switch to biogas since they will have very little economic incentive to doso. However,

available national statistics show that the stock of woodfuel resources in Ghana has

dwindled considerable thereby restricting household access to high quality woodfuel.

This situation has been projected to worsen. Information from the household survey

and the FGDs points to an acute situation in the three northern regions resulting in

the illegal felling of economic trees such as shea butter for firewood. “The forest is

gone”, they remarked. With no or very little non-woodfuel based alternative available

within reasonable distances (see Table 4-8), these households are compelled to travel

an average distance of over 5 kilometres to collect firewood as shown in Table 4-9.

Table 4-8: Alternative Sources of Cooking Fuels

Energy source No. of respondents % respondents

Electricity 1 1.5

Wood 26 40.0

Charcoal 27 41.5

crop residue 11 16.9

Total 65 100


Table 4-9: Average Distance to Fuel Source (km)

Energy source Gas Wood Charcoal Dung

Average distance 34.7 5.2 0.5 0.009


The evidencefrom the above suggest that traditional cooking fuels are becoming

scarcer and scarcer in the Northern Regions and this is going to continue unless

alternative and more sustainable cooking fuels are found or made available.

4.3 Ability to Pay for Biogas Plant

31

Mere expression of willingness to pay does not in anyway guarantee an effective

demand for the technology; willingness to pay must be backed by ability to pay in

order for the biogas marketplace to exist. The study thus assessed the financial ability

of households in the survey region to afford the investment cost of a biogas plant,

estimated be in the region of US$ 1200 and US$2,600 for a typical 6m3 fixed dome

biogas digester.

To gain a rough idea of income and expenditure levels and patterns in the surveyed

regions as proxies for households‟ ability to pay, households were asked during the

structured questionnaire interviews to indicate their average annual incomes and

expenditures. Table 4-10 shows, inter alia, the mean annual income and expenditure

of the respondents. As evident from the table mean annual expenditure and income of

households interviewed are US$2,145 and US$3,695 respectively, implying excess

income over expenditure of US$1,500 plus. Mean household income is surprisingly

highest in the Upper East Region (the poorest region in Ghana) and lowest in the

Ashanti region; this is mainly because the Upper East Region accounted for the largest

number of household interviewees coupled with the fact that majority of household

members in that region earned incomes in addition to the household heads. The

income and expenditure figures suggest that the survey households should in

principle be able to afford the upfront cost of any biogas digester selling for US$1,500

or less based on the assumption (albeit unrealistic) that they (households) will be

willing to spend all of their excess income on the technology.

Table 4-10: Annual Income and Expenditure Levels of Surveyed Households

Region Household Expenditure (US$)

Min Max Mean Std. Deviation

Ashanti 544 7,789 2,485 1,565

Upper West 590 7,252 1,807 1,010

Upper East 487 10,293 2,337 1,524

Northern 487 6,727 2,089 1,425

Total 487 10,293 2,145 1,386

Household Income (US$)

Ashanti 725 8,219 3,072 1,622

Upper West 1,088 8,461 3,158 1,888

Upper East 1,450 12,087 4,580 2,227

Northern 967 9670 3,565 2,370

Total 725 12,087 3,695 2,275


However, these income and expenditure figures cannot be considered as

representative of the population at the district, regional or national level because of

32

the smallness of the sample size. In fact much lower mean annual household income

levels are recorded among livestock owning households in the four regions in

nationally representative statistics as shown in Table 4-11 below.

Table 4-11: Average Annual Income of Livestock Owning Households (2005-26)

Region Mean Annual Household Income (US$) Total

Male Female

Ashanti 1,148 1,110 1,135

Northern 1,853 1,254 1,692

Upper East 634 583 620

Upper West 736 421 626

Ghana 1,410 1,140 1,320

Source: GSS 2008, Provisional GLSS 5 Results

The statistics in Table 4-11 shows that perhaps with the exception of the Northern

region, no households in the other regions will be able to afford a down-payment

(outright purchase) for the minimum upfront cost of US$1,200 for a 6m3 fixed dome

digester even in the event that the household decides to spend all of their annual

income to acquire the technology. However, it is implausible and unrealistic to expect

households to make full payment for biogas plant since the investment costs appears

to exceed the means at the disposal of the targeted investors and cannot be covered

from their regular incomes or savings. Clearly, a financing mechanism has to be

devised to facilitate the uptake of the technology considering the fact that service

providers usually demand down-payment before construction works will commence.

As a general rule of thumb, access to financial incentives has been singled-out as a

prerequisite for the success of any large scale biogas initiative (See ISAT-GTZ, Biogas

Digest, Volume III)

Results from the KITE survey confirm the need for outside (perhaps borrowed) capital

to help households cover the investment cost associated with the acquisition of the

biogas digesters. Using an investment cost of US$ 86011 and assuming that 50% of the

cost would be absorbed through subsidy and/or unpaid labour, the households were

asked to indicate how much they will be able to pay on a monthly basis to defray the

remaining investment cost given several scenarios. Table 4-12 captures the responses

of the households. About 45% of households indicated that they have the ability to

pay the equivalent of between US$10 and US$17/per month (US$120-US$170 per

year) for 3-5 years to acquire a 6m3 fixed dome digester.

Table 4-12: Household Preferred Repayment Schedule

11 Based on estimates provided by SNV during the survey

33

Options No. %

GH¢ 17 for 3 years 8 4.3

GH¢ 12.5 for 4 years 8 4.3

GH¢ 10 for 5 years 65 36.0

Others 105 55.4

Total 186 100


Among the 55% of households indicating repayment modes other than the 3

scenarios presented them, 71% indicated the ability to pay less than GH¢10 each

month to defray moneys borrowed to finance the investment cost, 8% were willing to

pay between GH¢10 and GH¢20 per month, with 20% willing to pay between GH¢20

and GH¢50 as depicted in Table 4-13.

Table 4-13: Other Preferred Repayment Mode

Monthly Payment No. %

1-9 GH¢ 75 71

10-20 GH¢ 8 8

20-50 GH¢ 21 20

Above 50 GH¢ 1 1

Total 105 100


To further establish whether or not the households have the wherewithal to acquire

the biogas digester, they were asked whether they had bought any household durable

product over the past 12 months. Table 4-14 shows their responses. As can be seen

from the table, 36% of households indicated that they had bought things such as

television sets, motorbikes, bicycles, refrigerators and mobile phones spending the

equivalent of US$290 on average per household as indicated in Table 4-15.

Table 4-8: Purchase of durable household product in the past year

Response

No. of

respondents

%

respondents

Yes 75 36.4

No 131 63.6

Total 206 100


34

Table 4-15: Cost of durable household product

Statistics cost of product (GH ¢)

Mean 288.6

Minimum 12.0

Maximum 2400.0


Majority (47%) of the items procured by households in the last year were motorbikes

and bicycles. The amount expended on motorbikes range between approximately

US$200 and US$1,400. The highest household expenditure of US$2,400 was made on

building materials, which was paid for in instalments. Majority of the items bought

(73%) were purchased through outright cash payment, with the rest either being paid

for in instalment or through the barter system.

Although the statistics point to high indicative ability to pay among households

reporting purchase of some household durables, little can be made of it in terms of its

implication for the market for biogas digesters since they represent only 36% of the

limited sample of 206 household. Perhaps a more important statistics will be the fact

that 64% of all the household respondents had not purchased any durables over the

past year, suggesting a lack of ability of make such investments.

4.4 Financial Analysis

Financial analysis evaluates the profitability of biogas plant from the point of view of

the users. Individual households judge the profitability of biogas plants primarily from

the monetary surplus gained (profit) from utilizing biogas and bio-fertilizer in relation

to the cost of the plants.

The financial analysis has been conducted with reference to a 6m3 biogas plant with a

daily gas production potential of 1.4m3, sufficient enough to meet the daily thermal

energy needs of a household of 5-8 people. As indicated in section 3.4 the investment

cost of this type of digester ranges between US$1,200 and 2,600. The benefits derived

from the use of the technology has been estimated primarily from savings in

expenditures on biomass12; other known benefits such as saved labour and recovered

nutrients in the slurry have not been considered in this analysis. The base price for

biomass is estimated at US$0.12 per/kg. The basic data and assumption for the

financial analysis is presented in Table 4-16.

12 Although majority of the households do not purchase firewood used, its value has been calculated based on the prices of woodfuel on the market. Theoretically, the firewood collector of the family could sell the amount that will be displaced by biogas to the firewood market.

35

The financial analyses yield a financial internal rate of return (FIRR) of 21% and -2%

respectively for the two investment cost scenarios of US$1,200 and US$2,600. This

means that in the lower case scenario (US$1,200) a household with access to credit,

and can make say a 10% down payment of (US$120), can borrow the rest of the

investment funds of (US$1,080) at a yearly interest rate 10% payable in 4 years and

still earn 21% return on the investment in the biogas plant. Such a household will

have a financial incentive to invest in the biogas technology since the FIRR is higher

than the minimum acceptable rate of 10% (which is the cost of capital), provided such

benefits are well explained and understood.13 There is no such incentive for the

household in the higher investment cost scenario (US$2,600) unless and until there is

significant reduction in the investment cost. A minimum of 45% reduction in

investment cost will be required under this scenario for the investment to return a

yield of 11%, which will still not be attractive to low income households.

Table 4-16: Data for Financial Analysis

Parameters Amount US$

Remarks Scenario 1 Scenario 2

Investment Cost 1,200 2,600

Annual Maintenance

Cost

24 52 2% of Investment Cost

Subsidy - -

Net Cost 1,200 2,600

Down Payment 120 260 10% of Investment

Cost

Loan Amount 1,080 2,340

Annual Loan

Repayment

341 738 10% interest, 4 year

term

Lifetime of Plant 15years 15years

Benefits

Annual Savings Unit (kg)/hh/yr Unit Cost ($) Total Annual Benefits

(US$)

Biomass 2,108 0.12 245

Figure 4-2 shows the degree of responsiveness of the FIRR to variations in project

benefits occasioned by changes in the price of biomass.

13 A FIRR of 21% may still not be attractive to households since experiences from agricultural farming have shown that low income farms/households become interested at FIRR of 30% (See Biogas for Better Life: an African Initiative - Business Plan, 2006-2020).

36

FIRR Vs Price of Biomass

0

12 14 1620

25 27 29

45

-14

-6 -4 -3 -1 1 2 38

-20

-10

0

10

20

30

40

50

122 196 209 220 245 269 281 293 369

Benefits

FIR

R (

%)

Scenario 1:IC=1200 Scenario 2:IC=2600

Figure 4-1: Sensitivity of FIRR to Price of Biomass

The figure reveals that the FIRR is less sensitive to changes in the price of biomass.

For example, not even a 50% increase in the price of biomass (from US$245 to

US$369) can make the investment worth the while of the household in Scenario 2

since it will only give a FIRR of 8%, which is still less than the cost of capital.

Similarly, a 40% reduction in the estimated investment benefits only reduces the

FIRR obtainable under Scenario 1 from 20% to 12%, which is still higher than the

cost of capital thus providing some marginal justification for the household to make

the investment.

Figure 4-3 on the other hand presents the sensitivity analysis of changes in the price

of biogas digester (possibly caused by provision of subsidy, development of cheaper

models, and economies of scale) on FIRR for the 6m3 digester. The figure shows that

the FIRR is relatively more sensitive to variations in the investment cost; a 50%

reduction in investment cost will increase the FIRR from 20% to 56% in Scenario 1

and from -1 to 13% in Scenario 2. Even a 30% increase in subsidy (or reduction in

investment cost) will yield the „magical‟ 30% plus14 FIRR that will attract investor

interest.

14 Experiences from other countries indicate that a FIRR of 30% plus is needed to trigger the interest of low income agricultural households (See Biogas for Better Life: An Initiative for Africa Business Plan, pg 23) .

37

FIRR Vrs Subsidy

2025

32

42

56

0 15

813

0

10

20

30

40

50

60

10% 20% 30% 40% 50%

Level of Subsidy

FIR

R(%

)

Scenario 1:IC=1200

Scenario 2:IC=2600

Figure 4-2: Sensitivity of FIRR to Subsidy

4.5 Economic Analysis

Unlike financial analysis, economic analysis attempts to assess a project in the context

of the national economy rather than that of the individual investor. Due mainly to

dearth of reliable data on key parameters such as shadow prices (shadow wage rates

and exchange rates, the determination of which is often complicated and contains a

great deal of uncertainty) and the amount of transfer payments (taxes, duties, interest

rates, subsidy, etc) embedded in input costs, the Economic Internal Rate of Return

(EIRR) for the 6m3 biogas unit has not been estimated in this feasibility study. This

notwithstanding the economic justification for widespread dissemination of biogas

plants has never been in doubt. There are documented evidence from countries such

as Nepal and Bangladesh that the EIRR of domestic biogas programme could go up to

as high 68% when all other accruable project benefits, such as domestic labour

savings, expenditure saved by the substitution of mineral fertilizers with bio-

fertilizer, reduction in CO2 emissions and deforestation, are captured and included in

the analysis. It is plausible to conclude that similar high EIRRs will be obtained for

Ghana once all project benefits are captured in an economic analysis.

38

5 STAKEHOLDERS ANALYSIS

This section assesses all individuals, institutions and organisations (both public and

private) that have a stake in or will impact on the development of the market for

biogas systems in Ghana. The stakeholder categories profiled in this section include

public and private sector organizations as well as civil society organisations.

5.1 Public Sector Institutions

5.1.1 Ministries, Departments and Agencies

The involvement of state institutions is essential to guarantee government

commitment (political will) toward creating the enabling environment required to

stimulate the market for biogas digesters in Ghana. Governments will be expected to

play the public role that corresponds to a market-oriented approach by creating an

enabling environment for the market, providing grants and tax breaks, drawing up

standards and legitimising the programme. The following are the list of identified

public sector stakeholder institutions:

The Ministries of Energy (MoE)

The Ministry of Energy is the sector ministry responsible for the formulation of

energy policies as well as the coordination of all organizations operating in the energy

sector for the achievement of the government‟s energy objectives. The Ministry of

Energy will be expected to formulate policies that will promote the commercialisation

of biogas systems and provide enabling environment rife with incentives to stimulate

private sector involvement in the biogas sector. A broad national policy on biogas will

provide, among other things, the institutional and regulatory framework for the

development of the market. It is worth mentioning at this point that the MoE already

have some pro-renewable policy objectives (though not explicitly on biogas – see

section 2.5) that could be drawn upon to underpin the proposed biogas project.

Energy Commission (EC),

The Energy Commission (EC) was established in 1997 by the Energy Commission Act

(Act 541). The EC is tasked with the responsibility of licensing, regulating and

monitoring energy services providers; developing national energy plans; and

providing advice to the Minister of Energy on energy policy issues. Basically the EC is

in charge of technical regulations of the energy sector. The EC will be instrumental in

39

supporting the development and enforcement of agreed technical standards and

licensing of service providers.

Ministry of Local Government, Rural Development and Environment (MLGRDE)

The Ministry of Local Government, Rural Development and Environment exists to

promote the establishment and development of a vibrant and well resourced

decentralized system of local governance for the people of Ghana and ensure balanced

rural development. Among other things the MLGRDE facilitates horticultural

development, good sanitation and orderly human settlement development. As the

umbrella Ministry for all the Districts, Municipal and Metropolitan Assemblies in the

country, the MLGRDE and its allied Districts, Municipalities and Metropolitan

Assemblies could serve as useful conduits for commercialisation of biogas systems in

the respective assemblies. Stringent and enforceable standards for the disposal of

animal waste in the districts for example would provide a huge economic impetus for

the private sector to consider the biogas technology.

The Ministry of Food and Agriculture (MOFA)

The Ministry of Food and Agriculture (MOFA) is the Ministry charged with the

development and growth of agriculture in the country. Its primary roles are the

formulation of appropriate agricultural policies, planning & co-ordination, and

monitoring and evaluation. The vision of the ministry is to accelerate growth in

agricultural productivity through modernization of the sector to enhance rural

development. With agencies and units throughout the country, the animal

production units of MOFA could be a vital role in the identification and scoping of

households. In addition, MOFA through its extension officers could recommend to

farmers the adoption of husbandry practices that will ensure adequate production and

easy collection of dung. Furthermore, implementation of a fertilizer extension

program to maximize the benefits of bio-slurry, will also benefit MOFA in its effort to

improve agricultural productivity. MoFA also have already demonstrated their

interest in the biogas technology through the construction of the biogas plant at Sege

(See Table A-2 in Annex 2).

The Environmental Protection Agency (EPA)

Established in 1994 by an Act of Parliament (Act 490), the EPA is the key agency in

Ghana responsible for the control of air pollution and the protection of the

environment. The EPA ensures compliance with laid down environmental impact

assessment procedures in the planning and execution of development projects. The

EPA may have the ability to influence the biogas initiative through the enforcement

40

of environmental standards that could legislate against or outlaw the dependence on

woodfuels as the main household cooking fuel, and thus influencing the adoption of

biogas as a clean alternative cooking fuel for the rural communities.

Community Water and Sanitation Agency (CWSA)

The primary responsibility of the CWSA is to provide clean and potable water to rural

communities as well as promote environmental sanitation. The CWSA has presence

in all the surveyed regions providing improved access to safe water and sanitation

facilities, especially in rural communities. It will be useful for the biogas service

providers to work in tandem with CWSA and the District/Metropolitan Assemblies to

improve upon the water supply situations in rural communities with significant

amount of feedstock but have limited assess to water resources. The CWSA will also

have a huge role to play as and when the dissemination of biolatrines becomes a part

of any national biogas programme in Ghana.

5.1.2 Research Institutions

Science and energy research institutions have critical roles to play in the form of

designing models of digesters suitable for the Ghanaian context as well as improving

the quality of the products. Other important roles that can be played by the research

institutions include assisting the development and commercialisation of end-use

appliances such as stoves, gas lamps, gas valves, slurry mixers and water drains. In

addition, the research institutions can also assist in the training of construction

artisans. Collaborating research institutes may include the Industrial Research

Institute (IRI) and the Animal Research Institutes (ARI) both of the Council for

Scientific and Industrial Research (CSIR), and the Agricultural Engineering

Department of the KNUST. Most of these institutions have conducted extensive

research into the biogas technology and thus have immense experience and capability

to provide technical support to the programme.

5.2 Civil Society Organisation (CSO)

5.2.1 Non-Governmental Organisations (NGOs)

The inclusion of civil society organisations (CSOs) such as Non Governmental

Organisations (NGOs) and Community-Based Organizations (CBOs) at the national

and community level is necessary for the successful implementation of any biogas

initiative in Ghana. NGOs and CBOs involvement will be required in areas of

41

coordination, public awareness creation and education and mobilisation of the end

users to create sustainable market for the product. Specifically, the CSOs will be

involved in market development and scoping/training of entrepreneurs. Some

identified NGOs and CBOs who can play roles in future biogas promotion programme

at the national and community level are profiled below.

The Energy Foundation

The Energy Foundation is a non-profit, public-private partnership institution

established in 1997 to promote sustainable development and efficient utilisation of

energy in all of its forms in Ghana. The Foundation is the implementing agency for

the Energy Demand-Side Management Programme of Ghana and has gained

international recognition for its innovative and effective energy efficiency

interventions. The Energy Foundation has in the past facilitated the construction of

biogas plants in the University College of Education, Winneba (UCEW). The Energy

Foundation‟s social marketing approach of influencing behavioural change in energy

consumers could be adapted to facilitate the extensive promotion and public

education on biogas in Ghana.

Kumasi Institute of Technology, Energy and Environment (KITE)

KITE is a wholly Ghanaian Not-for-Profit organisation and a leading actor in the

Energy, Technology and Environment sectors. Since its inception eleven years ago,

KITE has built a unique capacity in the development and implementation of public

benefit enhancing projects in the Energy, Technology and Environment sectors.

KITE's capacity has been built through a broad range of project and program

experiences, partnerships with key national and international actors and the

development of sound internal management and reporting capabilities. KITE‟s key

strength has been its ability to identify projects be they policy or infrastructural that

address the energy needs of the underserved populace. KITE is also a major proponent

of the enterprise centred approach to the provision of access to reliable modern

services, having benefited from over year eight (8) of involvement with the African

Rural Energy Enterprise Development (AREED) Programme.

Table 5-1 contains the list of other potential NGO and CBO partners identified in the

surveyed areas based on their energy and rural development orientation/inclination.

42

Table 5-1: Potential NGOs and Possible Roles

Potential NGOs Region Suggested Function

New Energy Northern Supervision and

implementation

TRAX Upper East Promotion, liaison

between communities

and partners – MFIs,

technical experts

SEND Foundation Upper East Region Supervision and

implementation


It is worth noting that the potential NGO and CBO partners provided above is not

exhaustive and the formation of coalition of NGOs/CBOs will be critical to facilitate

the commercialisation of biogas in Ghana.

5.3 The Private Sector

5.3.1 Micro Finance Institutions

The participation of financial institutions particularly the Micro-Finance Institutions

and the Rural Banks will be crucial to the successful commercialisation of the biogas

technology. The MFI will be expected to design innovative and tailor-made financing

products to provide loans/micro-credit to end-users who cannot afford outright

purchase of the biogas systems. Identified Micro Finance Institutions (MFI) who

could be partnered includes Rural Banks in the targeted markets, the SINAPI ABA

Trust, the Women World Banking, and the Micro-Finance and Small Loans Centre

(MASLOC).

5.3.2 Bio-digester Construction Companies

The bio-digester construction companies represented mainly by the private sector are

considered to be key “driver” of the commercialisation of the technology and will be

required to provide products of the highest quality and also ensure that routine

maintenance is provided to end-users on demand. There are currently few private

firms involved in the biogas business in Ghana as shown in Table 3-2. The identified

biogas construction firms include, RESDEM (Consulting) Limited; Environment

Technology Limited, Biotech Engineering Limited, and Biogas Technologies West

43

Africa Limited. The rest are Beta Construction Limited, UNIRECO and Global

Renewable Energy Services. Capacity building for existing firms and

unearthing/training of new biogas service providers is necessary to ensure that the

project has adequate supply-side actors to support the large scale deployment of

quality biogas products in Ghana.

5.3.3 End Users

Rural agricultural households in the Ashanti, Northern, Upper East and Upper regions

with adequate number of cattle and have the means to make some financial

commitment towards the acquisition of the digesters will constitute the targeted

market to be provided with biogas digesters on demand. The success of any biogas

programme will depend on the willingness and readiness of the cattle owning

households to buy the digesters. With current knowledge about the technology so

low at the moment among these households, a vigorous educational and promotional

campaign will have to be embarked upon to help stimulate the demand for the

products.

44

6 ASSESSMENT OF THE SUPPLY CHAIN

This section assesses the ability and the capacity of the existing and potential supply

side actors and stakeholders to serve the potential market for biogas digesters and

allied services.

The biogas supply chain is defined to include all activities, resources and skill set

required to facilitate the smooth delivery of biogas systems to the final consumer.

Findings from the study emphasize the need for an institutional framework that will

enhance linkages for diffusion/supply of biogas in Ghana. The identified elements of

the supply chain for Ghana include research and development, design and

construction, maintenance and monitoring and, financing.

6.1 Research and Development

Research and Development (R & D) is an important component of the biogas supply

chain. R&D which seeks to identify suitable design models for the Ghanaian context,

improve the quality of the product and reduce production cost is vital to the creation

of a profitable and sustainable domestic biogas market. Although stakeholders were

unanimous in their choice of the Chinese fixed dome biogas digesters over the other

types of digester, the study has shown that the cost of the fixed dome digester, which

is even cheaper than the alternatives, appears to be too high and unaffordable to

households in the target market. This calls for intensification of R&D activities to

either bring the cost down or come up with a cheaper but durable alternative that

will be affordable without compromising on its quality.

However, the study has revealed that none of the existing science/energy research

institutions identified in section 5.1.2 has an on going research and development

programme on biogas technologies. In view of the fact that the private sector will not

be willing to fund such research programme, public resources will have to be relied

upon to support R&D in established research institutions. Technology transfers from

countries like China, India, Tanzania, etc where prices of the products are lower than

Ghana can also be pragmatically pursued in lieu of new research that could be more

expensive.

45

6.2 Design and Construction

6.2.1 Technical Experts

The market diffusion of biogas systems on a large scale will require a pool of technical

experts and/or institutions capacitated to deliver quality installations and post

installation services on demand. As evident from section 5.3.2, there exist limited

number of private companies involved in the design and construction of biogas plants

in Ghana. Majority of these companies when interviewed were of the view that they

have enough technical capacity to handle any increases in demand for the biogas

digesters. They argue that they have trained enough technicians to supervise the

skilled artisans (masons, carpenters, etc) who will be and are being used in the

construction of the digesters and since masons and carpenters abound through out the

country, they do not think availability of manpower could be a constraint to large

scale commercialisation of the biogas technology.

Experience from countries like Nepal and Kenya has shown that slightly more

number of private firms than we do have at the moment need to be established to

ensure constant product and service availability as well as quick turnaround time.

Therefore more biogas-related businesses will have to be assisted to be set up while at

the same time providing support to existing companies to expand their capacity to

become significant players capable of producing several hundreds of biogas systems

within a year. In addition comprehensive training programmes for artisans and

technicians should be designed and organised to ensure the availability and readiness

of skilled labour as and when needed.

6.2.2 Availability of construction materials

Interviews with stakeholders confirms that with the exception of gas metres and gas

balloons, the rest of the materials used in the construction of biogas such as cement,

blocks, bricks and pipes are generally available on the Ghanaian market. However,

about 95% of these materials are produced in the southern industrial cities like Accra,

Tema and Takoradi. This means that construction materials becomes expensive the

farther one moves from the major production centres. For example, the cost of a bag

of cement in the Northern or Upper Regions could be about three times higher than

the price pertaining in Accra. In view of the fact that the price differential is due to

transportation charges (usually road haulage), there appears to be very little one can

46

do about increasing project cost as one moves further up north the country from the

south. Having said that, it should be noted that the transportation charges could be

reduced significantly if more construction materials are to be hauled per trip to any

installation site, and. bulk haulage makes economic sense only when there is bigger

demand for the digesters.

6.2.3 End-use Appliance

Most Ghanaian homes and commercial restaurants use round-base pots and large pots

that are usually not compatible with the western type of stoves. Customized stoves

(biogas cookers in this case) for the Ghanaian household will therefore be useful for

the successful promotion of biogas digesters. The local manufacture of other enduse

appliances and accessories such as gas lamps, gas valves, slurry mixers and water

drains will also be crucial for commercialisation of biogas in Ghana. The survey

identified GRATIS Foundation15,Endurance Metal Works and a network of local

metal artisans involved in the fabrication of stoves and other equipments in the

surveyed regions as potential institutions that could be relied on to fabricate and build

the above listed component parts and appliances.

6.3 Monitoring and Maintenance

Guaranteed after sales service by service providers is key to the success of the biogas

technology. The study has indicated that although there exists a handful of

construction companies in Ghana, these companies are mainly located in Accra the

national capital and normally do not provide after-sales support. This makes it

expensive for service providers to undertake routine maintenance and repairs away

from Accra leading to the break down of most systems. To ensure the successful

market diffusion of biogas in Ghana the construction firms will need to have a

presence close to the beneficiaries to facilitate regular visits when complaints are

lodged by end-users. In addition, the construction companies will have to offer

routine maintenance programmes and guarantees spanning a reasonable number of

years on the plant, pipes, fittings and appliances.

15 GRATIS Foundation – GRATIS Foundation is a government supported institution that trains technicians, adept in

technical construction and also provide service. To accomplish its mandate, GRATIS established the Regional Technology

Transfer Centres (RTTCs) in nine regions of Ghana to transfer appropriate technologies to small-scale industrialists.

47

6.4 Financing Domestic Biogas Systems

Loan and credit schemes for supporting potential end-users who cannot afford to

make upfront payment for the biogas system is important for the successful

commercialisation of biogas in Ghana. Results of the assessment of households‟ ability

to pay vis-à-vis their incomes and expenditure indicate that most potential users may

not be able to make upfront payment for the system. This situation calls for measures

such as investment subsidies and credits to facilitate access to the systems by end-

users who can not afford to make upfront purchase. A number of micro-credit

schemes currently operate in Ghana. However most of these micro credit schemes are

special purpose funds skewed towards livelihood (income generation), agriculture and

food security programmes. There is currently no credit/loan scheme for bio digesters

(or for any renewable energy technology for that matter) in the country. The project

will thus have to consider developing a financing facility in collaboration with the

existing micro-finance institutions in the catchments area of the project to enable low

income households overcome the high upfront cost barrier.

Table 6-1 shows the list of Micro Finance Institutions (MFIs) identified in the various

districts and regions covered by the study and a brief summary of the terms and

condition for granting credit to eligible applicants.

Table 6-1: List of Micro-Finance Institutions in Surveyed Regions

Region Rural banks Interest rate Credit institutions Interest rate

Ashanti

Juaben Rural Bank 10-28%pa SINAPI ABA Trust 30-35%pa

Ahafo-Ano

Premier Rural

Bank

20-30%pa Garden City Savings

and Loans Limited

15-30%pa

Atwima Mponua

Rural Bank

36%pa Women‟s World

Banking

3-3.2% flat per

month

Bosomtwe Rural

Bank

26%pa

Northern

MASLOC ≤200GH¢ - 10%

(200‹x‹600) GH¢

- 14.5%

(600‹x‹2000)

GH¢ – 14.5%

(2000‹x‹15000)

GH¢ – 17%

Upper East TRAX/SINAPI ABA 30-35%

48

Gia/Nabio Agro

Forestry Development

Organisation

(GNADO)

30%

Upper West SUSSEC


49

7 BUSINESS MODEL FOR PROMOTING DOMESTIC BIOGAS IN GHANA

7.1 Introduction

As mentioned earlier on, the market for domestic biogas digesters in the potential

rural market segment is virtually non-existent at the moment in Ghana. The potential

customers – rural cattle holding agriculture household are not currently demanding

the product because almost all of them do not know or have not seen the technology

before. Even if the lack of awareness barrier to the technology were to be addressed,

the households are likely to be confronted with another major barrier – the price of

the digesters – which has been found to be on the high side compared to their current

expenditure on cooking fuels and the price of comparable digesters in other countries.

It is inconclusive at the moment whether the supply side of the market has the

capacity to meet the demand for the products as and when it arises. Although private

entrepreneurs active in the sector insist that they have the capacity to respond to any

upsurge in the demand for the products, this assertion has not been tested yet. Thus

from purely business perspective, a market-based approach to the promotion of

domestic biogas in Ghana will be feasible. Do you mean the opposite?

However, the benefits associated with the technology are so enormous that market

forces alone should not be allowed to determine whether and when these benefits are

delivered to household beneficiaries and the nation as a whole. Left to business

entrepreneurs alone, who typically measures performance in profit and return, the

“better life” that the adoption of biogas promises rural household can never be

delivered. Experiences from several Asian countries have shown that widespread

adoption of domestic biogas can best be achieved through the concept of “social

entrepreneurship”. A social enterprise has been defined as „any business venture

created for a social purpose – mitigating/reducing a social problem or a market failure

– and to generate social value while operating with the financial discipline,

innovation and determination of a private sector business” (Alter, 2006). It is against

this background that we recommend the following business model as the way

forward for promoting domestic biogas systems in Ghana.

50

7.2 Proposed Business Model for Ghana

Based on the findings of the feasibility study and experiences from early mover

countries, we recommend the adoption of public-private partnership (PPP)16 as the

strategy for promoting the uptake of domestic biogas plants in Ghana. At the centre of

this model is the private entrepreneur (both business and social), seen as the vehicle

for promoting domestic biogas plants in Ghana. The activities of the private enterprise

in the Ghana biogas market are expected to be conducted on a commercial basis. The

private entrepreneurs will be expected to install biogas plant on demand for an

outright payment or instalment payment (credit sales) depending on the financial

circumstances of the households. The rationale for the proposed model is that the

biogas market in Ghana is at its nascent stage hence requiring pragmatic and well-

targeted public sector interventions to nurture and grow the market. Figure 7-1 gives

a diagrammatic representation of the proposed model showing the linkages between

the various market actors and stakeholders.

SUPPORT SYSTEMS

Technical training

and business dev't

Financing

Biogas

EnterprisesBiogas

systems

NGOs

Stakeholders

FIs/Banks

Rural clients

Gov‟t agencies

Market facilitation

Figure 7-1: Business Model for Promoting Domestic Biogas in Ghana

The proposed model will combine business development, market facilitation and a

menu of financing mechanisms to help build a self sustaining domestic biogas market

16 Under a PPP, the public sector provides some of or all of the financing for a project or programme while the private sector provide the service on a contractual basis

51

in Ghana. The strategy to be used will be to actively engage the existing biogas

construction firms and provide them with the enabling environment and incentives

that will allow them to focus on delivery of the products and services to rural and

peri-urban customers. Enterprise development services will be provided to potential

entrepreneurs in the medium to long-run to help establish more biogas-related

businesses to meet expected increases in demand.

The outcome of the financial analysis in this report points to the need for subsidy to

make the biogas systems affordable to the target beneficiaries. In view of this the

proposed model envisages that public/donor funds will be attracted to finance

institutional development (enterprise development) and the market facilitation

activities that will be required to enable the existing biogas construction firms to

venture into the targeted markets i.e. the rural areas.

The identification and selection of a „champion‟17 tasked with the responsibility of

ensuring institutional development and coordination among all stakeholders will be

extremely important for operationalising the proposed model for Ghana.

Brief Description of Key Components of the proposed business model

Technical Training: The study results show that there exist limited number of

technical persons involved in the design and construction of biogas plants in Ghana.

Another challenge identified during the survey is the absence of opportunities for the

existing biogas construction firms to update their knowledge in plant design and

construction. To facilitate the dissemination of biogas in Ghana, under the proposed

model, conscious effort would be made to provide refresher courses to existing

technicians and also train a critical mass of technicians and artisans in the beneficiary

communities in areas of designing, construction and maintenance of biogas plants.

This part of the business model will also focus on certification of the technicians and

also encourage uniform technical design of the biogas plants to be deployed in Ghana.

The “champion” will need to work with local and international experts such as the

CSIR, KNUST, GTZ, SNV and key service providers to help build and/or deepen the

capacity of existing and new technicians in the design and construction of the plants.

An aspect of the training programme should also target potential owner-operators of

the biogas plants.

Business Development: Another important component of the proposed model is

business development. Under this component, Enterprise Development Support18 will

17 The champion could be an umbrella body of Biogas Construction Firms or an Energy Institution

52

be provided to the respective businesses that are expected to provide various roles

towards the market development and penetration of the product in the targeted

communities. Potential energy entrepreneurs will be identified and groomed to

improve their business management skills and coached and/or mentored to define and

develop their business ideas into bankable business plans. The biogas entrepreneurs

would be expected to work with private and national business development

institutions such as the National Board for Small Scale Industries (NBSSI) and KITE to

execute the business development component of the model.

Financing: Access to finance by end-users is one of the key challenges identified

under this study. This is largely due to the outright purchase scheme (cash and carry)

currently being operated by the existing biogas construction firms. For the proposed

model to work, a financing scheme (such as micro-finance), will be established to

help low income households acquire the biogas digesters and end-use appliances. The

champion/entrepreneurs will need to engage with microfinance institutions, donors

and local banks such as the Agricultural Development Bank, Stanbic Bank and

SINAPI ABA Trust to facilitate flow of end-user financing to the ultimate

beneficiaries. Prospective entrepreneurs wishing to enter the supply chain of the

product will all need to be provided with some credit. To establish a private biogas

company, entrepreneurs will need money. Money is needed to purchase tools,

building materials and to employ people. The start-up capital should/could come from

loans given by the private sector (banks) or micro credit institutions.

Market Facilitation: Another important element of the proposed business model for

Ghana is market facilitation (market development). The proposed model proposes to

use the social marketing approach19 to whip-up demand through awareness creation

and sensitization within the target market. In addition, market regulator/champion

will be required to establish clear and enforceable quality control measures, which

will include monitoring and evaluation schedules to help ensure that end-users get

“value for their money” as well as reducing incidence of failures. Under the model,

market development is expected to be achieved through the multi-sectoral approach

whereby all relevant government institutions such as the MoE, MoFA and MLGRDE

will be brought together to formulate the appropriate policies and regulation that will

catalyze biogas “market take off”. The market facilitation will be undertaken with the

active involvement of Community-based organisations (CBOs) and Non

Governmental Organisations (NGOs) operating in the beneficiary communities as

well as new biogas user associations expected to be formed. The proposed User

18 Training in business management skills, assessment of business feasibility and development of

business plans 19 That is using behavioural change marketing techniques to generate demand for the product

53

Associations will, inter alia, be the main conduit for engendering behavioural change

within households.

54

8 CONCLUSIONS AND RECOMMENDATIONS

8.1 Conclusions

The following key conclusions can be drawn from the feasibility study:

On the basis of the number of cattle owning households and accessibility to

water resources, the technical potential for biogas digesters in the 4 regions is

estimated at a little over 80,000 installations. However, effective demand for

the domestic digesters is estimated to be 10% of the technical potential based

on current demand for the technology as well as the households‟ willingness

and ability to pay for the technology. This potential market has been estimated

based on the assumption that the initial biogas promotion in Ghana will target

cattle owing households whose incomes fall within the two highest income

quintiles (fourth and fifth).

It is however important to highlight that this market does not currently exist

and has to be developed. There is very little or limited in-country experience

with regards to domestic biogas plants as majority of existing biogas plants are

bio-sanitation projects located in urban centres. Consequently, majority of

potential users in the targeted regions are neither aware of the biogas

technologies nor seen one before. But experiences from other developing

countries have shown that this nascent market can be developed with the

right combinations of incentive-based and policy instruments.

The FIRR, which indicates the profitability of investing in the biogas plant

from the perceptive of households, is very much dependent on the investment

cost of the technology. An investment cost of US$2,600 yields a negative

return of -2%, which appreciates to 21% when the cost of acquiring the

digester reduces to US$1,200. Although a FIRR 21% is higher than the

assumed minimum acceptable rate of return of 10% hence justifying the

investment, experiences from other countries indicate that a FIRR of 30% plus

is needed to trigger the interest of low income agricultural households. This

can only be achieved either through a reduction in the investment costs or an

increase in the benefits accruing under investment.

The sensitivity analysis has shown that the FIRR is less sensitive to the

variations in benefits than it is to the cost of investment; a 30% reduction in

investment cost will be enough to return a FIRR of 32% while 40% plus

increase in project benefits will be required to yield the similar FIRR using the

lower investment cost scenario. The financial analysis thus indicates the need

55

for a subsidy to stimulate the demand for domestic biogas. A capital subsidy of

30% on US$1,200 investment in biogas is deemed sufficient to make the

investment in biogas plant worth the household‟s while.

The supply chain for domestic biogas digesters is very weak and typically

characterised by few service providers over concentrated in two main cities in

Ghana. This is due mainly to the lack of demand for product at the moment.

But a lot more biogas related businesses need to be established and existing

ones expanded to be able to effectively meet the expected growth in demand.

There are a host of institutions, ranging from governmental to private sector

through to civil society organisations, that can be rallied together to provide

the technical, institutional, regulatory and financing support needed to

develop and grow the domestic biogas market. There is therefore no need to

set up new institutions to promote the biogas technology.

A strict business approach to widespread deployment of domestic biogas

systems is a non-starter at the moment due to the absence of essential market

ingredients of demand and supply. However, the benefits associated with the

adoption of the technology by households and the society at large provide

enough economic justification for the introduction of policy and financing

mechanisms to help create and grow the latent market.

A business model based on the public-private-partnership (PPP) concept is

recommended for the promotion of biogas digesters among Ghanaian

households. At the heart of the model the private sector is expected to apply

business principles in designing and selling biogas digesters to households who

have been capacitated (through public interventions in the form of subsidies,

etc) to afford the technology on favourable terms. A market facilitation

organisation, preferably a non-governmental organisation, will be required to

play the coordinating role in the implementation of the various components of

the business model

56

8.2 Recommendations

In addition to the main recommendations on the business model, the following

suggestions should be given serious consideration:

There is the need for vigorous policy advocacy to ensure that the development

and promotion of the biogas technology is brought into mainstream energy

policy. This will help secure the needed political support for the technology.

Although the development of renewable energy resources is a key policy

objective in Ghana, the thrust of the policy is not on biogas – biofuels and solar

energy are the renewables being considered at the moment. Meanwhile, LPG

is still being promoted as a substitute for woodfuels. However, the penetration

rate for the fuel is low and is completely unavailable in rural areas. As prelude

to recommended policy advocacy, a comprehensive comparative study

showing the relative costs and benefits of biogas technology vis a vis those of

LPG should be carried out and the results disseminated through say a national

workshop on biogas. This study will most likely reveal that it will be cost-

effective for the government to promote biogas as substitute for woodfuel in

rural areas due to the many other benefits of the biogas technology.

Government can then limit its LPG promotion campaign to the urban areas

where the level of penetration is still very low.

The Institute of Industrial Research (IIR), working in collaboration with the

KNUST and other private biogas companies, should be commissioned to

conduct research to determine the most appropriate and cost-effective design

for the biogas digesters to be deployed in the targeted market. The general

consensus appears to tilt the scale in favour of the 6m3 Chinese fixed dome as

the cost-effective model to be adopted. However, it has been established that

this type of digester is too expensive to build from the standpoint of the rural

customers. If the suggested research confirms the fixed dome digester to be the

best option, then the technology must be subjected to further research and

development to improve the design so as to lower the cost without

compromising on output, reliability and durability.

Same comments as I made earlier regarding consumer desire for variety and

choice

A comprehensive training programme should be put in place to properly train

those to be responsible for constructing, operating and repairing the plants.

57

The training programme should be centred on the practical skills required for

the construction and everyday operation and should be opened to potential

owner-operators, artisans such as masons and plumbers, among others. A short

course on anaerobic digestion could also be added to the curriculum of

engineering and technical students in the Polytechnics and the Technical

Institutes to help train middle level manpower to support the deployment of

the technology.

A national programme to promote biogas should be packaged as a CDM project

for which Certified Emissions Reductions could be earned. Funds coming

through the CDM window should be used to support any of the financing

mechanisms to be established under the initiatives

All the recommendations made show clearly that there is an urgent need for a

„champion‟ who will, inter alia, engage all stakeholders to ensure that a

concerted national effort on biogas is initiated and implemented.

58

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60

Annexure

Annex 1: Study Methodology

Selection of Study Areas

Quantitative analysis of the Fourth Round of the Ghana Living Standards Survey

(GLSS4), which covered approximately 6,000 households, was conducted to help

delineate the physical area(s) of high market potential. The information from the

GLSS 4 was supplemented with information from the Veterinary Department of the

Ministry of Food and Agriculture (MOFA) and the Food and Agriculture Organisation

(FAO) to delineate study areas.

Based on the results of the analyses, a number of districts were selected in the Upper

East, Upper West, Northern and Ashanti Regions. A key criterion used in the

selection of districts in the three northern regions was the cattle and piggery holding

per household with emphasis on the holding per rural household.

Sampling Technique

Both probabilistic and non-probabilistic sampling methods were adopted. In the three

northern regions, a combination of simple random and purposive sampling methods

was used. This was due to the scattered nature of the household in the regions.

Household units in the Ashanti Region were selected using purposive sampling.

Key Informant Interviews

A number of key stakeholders (both existing and potential) were identified and

interviewed as shown in Table A-1 below.

Focus Group Discussions (FGDs)

A total of 6 focus group discussions (2 discussion groups per community) involving a

total of 45 livestock holding households were held in three additional communities

selected at random in the three northern regions. These communities, which were

not covered in the household surveys, are Sang in the Yendi District in the Northern

Region, Wiaga in the Builsa District in the Upper East Region, Sabuli in the Jirapa

District in the Upper West Region.

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Table A- 1: List of Experts and Institutions Interviewed

Key informant Institution Main Areas of Inquiry

Existing NGO German Technical Cooperation The extent of involvement in biogas promotion,

feasibility studies or dissemination

Potential NGOs New Energy, Netherlands

Development Organisation,

KITE, TRAX, SEND

Foundation

Capacities for promoting and supervising biogas

initiatives in the rural communities

Technical experts GRATIS Foundation Technical and man-power capacity in the

installation and provision of after-sales service

Endurance Metal Works “

A pool of small scale licensed

technicians

“

Alternative Energy

Providers

Charcoal sellers Availability and accessibility to consumers, the cost

factor

Firewood sellers “

LPG distributors “

Experts in Biogas

technologies

Hon. Kwame Ampofo History of biogas technologies in Ghana

Wisdom Togobo, MoEN/REES “

BTWAL – Dr. Idun “

Dr. Hagan, IIR “

Hypolyte Pul “

Dr. Ben Ayorelere – UDS The animal husbandry system in the 3 northern

regions

Prof. Abeeku Brew-Hammond,

KNUST

Biogas Technologies

Mr. Ahenkora, BCL

Prof. Coleman, CSIR

Mr. Martinson, UNIRECO

Dr. Aklaku, KNUST

Installation sites Five (5) installation sites in the

4 regions – Appolonia,

Okushibli, Nestle Ghana,

Tamale Regional Hospital,

Tamale West Hospital, Kumasi

Abattoir

Type of model adopted, status of systems, lessons

learnt in the operation and maintenance of the

digesters

Stakeholder Analyses

An analysis of stakeholders in the biogas sub-sector was also carried out to highlight

the interests and influence of various stakeholders as well as the capacity and

effectiveness of established institutions to provide the requisite support for the

creation of the biogas marketplace. Stakeholders identified include technical experts,

62

government institutions, research institutions, financial institutions and civil society

organisations.

Training and Pre-testing

The survey instrument was developed in consultation with the Shell Foundation and

a market research consultant. The questionnaire interviews were used, inter alia, to

elicit the following information:

Demographic profile of selected communities

Socio-economic profile (including income levels) of sample households

Current forms of energy used for cooking and their respective prices

Monthly household expenditure on cooking fuels

Supply channels and availability of cooking fuels

Type and availability of end-use cooking appliances

Fuel Use patterns and availability of substitutes in the communities

Knowledge about biogas and acceptability of technology

Willingness and ability of pay for the technology

There was a 2-day training of field assistants which consisted of familiarisation visits

to some installation sites, and a day‟s in-house training in understanding and

administration of questionnaire. The survey instruments were tested to assess their

suitability, effectiveness, accuracy, clarity and timing at Okushibli, a major cattle

holding community in the Greater Accra Region. Feedback and observations from the

pilot survey was used to finalise the questionnaire.

Fieldwork

The research team consisted of researchers with backgrounds in development

planning, research and marketing. The field work covered the Northern, Upper East,

Upper West and the Ashanti Region. It was undertaken from 15th October to 10th

November 2007, spanning a total of 27 days. A maximum of seven days was spent in

each region. The survey within the seven days consisted of the household survey,

focus group discussions in livestock holding communities, visits to dysfunction and

functioning installation sites, interview with alternative energy providers,

identification and interview of existing and potential technical experts, identification

and interview of existing and potential non-governmental agencies, and identification

and interview of Micro Finance Institutions (MFIs). Interviews were also conducted

with some biogas experts and key informants who had been involved in isolated past

biogas initiative or had certain vital information that would inform the development

of the biogas sub-sector.

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Data Analysis

The main unit of analysis was the livestock holding household. The computer

packages SPSS and Excel were used for data entry and analyses. Information from

focus group discussions and key informant interviews were used in the absence of or

to support the quantitative data.

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Annex 2: Biogas Initiatives in Ghana

Table A- 2: Catalogue of Known Biogas Initiatives in Ghana

No. Beneficiary Project Type Digester Type Plants

Capacity

Year

Constructed

Construction

Company

Current Status

HEALTH

1 St. Dominic

Catholic Hospital

Effluent/sewage

treatment

Fixed dome with separate

gas balloon

280m³ (5

Plants)

1994 Environment

Technology Ltd.

(ETL)

Operational

2 Holy family

Hospital, Nkawkaw

Effluent/sewage

treatment


gas balloon

120m³ (2

Plants)

1994 ETL Operational

3 Battor Catholic

Hospital

Effluent/sewage

treatment


gas balloon

240m³ (4

Plants)

1995 ETL Operational

4 Tamale Regional

Hospital

Effluent/sewage

treatment

Camartec Fixed dome type Twin 60m³ 2001 Biogas

Technologies

West Africa Ltd.

(BTWAL)

5 Tamale West

Hospital

Construction of

Biolatrine

Sewage treatment plant 12 seater

with a

40m³

digester

2002 BTWAL In use but gas just

in storage

6 Mampong Hospital Effluent/sewage

treatment

Camartec Fixed dome 2002 UNIRECO operational

7 Koforidua Regional

Hospital

Effluent/sewage

treatment

Sewage Treatment Plant

80m³ 2004 BTWAL operational

8 Accra Psychiatric

Hospital

Sewage system

rehabilitation

Sewage Treatment Plant Twin 50m³ 2003 BTWAL Non operational

EDUCATION

9 Dept. Animal

Science, KNUST

effluent waste

treatment

Camartec fixed dome 50m³ 1999 ETL operational

No. Beneficiary Project Type Digester Type Plants Year Construction Current Status

65

Capacity Constructed Company

10 Tema East Basic

Exp. School

Construction of

Biolatrine

Camartec fixed dome 30m³ 2002 BTWAL operational

11 Ofori-Panin Sec.

School

Biolatrine Camartec fixed dome 2002 UNIRECO operational

12 Tetrem Sec. School Biolatrine Camartec fixed dome 2002 UNIRECO operational

13 Aburi Girls School Biolatrine Camartec fixed dome 2002 UNIRECO operational

14 Valley View

University

Sewage treatment Camartec fixed dome 78.3m³ 2003 BTWAL operational

15 Abdullam

Orphanage, Obuasi

Biolatrine Camartec fixed dome 20m³ 2001 BTWAL operational

16 Children

Orphanage,

Prampram

Biolatrine Camartec fixed dome 50m³ 2004 BTWAL Operational

17 Garden City Special

School

Biolatrine Fixed dome with seperate

gas balloon

2004 ETL Not operational

18 UCEW, Winneba Biolatrine Sewage Treatment Plant 30m³ 2006 UNIRECO operational

19 GIMPA, Legon Sewage treatment

rehabilation


balloon

BTWAL operational

20 Pope John‟s School

and Seminary,

Koforidua

Sewage and kitchen

waste treatment

Puxin biodigester 60 m³ 2007 Beta

Construction

Not operational

INDUSTRY

21 Ejura Abattoir

House

effluent waste

treatment


gas balloon

ETL operational

No. Beneficiary Project Type Digester Type Plants

Capacity

Year

Constructed

Construction

Company

Current Status

22 Kumasi Abattoir effluent waste

treatment

sewage treatment plant ETL Still under

construction

23 Nestle Ghana Ltd. Sewage system

rehabilitation

Sewage Treatment Plant Twin 60m³ 2004 BTWAL Not operational

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24 Kotoka

International

Airport

Sewage system

rehabilitation

Puxin digesters for

sewage treatment

60m³ 2007 Beta

Construction

Under

construction

25 Office Complex,

Dome

effluent waste

treatment

Puxin biogas digesters 40m³ 2007 Beta

Construction

operational

REAL ESTATE DEVELOPMENT

26 Trasacco Valley

Estates

Sewage and kitchen

waste treatment

Camartec fixed dome 4 plants-

260m³ total

vol.

2002 BTWAL operational

27 AngloGold Ashanti Sewage/Effluent

treatment

Camartec fixed dome 14 plants

with total

volume of

886m³

2000 BTWAL operational

HOTELS

28 Airport West

Hospitality, Accra

Sewage/Effluent

treatment

Camartec Fixed dome 50m³ 2006 BTWAL operational

29 Ntiamoah Hotels -

Agona Swedru

Sewage/Effluent

treatment

Puxin biodigesters 30m³ 2007 Beta

Construction

operational

30 Ntiamoah Hotels –

Akyem Oda

Sewage/Effluent

treatment

Puxin biodigesters 30m³ 2007 Beta

Construction

operational

COMMUNITY/DOMESTIC PROJECTS

35 Guinness- Kaasi

Project

Biolatrine Camartec Fixed dome 100m³ 2005 ETL operational

32 Jisonayilli, N/R Community lighting Camartec fixed dome 1987 RESDEM Not operational

31 Apollonia

community

Community lighting

project

Floating Drum 10 plants,

total vol. of

500m³

1987 Global

Renewable

Energy Services

(GRES)

operational

34 Sege- Sokorpe 8-seater biolatrine Camartec Fixed dome 30m³ 2002 GRES operational

32 Jisonayilli, N/R Community lighting Camartec fixed dome 1987 RESDEM Not operational

33 Abeman/ 16-seater biolatrine Camartec Fixed dome 40m³ 2000 BTWAL operational

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Oshiuman

36 Okushibli – 5

installation in 5

houses

Biodiegsters for

household cooking

Camartec fixed dome 50m³ GRES operational

37 Ankaful Prisons Biolatrines Sewage treatment plants GRES ongoing

PRIVATE DOMESTIC INSTALLATIONS

38 Dr. E.N. Mensah, of

Tema

Effluent and kitchen

waste treatment


39 Mr. Kofi Ayim,

Tema


waste treatment


40 Mr. Ransford

Tetteh


waste treatment


41 Mr. Bonfah of

Accra


waste treatment


42 Mr. Quainoo, Accra Effluent and kitchen

waste treatment


43 Private residence

Nungua Accra,


waste treatment

Puxin fixed dome 10m³ 2006 Beta

Construction

operational


Taifa, Accra


waste treatment

Puxin fixed dome 10m³ 2006 Beta

Construction

operational

45 New Legon –

Hostel Apartment


waste treatment

Puxin Fixed dome 40m³ 2007 Beta

Construction

operational

46 Private residence,

Achimota


waste treatment


Construction

operational


Tema, Com. 18


waste treatment


Construction

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Annex 3a: Cost Breakdown of Fixed Dome Digesters

COST BREAKDOWN FOR A 6M3 HOUSEHOLD BIOGAS DIGESTER COST BREAKDOWN FOR A 10M3 HOUSEHOLD BIOGAS DIGESTER

Material Cost Unit Quantity Unit Cost Total Cost Unit Quantity Unit Cost Total Cost

Bricks/blocks piece 1500 0 225 Bricks/blocks piece 2800 0 420

Blocks piece 100 1 65 Blocks piece 160 1 104

Cement (bags) bags 35 10 350 Cement (bags) bags 48 10 480

Sand -Smooth trip 1 80 80 Sand -Smooth trip 1 80 80

Sand Rough trip 1 80 80 Sand Rough trip 1 80 80

Stone chippings trip 1 16 16 Stone chippings trip 1 16 16

Enamel paint litre 2 20 40 Enamel paint litre 3 20 60

AC pipe 6" piece 1 40 40 AC pipe 6" piece 1 40 40

GI pipe 3/4"x12" piece 1 8 8 GI pipe 3/4"x12" piece 1 8 8

iron Rod ton 0.5 70 35 iron Rod ton 0.7 70 49

Wawa Board piece 10 7 65 Wawa Board piece 10 7 65

Wawa 2x4 piece 6 5 27 Wawa 2x4 piece 6 5 27

Odum 2x6 piece 2 9 18 Odum 2x6 piece 2 9 18

Nails box 1 17 17 Nails box 1 17 17

Gas piping system Various 1 120 120 Gas piping system Various 1 150 150

Stove piece 2 16 32 Stove piece 3 16 48

lamp piece 2 7 14 1,232 lamp piece 3 7 21 1,683

Labour Labour Days No. of personUnit Cost Total Cost Labour Days No. of person Unit Cost Total Cost

Clearing of site 1 2 7 14 Clearing of site 1 2 7 14

Escavation 2 3 7 42 Escavation 3 3 7 63

Mason 18 2 12 432 Mason 23 2 12 552

Capenter 4 1 12 48 Capenter 4 2 12 96

Steel bender 1 1 10 10 Steel bender 2 1 10 20

Labour unskilled 18 2 7 252 Labour unskilled 28 2 7 392

Supervisor 15 1 20 300 1,098 Supervisor 25 1 20 500 1,637

Others Other

Transport/mobilization 1 1 100 100 Transport/mobilization 1 1 150 150

Woorking Tools 1 1 120 120 Working Tools 1 1 140 140

water Container/supply 1 50 50 270 water Container/supply 1 60 50 340

Total Cost 2,600 3,660

Source: REES, 2007

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Annex 3b: Cost Breakdown of Fixed Dome Digester

10m3 Fixed Dome Digester

Component Quantity Total Cost GH¢

Bricks 850pcs 340.00

Blocks 5” 20pcs 14.00

Cement 20bags 170.00

Sand 5m3 60.00

Chippings 5m3 80.00

6mm Iron Rod 5pcs 15.00


Binding Wire “ 5.00

Pressure Gauge 1no. 120.00

Piping 300.00

Wawa Board 6pcs 30.00

2”x4” Wood 8pcs 28.00

Total 1199





Sand 5m3 60.00

Chippings 5m3 80.00



Binding Wire 5.00


Piping 280.00


2”x4” Wood 6pcs 21.00

Total 1071.5





Sand 5m3 60.00

Chippings 5m3 80.00



Binding Wire 5.00


Piping 260.00


2”x4” Wood 6pcs 21.00

Total 997.5

Source: UNIRECO, 2008

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Annex 3c: Cost Breakdown of 10m3 Fixed Dome Digester

Component Quantity Total Cost (US$)

Bricks/blocks 1000 537.63

Cement (bags) 30 322.58

Sand –Smooth/ Rough 2 258.06

Stone chippings 1 150.54

Enamel paint(gal) 1 37.63

Pipings(8in dia pressure

pipe) 1 86.02

iron Rod(1/2in for slaps) 6 48.39

Wood(8pcs of 2in x 4in

scantlings, 10pcs of wawa

boards) 1 104.3

Nails(lbs) 8 6.9

Gas piping components(gas

valves, pipes, T‟s, elbows,

sockets etc 1 82

Stove(single burner) 1 32.26

lamp (converted pressure

lamps) 1 69.89

TOTAL 1736.2

Source: IIR, 2008

KITE Report Biogas Ghana 2008

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