Cost-Benefit Analysis and Financial Viability of Household Biogas Plant Installation in Aleta Wondo District, Southern Ethiopia

Abstract Background: Installation of biogas plants has both costs and incomes; installation and maintenance service demand financial costs and reduction of costs for purchasing firewood, kerosene and chemical fertilizers are benefits or incomes. This study investigates the cost-benefit analysis and financial viability related to biogas plant installation in Southern Ethiopia. Method: A multi-stage sampling technique was employed to select sample households. A total of 105 adopter households were selected for household survey.Results and conclusion: The installation cost took the largest share of the total cost of installation and was one of the main constraints that hindered installation. Installation increased household income by reducing the costs incurred for buying firewood, kerosene and chemical fertilizers. Relatively, lower plant size was more profitable than larger plant size. Installation under the subsidy scheme was more financially viable at 10 % discount rate than its counterparts. The profitability of lower plant size was more sensitive to changes in the discount rate, the level of expenditure saving and input price than larger plant size, under an assumption and without subsidy. Installation of low cost plants could more attract the engagement of a large number of rural households with low economic capacity. Besides, installation of lower plant sizes could more substantially enhance household income by saving costs incurred for buying firewood, kerosene and chemical fertilizers.