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FEASIBILITY STUDY REPORT ON DOMESTIC BIOGAS IN GHANA REVISED DRAFT

Submitted by KITE to the Shell Foundation

March, 2008

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 1.2 1.3 1.4 1.5 2 BACKGROUND TO THE STUDY ...................................................................................................... 1 OBJECTIVES ................................................................................................................................. 3 RESEARCH METHODOLOGY ......................................................................................................... 4 THE SCOPE OF THE STUDY ........................................................................................................... 4 BRIEF PROFILE OF HOUSEHOLDS .................................................................................................. 5

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

BIOGAS TECHNOLOGIES IN GHANA .......................................................................................15 3.1 3.2 3.2.1 3.2.2 3.2.3 3.2.4 3.3 3.4 3.5 HISTORICAL OVERVIEW ..............................................................................................................15 TYPES OF BIOGAS DIGESTERS IN GHANA ....................................................................................16 The Floating Drum Digester .................................................................................................16 The Fixed Dome Digester ......................................................................................................17 The Puxin Biogas Digester ....................................................................................................19 Conclusion .............................................................................................................................20 BIOGAS SERVICE PROVIDERS ......................................................................................................20 THE COST OF BIOGAS DIGESTERS ...............................................................................................21 LIKELY CHALLENGES TO BE FACED BY THE BIOGAS INDUSTRY ..................................................23

MARKET POTENTIAL OF BIOGAS IN GHANA .......................................................................24 4.1 4.1.1 4.1.2 4.2 4.2.1 4.3 4.4 4.5 TECHNICAL POTENTIAL OF BIOGAS.............................................................................................24 Resource Availability .............................................................................................................24 Access to Water .....................................................................................................................27 WILLINGNESS AND ABILITY TO PAY ...........................................................................................28 Willingness to Adopt and Pay for Biogas ..............................................................................28 ABILITY TO PAY FOR BIOGAS PLANT ..........................................................................................30 FINANCIAL ANALYSIS ..................................................................................................................34 ECONOMIC ANALYSIS .................................................................................................................37

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

ASSESSMENT OF THE SUPPLY CHAIN.....................................................................................44 6.1 6.2 RESEARCH AND DEVELOPMENT ..................................................................................................44 DESIGN AND CONSTRUCTION ......................................................................................................45

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 7.2 8 INTRODUCTION............................................................................................................................49 PROPOSED BUSINESS MODEL FOR GHANA ..................................................................................50

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

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List of Figures
Figure -1: Map of Ghana Showing Administrative Regions................................................................ 7 2 Figure -3: Electrification Trends in Ghana ............................................................................................14 2 Figure -2: Schematic Drawing of Chinese Fixed Dome (Left) & Completed CFD Digester in 3 Accra .............................................................................................................................................................18 Figure -3: CFD Digester under Construction (left) and CFD Being Repaired (Right) (Courtesy 3 REES) ............................................................................................................................................................19 Figure -4: Set up of Puxin Digester (left) Schematic Description of Puxin Slurry-based Digester 3 (right) ............................................................................................................................................................19 Figure -5: Construction of 10m3 Puxin Digester at Private Residence in Accra (Courtesy Beta 3 Construction Ltd) .......................................................................................................................................20 Figure -2: Sensitivity of FIRR to Price of Biomass ................................................................................36 4 Figure -3: Sensitivity of FIRR to Subsidy ...............................................................................................37 4 Figure -1: Business Model for Promoting Domestic Biogas in Ghana ..............................................50 7

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List of Acronyms and Abbreviations

ADB AIF AREED ARI CSIR CWSA CSO DANIDA DfID FGD EC EIRR EPA FAO FIRR GAMA GCSS CDM GDP GHG GIMPA GNADO GPOBA GPRS GLSS GNA GoG GRATIS GSS GTZ HIPC IAP ICT IDA IIR ITTU KfW KITE KNUST KVIP LPG African Development Bank Agriculture Investment Fund African Rural Energy Enterprise Development Animal Research Institutes Council for Scientific and Industrial Research Community Water and Sanitation Agency Civil Sector Organisation Danish International Development Agency Department for International Development Focus Group Discussion Energy Commission Economic Internal Rate of Returns Environmental Protection Agency Food and Agriculture Organisation Financial Internal Rate of Returns Greater Accra Metropolitan Authority Garden City Special School Clean Development Mechanisms Gross Domestic Product Green House Gasses Ghana Institute of Management & Public Administration Gia/Nabio Agro Forestry Development Organisation Global Partnership on Output Based Aid Growth and Poverty Reduction Strategy Ghana Living Standard Survey Ghana News Agency Government of Ghana Ghana Regional Appropriate Technology Industrial Service Ghana Statistical Service German Technical Cooperation Highly Indebted Poor Countries Indoor Air Pollution Information & Communications Technology International Development Agency Institute of Industrial Research Intermediate Technology Transfer Units German Bank for Reconstruction Kumasi Institute of Technology, Energy and Environment Kwame Nkrumah University of Science and Technology Kumasi Ventilated Improved Project Liquefied Petroleum Gas

MASLOC MDG MFI MLGRDE MoE MOFA MOFEP NDPC NGO NPO RTIP RTTC SARD SEND SMIDO SNV SPSS UDS UER UNDP UN-ESCAP US UWR VALCO WFP

Micro Finance and Small Loans Centre Millenium Development Goals Micro Finance Institutions Ministry of Local Government, Rural Development and Environment Ministries of Energy Ministry of Food and Agriculture Ministry of Finance and Economic Planning National Development Planning Commission Non Governmental Organisation Non Profit Organisation Roots and Tuber Improvement Program Regional Technology Transfer Centres Sustainable Agriculture and Rural Development Social Enterprise Development Suame Magazine Industrial Development Organisation Netherlands Development Organisation Statisitical Package for Social Scientist University for Development Studies Upper East Region United Nations Development Programme United Nations Economic and Social Commission for Asia and the Pacific United States Upper West Region Volta Aluminium Company 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 marketbased, 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 countrys 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 wouldnt meet everyones 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 worlds 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 worlds 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 familys 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 Health 1, 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.

See April 1 issue of the Journal Science

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.

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; To assess competing sources/supply chains of other energy sources for the target market; To calculate both the Financial and Economic Internal Rate of Return (FIRR/EIRR) on the biogas plant;
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ii. iii.

iv.

v.

vi.

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; 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. To design a marketing and financial strategy for pursuing an enterprisecentred 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 NGOs such SNV, NewEnergy, etc and technical institutions such as GRATIS Foundation, IIR, Endurance Works, etc were

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 Upper West District Wa East Nadowli Sissala West Sissala East Upper East Garu-Tempane Builsa Communities Bulenga Bussie Fian Jeffisi Kong Wallembele Kugzua Batuisa Buadam Fumbisi Doba Chiana Chuchuliliga Tilli Kapilbe Bussunu Monpani Kandin Nasia Fufulso Lungbunga Akropong Nsenie Onwe Mabang Twindurase 26 No. of Respondents 14 11 4 11 6 15 11 2 5 9 6 12 8 13 4 8 5 5 10 9 7 4 6 13 5 3 206

Kassena-Nankana

Northern

Bawku West West Gonja

Ashanti

Total

Zabzugu West Mamprusi Central Gonja Tolon-Kungbugu Atwima Nwabiagya Kumasi Metropolitan Assembly Ejisu-Juaben Ahafo Ano North Bosomtwe- Kwanwoma 18

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

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.

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 dIvoire 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 25C, 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 unimodal in the Sudan and Guinea Savannah Zones and bi-modal in all the other zones.
Figure 2-2: Agro-Ecological Zones in Ghana

The 2000 Population and Housing Census, puts Ghanas 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 . 8

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 subsector 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 Crops And Livestock Cocoa Sub-sector Forestry & Logging Fishing Total 22.01 4.81 3.89 4.57 35.27

2001 22.25 4.58 3.92 4.49 35.24

2002 22.43 4.36 3.94 4.42 35.15

2003 22.35 5.77 3.95 4.30 36.38

2004 22.12 7.60 3.98 4.24 37.94

2005 23.8 4.6 3.6 4.1 36.0

2006 23.8 4.7 3.4 4.0 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 countrys 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) Year Species 1980 1990 2000 2002 Cattle 804 1,145 1,302 1,330 Sheep & Goat 3,875 4,242 5,820 6,150 Pigs 379 474 324 310 Poultry 11,500 9,686 20,474 24,251 Total 16,558 15,547 27,920 32.041

2006 2,750 13,297 1,463 22,984 40,494

Source: FAO, 2005a and GSS, 2008

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

Ghanas 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 Ghanas 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 Residential Commercial & Service Industrial Agriculture and Fisheries Source: Energy Commission, 2005

2000 90.4 77.4 66 3.6

2001 90.5 78.5 62 3.9

Year 2002 90.3 79.2 61 4.0

2003 90.0 78.9 61 4.2

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 Ghanas energy balance has averaged approximately 71% between 1974 and 2001. 10

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, Ghanas 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 11

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 DIvoire. 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 Cte dIvoire 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 Ghanas 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
12

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 Fuel Type (%) Non-Woodfuels LPG Kerosene Agric Others residue 7.5 1.3 1.2 1.1 6.3 4.6 29.4 2.3 4.6 2.7 8.5 0.7 0.2 0.0 0.2 0.3 0.9 2.1 0.4 0.5 0.3 0.7 0.1 0.2 32.8 0.0 0.1 0.2 0.4 0.2 1.3 0.7 0.1 0.2 0.3 0.6 0.2 0.1 0.6 0.5

Region

Electricity

Woodfuels Firewood Charcoal

Ashanti Northern Upper East Upper West Western Central Gt. Accra Volta Eastern Brong-Ahafo Ghana

0.6 0.1 0.4 0.0 0.2 0.1 0.3 0.1 0.3 0.1 0.3

50.6 81.8 55.0 80.2 65.2 63.1 7.2 73.2 71.2 77.6 56.6

39.9 16.4 10.4 18.2 27.3 31.1 59.8 23.7 22.9 18.5 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 Fuel Type (%) Gas Genset Battery 0.1 0.0 0.1 1.3 0.1 0.1 0.1 0.3 0.1 0.0 0.0 0.1 0.2 0.1 0.1 0.1 0.0 0.0 0.1 0.0 0.0 0.6 0.1 0.0 0.0 0.1 0.1 0.0 0.0 0.1

Region Ashanti Northern Upper East Upper West Western Central Gt. Accra Volta Eastern Brong-Ahafo Ghana

Grid Electricity 58.5 28.0 14.0 17.0 49.3 46.1 78.9 35.4 41.0 41.9 48.9

Kerosene 40.9 71.1 84.7 78.2 50.2 53.3 18.7 64.2 58.7 57.6 50.1

Candles 0.3 0.1 0.2 0.2 0.3 0.7 0.0 0.1 0.1 0.2

Others 0.0 0.7 0.7 4.3 0.0 0.0 0.3 0.1 0.1 0.3 0.3

Source: Ghana Statistical Service, 2005

13

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.

Level of Access (%)

100 80 60 40 20 0 1991/92 1998/99

9 30 20 69 78

79 49 27

41

2005/06

Year Rural Urban Total

Figure 2-2: Electrification Trends in Ghana

14

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. Ghanas 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) 15

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

16

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.

17

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.

CAMARTEC is the acronym for Centre for Agricultural Mechanisation and Rural Technology based in Arusha, Tanzania. 18

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)

19

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.

20

Table 3-1: Profile of Selected Biogas Service Providers Company Date Workforce Type of Biodigester Established (Full Installed Time) Biogas Engineering Ltd 2002 6 CAMARTEC fixed dome type, and effluent treatment plants Biogas Technologies West 1994 148 Fixed dome and effluent Africa Limited (BTWAL) treatment plants RESDEM 1996 Mostly bio-latrine digesters UNIRECO 2001 5 Mostly bio-latrine digesters Global Renewable Energy 1996 4 Traditional Fixed Dome Services with external gas holders Beta Civil Construction 1975 25 Puxin Biogas Digesters Ltd. Renewable Energy and 2002 Environmental Systems (REES)

Number Digesters Installed 10

of

35 25

20 12

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

21

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$1,200 was quoted by the IIR, which is a division of the Council for Scientific and Industrial Research (CSIR), a public sector institution charging lower rates for labour and project supervision than the two private sector service providers. Table 3-3 also shows significantly different estimates being quoted by REES and UNIRECO, both private sector concerns. As can be seen from Annex 3, the cost differential is attributable to the fact that UNIRECO proposes to use fewer blocks and less costly labour in the construction of the digester.
Table 3-2: Cost Breakdown of 6m Fixed-dome Biogas Digester Name of Company Cost Breakdown (US$) Digester Size

6m
Materials Labour Supervision Other cost Total cost Materials Labour Supervision Others Total cost Materials Labour Institute of Industrial Research (IIR) Supervision Others Total cost Materials Labour Supervision Others Total cost

8m3
1,064 596 298 99 2,056

10m3
1,190 794 298 99 2,382 1,683 1,137 500 240 3,660 1,736 300 100 200 2,336

UNIRECO

Renewable Energy and Environmental Systems (REES)

990 496 199 60 1,745 1,232 798 300 270 2,600 840 180 60 120 1,200 1,938 400 300 48 2,684

1120 240 80 160 1,600

BETA Construction Ltd (Puxin Digesters)

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).

22

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

23

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 nightstabling 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.

Northern Upper West Upper East Ashanti TOTAL

No. of Cattle No. of Cattle Av. Cattle owning Owning Agric. household Households Households 85,142 982,847 98,090 23,645 787,681 28,250 39,441 454,112 47,577 36,355 6,455 4,874 153,102

per

11.5 33.3 11.5 7.5 14.8

2,260,995 180,372 Source: Ghana Statistical Service, GLSS 5 Provisional Results, 2008

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. 24

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; Ghanas 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.

This represent 71% of the theoretical potential 25

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 Farm manure Manure and binding material Dispose off Manure and plastering Manure, binding and plastering Binding material Manure, energy, binding and plastering Total

% respondents 50.5 28.4 8.3 7.8 2.0 1.5 1.5 100

Source: KITE Survey, 2007 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 43. 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.

26

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

Yes No Total

No. of respondents % respondents 200 4 204

98.0 2.0 100

Source: KITE Survey, 2007 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 installations 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

Rural Ashanti 97.4 Northern 74.4 Upper East 89.6 Upper West 88.1 Ghana 83.1 Source: Ghana Statistical Service, 2003

Region

Level of Access (%) Urban 99.3 92.9 92.2 97.0 94.9

Total 98.4 80.2 90 87.7 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

27

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 Has some knowledge Has no knowledge Total

No. of respondents % respondents 12 194 206

5.8 94.2 100

Source: KITE Survey, 2007

not sure 3% in a year 4% in six months 3%

Figure 4-1: Willingness to Switch to Biogas

Not only did the households say they were willing to go in for in three the switch, but an months 23% overwhelming majority (99%) were also willing to pay for the immediately 67% 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
This works up to between US$432 and 1440 for firewood users and $342 and 1140 for charcoal users.
10

28

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 10m 3 digester will be able to provide lighting, its investment costs is higher than that of the 6m 3 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 No. of Willingness to pay respondents Yes 204 No 2 Total 206 Scenario 1 twice current energy bill for maximum of 5 years thrice current energy bill for 5 years 1.5 times more none of the above Total Scenario 2 same price as septic tank (equivalent of US$ 2550) half the price of septic tank one-third the price of septic tank none of the above Total Scenarios 1 and 2 One of the available options None of the above Total

% 99 1 100

8 9 3 175 195

4.1 4.6 1.5 89.7 100

3 1 4 1 9

33.3 11.1 44.4 11.1 100

28 176 204

13.7 86.3 100

Source: KITE Survey, 2007

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Table 4-7: Reasons for Indecision Reasons Expensive may move away more than 3times no cooking fuel expense Total

% 11.9 0.6 0.6 87.0 100.0

Source: KITE Survey, 2007 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

Source: KITE Survey, 2007

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 Source: KITE Survey 2007 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

30

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 6m 3 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 Ashanti Upper West Upper East Northern Total Ashanti Upper West Upper East Northern Total

Min 544 590 487 487 487 725 1,088 1,450 967 725

Household Expenditure (US$) Max Mean 7,789 2,485 7,252 1,807 10,293 2,337 6,727 2,089 10,293 2,145 Household Income (US$) 8,219 3,072 8,461 3,158 12,087 4,580 9670 3,565 12,087 3,695

Std. Deviation 1,565 1,010 1,524 1,425 1,386 1,622 1,888 2,227 2,370 2,275

Source: KITE Survey, 2007 However, these income and expenditure figures cannot be considered as representative of the population at the district, regional or national level because of

31

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$) Male Female Ashanti 1,148 1,110 Northern 1,853 1,254 Upper East 634 583 Upper West 736 421 Ghana 1,410 1,140 Source: GSS 2008, Provisional GLSS 5 Results

Total 1,135 1,692 620 626 1,320

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 32

Options GH 17 for 3 years GH 12.5 for 4 years GH 10 for 5 years Others Total

No. 8 8 65 105 186

% 4.3 4.3 36.0 55.4 100

Source: KITE Survey, 2007 Among the 55% of households indicating repayment modes other than the 3 scenarios presented them, 71% indicated the ability to pay less than GH10 each month to defray moneys borrowed to finance the investment cost, 8% were willing to pay between GH10 and GH20 per month, with 20% willing to pay between GH20 and GH50 as depicted in Table 4-13.
Table 4-13: Other Preferred Repayment Mode

Monthly Payment 1-9 GH 10-20 GH 20-50 GH

No. 75 8 21

% 71 8 20

Above 50 GH
Total

1
105

1
100

Source: KITE Survey, 2007 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

No. of % Response respondents respondents Yes 75 36.4 No 131 63.6 Total 206 100 Source: KITE Survey 2007

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Table 4-15: Cost of durable household product

Statistics cost of product (GH ) Mean 288.6 Minimum 12.0 Maximum 2400.0 Source: KITE Survey 2007

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.
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.
12

34

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$2,600) unless and until there is significant reduction in the investment cost. A minimum of 45% reduction in investment cost will be required under this scenario for the investment to return a yield of 11%, which will still not be attractive to low income households.
Table 4-16: Data for Financial Analysis Parameters Investment Cost Annual Maintenance Cost Subsidy Net Cost Down Payment Loan Amount Annual Loan Repayment Lifetime of Plant Annual Savings Biomass Amount US$ Scenario 2 2,600 52 2,600 260 2,340 738 15years Benefits Unit Cost ($) 0.12 Remarks 2% of Investment Cost

Scenario 1 1,200 24 1,200 120 1,080 341 15years Unit (kg)/hh/yr 2,108

10% Cost

of

Investment

10% interest, 4 year term

Total Annual Benefits (US$) 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.

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).
13

35

FIRR Vs Price of Biomass

50 40
45 25 27 29

FIRR (%)

30 20 10 0 -10 -20
0 12 -6 14 -4 16 -3 20

-1

122

-14

196

209

220

245

269

281

293

369

Benefits 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.

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) .
14

36

FIRR Vrs Subsidy

60 50
56 42 32 20 25 8 13

FIRR(%)

40 30 20 10 0
0 1

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

10%

20%

30%

40%

50%

Level of Subsidy

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 biofertilizer, 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.

37

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 governments 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
38

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
39

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

40

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 Foundations 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. KITEs 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.

41

Table 5-1: Potential NGOs and Possible Roles

Potential NGOs New Energy TRAX

Region Northern Upper East

SEND Foundation Source: KITE Survey 2007

Upper East Region

Suggested Function Supervision and implementation Promotion, liaison between communities and partners MFIs, technical experts 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

42

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.

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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.

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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

45

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.

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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--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 endusers 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 Juaben Rural Bank Ahafo-Ano Premier Rural Bank Atwima Mponua Rural Bank Bosomtwe Rural Bank Interest rate 10-28%pa 20-30%pa Credit institutions SINAPI ABA Trust Garden City Savings and Loans Limited Womens World Banking Interest rate 30-35%pa 15-30%pa

Ashanti

36%pa 26%pa

3-3.2% flat per month

MASLOC

Northern

Upper East

TRAX/SINAPI ABA

200GH - 10% (200x600) GH - 14.5% (600x2000) GH 14.5% (2000x15000) GH 17% 30-35%

47

Upper West

Gia/Nabio Agro Forestry Development Organisation (GNADO) SUSSEC

30%

Source: KITE Survey, 2007

48

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.

49

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 welltargeted 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 Market facilitation

Biogas Enterprises

Biogas systems

Rural clients

NGOs

FIs/Banks Stakeholders

Govt agencies

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
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
16

50

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 champion17 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
The champion could be an umbrella body of Biogas Construction Firms or an Energy Institution
17

51

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
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
18

52

Associations will, inter alia, be the main conduit for engendering behavioural change within households.

53

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
54

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 households 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

55

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 costeffective 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.
56

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.

57

Reference
Ampofo K. 1996: National Biogas Resource Assessment. Ministry of Energy, Ghana Bajgain S and I. Shakya (2005): The Nepal Biogas Support Program: A Successful Model of Public Private Partnership for Rural Household Energy Supply. Ministry of Foreign Affairs, The Netherlands Brew-Hammond A and F. Kemausour (2007): Energy Crisis in Ghana Drought, Technology or Policy. College of Engineering, KNUST Biogas Team, 2007: Biogas for Better Life, An African Initiative Business Plan 2006 2020. A draft/discussion paper Biogas Team, 2007: Biogas for Better Life, An African Initiative. SNV, AGAMA Dekelver G. et al, 2006: Biogas for Better Life, An African Initiative Implementation Plan National Programme on Domestic Biogas in Rwanda. A draft/discussion paper. Kigali, Rwanda Edjekumhene et al (2002): Implementation of Renewable Energy Technologies Opportunities and Barriers. Ghana Country Study, UNEP, Denmark Ghana Living Standards Survey, 1998 1999, Ghana Statistical Service. Ghana Statistical Service (2005): 2000 Population and Housing Census Analysis of District Data and Implications for Planning. Ghana Statistical Service Ghana Statistical Service 2005: 2000 Population and Housing Census of Ghana The Gazetteer 1-3. GSS, Ghana Ghana Statistical Service (2007): Patterns and Trends of Poverty in Ghana 1991-2006. Ghana Statistical Service Haugan, K, et al, 2005: Energy and Development Biomass as an Energy Source in Rural Areas Information and Advisory Service on Appropriate Technology (ISAT-GTZ): Biogas Digest, Volume II and III

58

Interim Poverty Reduction Strategy, 2000 2002, Ghana Statistical Service Livestock Planning and Information Unit: National Livestock Census. MOFA Ghana Maaike S. et al, 2007: A technical feasibility study on the implementation of a biogas promotion programme in the Sikasso region in Mali. ETC Energy, Mali Muller, C. 2007: Anaerobic Digestion of Biodegradable Solid Waste in Low-andMiddle Income Countries: Overview over Existing Technologies and Relevant Case Studies, Eawag Aquatic Research Nhete T.D. & C. Christopher, 2007: Biogas for Better Life, An African Initiative A Synopsis of Lessons from Past and Present Programme to disseminate Biogas Technology in Africa. A draft/Discussion paper Optimal Consultancy Services Limited 2002: The Role of Livestock in Rural Livelihoods in Ghana. MOFA, Ghana, DFID, Ghana Strategic National Energy Plan, 2006 2020, Annex I of IV, Energy Demand Sectors of the Economy. ter Heegde F & K. Sonder, 2007: Biogas for Better Life, An African Initiative Domestic Biogas in Africa, a First Assessment of the Potential and Need, Nigeria, Netherlands UN-ESCAP, 2007: Recent Developments in Biogas Technology For Poverty Reduction and Sustainable Development. UN-ESCAP, Beijing van Nes W.J. et al, 2005: Feasibility of a National Programme on Domestic Biogas in Bangladesh SNV, The Ntherlands Veterinary Service Directorate 2007: Livestock Population. Ministry of Food and Agriculture, Ghana Warwick, H & A. Doig, 2004: Smoke the Killer in the Kitchen: Indoor Air Pollution in Developing Countries, ITDG Publishing, UK Winrock International (2007): Biogas for Better Life, An African Initiative. A CostBenefit Analysis of National and Regional Integrated Biogas and Sanitation Programs in Sub-Saharan Africa. A draft/discussion paper. Winrock International, Denmark

59

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.

60

Table A- 1: List of Experts and Institutions Interviewed Key informant Existing NGO Potential NGOs Institution German Technical Cooperation New Energy, Netherlands Development Organisation, KITE, TRAX, SEND Foundation GRATIS Foundation Endurance Metal Works A pool of small scale licensed technicians Charcoal sellers Firewood sellers LPG distributors Hon. Kwame Ampofo Wisdom Togobo, MoEN/REES BTWAL Dr. Idun Dr. Hagan, IIR Hypolyte Pul Dr. Ben Ayorelere UDS Prof. Abeeku Brew-Hammond, KNUST Mr. Ahenkora, BCL Prof. Coleman, CSIR Mr. Martinson, UNIRECO Dr. Aklaku, KNUST Five (5) installation sites in the 4 regions Appolonia, Okushibli, Nestle Ghana, Tamale Regional Hospital, Tamale West Hospital, Kumasi Abattoir Main Areas of Inquiry The extent of involvement in biogas promotion, feasibility studies or dissemination Capacities for promoting and supervising biogas initiatives in the rural communities

Technical experts

Technical and man-power capacity in installation and provision of after-sales service

the

Alternative Providers

Energy

Experts in technologies

Biogas

Availability and accessibility to consumers, the cost factor History of biogas technologies in Ghana The animal husbandry system in the 3 northern regions Biogas Technologies

Installation sites

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,

61

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 days 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.
62

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.

63

Annex 2: Biogas Initiatives in Ghana

Table A- 2: Catalogue of Known Biogas Initiatives in Ghana No. Beneficiary Project Type Digester Type HEALTH 1 St. Dominic Catholic Hospital 2 3 4 Holy family Hospital, Nkawkaw Battor Catholic Hospital Tamale Regional Hospital

Plants Capacity 280m (5 Plants) 120m (2 Plants) 240m (4 Plants) Twin 60m

Year Constructed 1994

Construction Company Environment Technology Ltd. (ETL) ETL ETL Biogas Technologies West Africa Ltd. (BTWAL) BTWAL

Current Status

Effluent/sewage treatment Effluent/sewage treatment Effluent/sewage treatment Effluent/sewage treatment

Fixed dome with separate gas balloon Fixed dome with separate gas balloon Fixed dome with separate gas balloon Camartec Fixed dome type

Operational

1994 1995 2001

Operational Operational

Tamale West Hospital

Construction of Biolatrine

Sewage treatment plant

12 seater with a 40m digester

2002

In use but gas just in storage

6 7

Mampong Hospital

Koforidua Regional Hospital 8 Accra Psychiatric Hospital EDUCATION 9 No. Dept. Animal Science, KNUST Beneficiary

Effluent/sewage treatment Effluent/sewage treatment Sewage system rehabilitation effluent waste treatment Project Type

Camartec Fixed dome Sewage Treatment Plant Sewage Treatment Plant 80m Twin 50m

2002 2004 2003

UNIRECO BTWAL BTWAL

operational operational Non operational

Camartec fixed dome Digester Type

50m Plants

1999 Year

ETL Construction

operational Current Status

64

10 11 12 13 14 15 16

17 18 19

Tema East Basic Exp. School Ofori-Panin Sec. School Tetrem Sec. School Aburi Girls School Valley View University Abdullam Orphanage, Obuasi Children Orphanage, Prampram Garden City Special School UCEW, Winneba GIMPA, Legon

Construction of Biolatrine Biolatrine Biolatrine Biolatrine Sewage treatment Biolatrine Biolatrine

Camartec fixed dome Camartec fixed dome Camartec fixed dome Camartec fixed dome Camartec fixed dome Camartec fixed dome Camartec fixed dome

Capacity 30m

Constructed 2002 2002 2002 2002 2003 2001 2004

Company BTWAL UNIRECO UNIRECO UNIRECO BTWAL BTWAL BTWAL

operational operational operational operational operational operational Operational

78.3m 20m 50m

Biolatrine Biolatrine Sewage treatment rehabilation Sewage and kitchen waste treatment

Fixed dome with seperate gas balloon Sewage Treatment Plant Fixed dome with separate balloon Puxin biodigester

2004 30m 2006

ETL UNIRECO BTWAL

Not operational operational operational

20

Pope Johns School and Seminary, Koforidua INDUSTRY 21 Ejura Abattoir House No. Beneficiary 22 23 Kumasi Abattoir Nestle Ghana Ltd.

60 m

2007

Beta Construction

Not operational

effluent waste treatment Project Type effluent waste treatment Sewage system rehabilitation

Fixed dome with separate gas balloon Digester Type sewage treatment plant Sewage Treatment Plant

ETL Plants Capacity Year Constructed Construction Company ETL BTWAL

operational Current Status Still under construction Not operational

Twin 60m

2004

65

24

Kotoka Sewage system International rehabilitation Airport 25 Office Complex, effluent waste Dome treatment REAL ESTATE DEVELOPMENT 26 Trasacco Valley Sewage and kitchen Estates waste treatment 27 AngloGold Ashanti Sewage/Effluent treatment

Puxin digesters for sewage treatment Puxin biogas digesters

60m

2007

Beta Construction Beta Construction BTWAL

Under construction operational

40m

2007

Camartec fixed dome

Camartec fixed dome

4 plants260m total vol. 14 plants with total volume of 886m 50m 30m

2002

operational

2000

BTWAL

operational

HOTELS 28 Airport West Hospitality, Accra 29 Ntiamoah Hotels Agona Swedru 30

Sewage/Effluent treatment Sewage/Effluent treatment

Camartec Fixed dome Puxin biodigesters

2006 2007

BTWAL Beta Construction Beta Construction ETL RESDEM Global Renewable Energy Services (GRES) GRES RESDEM BTWAL

operational operational

Ntiamoah Hotels Sewage/Effluent Akyem Oda treatment COMMUNITY/DOMESTIC PROJECTS 35 Guinness- Kaasi Biolatrine Project 32 Jisonayilli, N/R Community lighting 31 Apollonia Community lighting community project

Puxin biodigesters

30m

2007

operational

Camartec Fixed dome Camartec fixed dome Floating Drum

100m

2005 1987 1987

operational Not operational operational

10 plants, total vol. of 500m 30m 40m

34 32 33

Sege- Sokorpe Jisonayilli, N/R Abeman/

8-seater biolatrine Community lighting 16-seater biolatrine

Camartec Fixed dome Camartec fixed dome Camartec Fixed dome

2002 1987 2000

operational Not operational operational

66

Oshiuman

36

Okushibli 5 Biodiegsters for installation in 5 household cooking houses 37 Ankaful Prisons Biolatrines PRIVATE DOMESTIC INSTALLATIONS 38 Dr. E.N. Mensah, of Effluent and kitchen Tema waste treatment 39 Mr. Kofi Ayim, Effluent and kitchen Tema waste treatment 40 Mr. Ransford Effluent and kitchen Tetteh waste treatment 41 Mr. Bonfah of Effluent and kitchen Accra waste treatment 42 Mr. Quainoo, Accra Effluent and kitchen waste treatment 43 Private residence Effluent and kitchen Nungua Accra, waste treatment 44 Private residence Effluent and kitchen Taifa, Accra waste treatment 45 New Legon Effluent and kitchen Hostel Apartment waste treatment 46 Private residence, Effluent and kitchen Achimota waste treatment 47 Private residence Effluent and kitchen Tema, Com. 18 waste treatment

Camartec fixed dome

50m

GRES

operational

Sewage treatment plants Camartec Fixed dome Camartec Fixed dome Camartec Fixed dome Camartec Fixed dome Camartec Fixed dome Puxin fixed dome Puxin fixed dome Puxin Fixed dome Puxin Fixed dome Puxin Fixed dome 8m 12m 8m 10m 10m 10m 10m 40m 10m 10m 2002 2002 2002 2004 2004 2006 2006 2007 2007 2007

GRES BTWAL BTWAL BTWAL BTWAL BTWAL Beta Construction Beta Construction Beta Construction Beta Construction Beta Construction

ongoing operational operational operational operational operational operational operational operational operational

67

Annex 3a: Cost Breakdown of Fixed Dome Digesters

COST BREAKDOWN FOR A 6M 3 HOUSEHOLD BIOGAS DIGESTER Material Cost Bricks/blocks Blocks Cement (bags) Sand -Smooth Sand Rough Stone chippings Enamel paint AC pipe 6" GI pipe 3/4"x12" iron Rod Wawa Board Wawa 2x4 Odum 2x6 Nails Gas piping system Stove lamp Labour Labour Clearing of site Escavation Mason Capenter Steel bender Labour unskilled Supervisor Others Other Transport/mobilization Woorking Tools water Container/supply Total Cost Unit piece piece bags trip trip trip litre piece piece ton piece piece piece box Various piece piece Days 1 2 18 4 1 18 15 1 1 Quantity Unit Cost Total Cost 1500 0 225 100 1 65 35 10 350 1 80 80 1 80 80 1 16 16 2 20 40 1 40 40 1 8 8 0.5 70 35 10 7 65 6 5 27 2 9 18 1 17 17 1 120 120 2 16 32 2 7 14 No. of person nit Cost Total Cost U 2 7 14 3 7 42 2 12 432 1 12 48 1 10 10 2 7 252 1 20 300 1 1 1 100 120 50 100 120 50 COST BREAKDOWN FOR A 10M 3 HOUSEHOLD BIOGAS DIGESTER Bricks/blocks Blocks Cement (bags) Sand -Smooth Sand Rough Stone chippings Enamel paint AC pipe 6" GI pipe 3/4"x12" iron Rod Wawa Board Wawa 2x4 Odum 2x6 Nails Gas piping system Stove 1,232 lamp Labour Clearing of site Escavation Mason Capenter Steel bender Labour unskilled 1,098 Supervisor Transport/mobilization Working Tools 270 water Container/supply 2,600 Unit piece piece bags trip trip trip litre piece piece ton piece piece piece box Various piece piece Days 1 3 23 4 2 28 25 1 1 Quantity Unit Cost Total Cost 2800 0 420 160 1 104 48 10 480 1 80 80 1 80 80 1 16 16 3 20 60 1 40 40 1 8 8 0.7 70 49 10 7 65 6 5 27 2 9 18 1 17 17 1 150 150 3 16 48 3 7 21 No. of person Unit Cost Total Cost 2 7 14 3 7 63 2 12 552 2 12 96 1 10 20 2 7 392 1 20 500 1 1 1 150 140 60 150 140 50

1,683

1,637

340 3,660

Source: REES, 2007

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Annex 3b: Cost Breakdown of Fixed Dome Digester

Component Bricks Blocks 5 Cement Sand Chippings 6mm Iron Rod 12mm Iron Rod Binding Wire Pressure Gauge Piping Wawa Board 2x4 Wood Total Bricks Blocks 5 Cement Sand Chippings 6mm Iron Rod 12mm Iron Rod Binding Wire Pressure Gauge Piping Wawa Board 2x4 Wood Total Bricks Blocks 5 Cement Sand Chippings 6mm Iron Rod 12mm Iron Rod Binding Wire Pressure Gauge Piping Wawa Board 2x4 Wood Total 10m3 Fixed Dome Digester Quantity Total Cost GH 850pcs 340.00 20pcs 14.00 20bags 170.00 5m3 60.00 5m3 80.00 5pcs 15.00 5pcs 37.00 5.00 1no. 120.00 300.00 6pcs 30.00 8pcs 28.00 1199 3 Fixed Dome Digester 8m 700pcs 280.00 20pcs 14.00 17bags 144.50 5m3 60.00 5m3 80.00 4pcs 12.00 4pcs 30.00 5.00 1no. 120.00 280.00 5pcs 25.00 6pcs 21.00 1071.5 6m3 Fixed Dome Digester 650pcs 260.00 15pcs 10.50 14bags 119.00 5m3 60.00 5m3 80.00 4pcs 12.00 4pcs 30.00 5.00 1no. 120.00 260.00 4pcs 20.00 6pcs 21.00 997.5

Source: UNIRECO, 2008

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Annex 3c: Cost Breakdown of 10m3 Fixed Dome Digester

Component Bricks/blocks Cement (bags) Sand Smooth/ Rough Stone chippings Enamel paint(gal) Pipings(8in dia pressure pipe) iron Rod(1/2in for slaps) Wood(8pcs of 2in x 4in scantlings, 10pcs of wawa boards) Nails(lbs) Gas piping components(gas valves, pipes, Ts, elbows, sockets etc Stove(single burner) lamp (converted pressure lamps) TOTAL Quantity 1000 30 2 1 1 1 6 Total Cost (US$) 537.63 322.58 258.06 150.54 37.63 86.02 48.39

1 8

104.3 6.9

1 1 1

82 32.26 69.89 1736.2

Source: IIR, 2008

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