Economics of Rural Domestic Biogas Development: Applying Spatial Analysis to Evaluate Profitability

Abstract

The aim of this paper is to calculate the profitability of communal anaerobic digester (AD) development in rural area. For that purpose, spatial cluster analysis is used to determine the cluster size and location for low affordability of non-biogas farmers to construct individual anaerobic digester. Cluster size is characterized by the number of households and the spatial proximity among the cluster member, while cluster location is determined by the land suitability. The potential energy production for each cluster is calculated afterwards as it may be distributed to non-farmer households. Meanwhile, the economics of communal (AD) is estimated using the Net Present Value, the Internal Return Rate, the Payback, and the Profitability as Return/Investment Ratio. As a result of the study, we have attained energy values ranging between 193,026.6 (MJ/yr) and 649,510.2 (MJ/yr). The BCR varies for both communal and individual AD which is 1.57 – 1.61 and 1.28 – 1.46, respectively. Furthermore, the calculation shows that Net Present Value, Internal Return Ratio, Payback, and profitability is US$ 12,112, 18%, 4.3 years and 110% respectively.