Profitability analysis of family-size Biogas Plant Installation in West Hararghe Zone, Oromia National Regional State, Ethiopia

Abstract Biogas technology, which converts biological waste into energy, is considered as an excellent tool to improve the lives, livelihoods, health, ecosystem and economy. In Ethiopia, biogas technology has been domesticated to improve the rural energy security and household’s income by reducing their dependence on traditional biomass energy and chemical fertilizers. The profitability of biogas installation is rendered doubtful despite its numerous benefits and domestication efforts. Hence, this study aimed at evaluating the cost-benefit analysis and Profitability of biogas technology at household level in West Hararghe zone, Eastern Ethiopia. A multi-stage sampling technique was employed to select sample households. A total of 105 biogas adopter households were selected for household survey. Results indicated the most commonly domesticated plant is fixed dome biogas with volumes of 6 m 3 and 8 m 3 . Investing 6 m 3 biogas plant with subsidy (0.73 year) had short payback period (PBP) than the 8 m 3 plant (0.97 year). This implies, subsidy has been attracting households into biogas adoption. The benefit cost ratio (BCR) under assumption with subsidy was found to be 1.34 and 1.10 at 10% discount rate for 6 m 3 and 8 m 3 plants, respectively. Under both assumptions with and without subsidy, the NPV results for 6 m 3 and 8 m 3 biogas plant sizes turn out positive. In general, the results of PBP, BCR and NPV shown that the biogas investment is preferable and profitable for continuing the investment for the future.