Biogas Market Study in Bhutan Final Report Submitted to Asian Development Bank Submitted by Prakash C. Ghimire Sr. Regional Advisor, SNV/Asia Biogas Programme Saroj K. Nepal Consultant, Gonefel Options Consult, Bhutan December, 2009 Executive Summary o A feasibility study conducted in Bhutan in 2008 by SNV concluded that a small scale domestic biogas programme is possible with a technical potential of about 20,000 biogas plants especially in the southern belt and inner mountain valleys. The key question for the development of a substantial biogas programme in Bhutan is whether the households having enough number of cattle to install biogas plant are willing and able to invest in it and to feed the plant with the required amount of manure on a daily basis. Asian Development Bank (ADB) under the framework of Energy for All Partnership Programme proposed to undertake a specific market study to provide realistic answers to various questions related to technical and socio-economic feasibility of a biogas programme in Bhutan and contracted Netherlands Development Organisation (SNV) to carry out an in-depth market study. o The objective of the biogas market study was to assess the willingness and affordability of livestock keeping households to invest in biogas technology. The key question of the study was, therefore, ‘can biogas plant be ‘sold’ in Bhutan and if yes, to how many households and at what cost’? o The main methods used were cluster meetings, household survey and market survey using a structured questionnaire as the instrument of the study as well as open-ended unstructured interviews with respondents from the selected households under study. Additional investigation tools included observations, especially of cattle-sheds, manure management practice, water sources, household kitchen and conventional fuel sources being used in the sampled households, and informal discussions with people in the survey clusters. Seventy eight households from nine districts representing all three ecological zones as well as four administrative regions in the country were sampled for the study. Given the total number of households in each cluster, the sample size is not representative for the entire country. Hence, the findings of the study should be considered as indicative rather than representative. o The demographic attributes of the sample population showed that there were more male members than female. On an average there were 5.65 members in the household. Although 55% of the population were in the productive population group (between 17 and 61 years); the dependency ratio is relatively high with 71 young and elderly population being supported by 100 productive persons. However, given that the labour requirements for biogas plant operation are low, the present productive population are sufficient to take up operation. o Half the population depended on agriculture and are therefore based in the village implying that the biogas plants (which are home-based) can be managed since people will generally be around their farms. Farmers have sufficient land to install biogas plants and slurry pits although location of the cowsheds may not always be near the houses and kitchens in some of the households. The crops produced from the land are in most of the cases consumed by the family. Farmers however grow cash crops and derive most of their income from the sale of such crops. There were substantial differences in income among sampled households. Thirteen households earned less than Nu.13,164 a year implying that they lived in poverty. Another four did not earn any income. Those at the lower rung of the income ladder may not be able to afford to invest in biogas plants unless some financing incentives are provided. o Education attainment levels were relatively low with 44% of the family members being illiterate among which majority were women. Any information and communication materials developed for awareness- raising and training on biogas will have to take this into consideration. o The outcome of the study revealed that the main source of energy for cooking was firewood collected from the nearby forest. Eighty six percent of the HHs collected firewood from nearby forest or their own land whereas the remaining 14% of the HHs purchased it from market/vendors. Sixty two percent of the HHs cut the whole tree and the other 38% cut twigs and dried branches from the tree. Fifty two ii percent out of those who cut whole tree to supply firewood, were reported to cut 2 trees in a year followed by 33% cutting 3 trees and the remaining 15% cut only one tree. One household on an average burns 388.2 kilograms of firewood per month for cooking and 32.1 kg for space heating. The average firewood consumption in electrified households (13.88 kg/hh/day) is less than that in non- electrified households (20.67 kg/hh/day) which indicated that electricity was also used for cooking and space heating purposes. Electricity and kerosene were used for lighting purposes in urban and rural areas respectively. An average of 3.35 litres of kerosene per household per month was consumed for lighting. The field findings also revealed that out of the 78 households under study, 12 HHs used batteries, 2 HHs used solar PV and 1 HH used pine resin for lighting. o In general farmers owned cattle and other smaller livestock. Most farmers qualify to install biogas since the majority own more than 3 cattle with the average cattle holding being 6 cattle, most of which are night stalled cattle. The cultural practices of keeping cattle in sheds also vary with some villages having cattle sheds quite distant from the houses. In such situations, providing biogas and conveying the gas to the households can be expensive. Based upon field observation and information from the respondents, 2 adult zero grazed cattle or 3 adult open-grazed (night-stabled) cattle would be sufficient to produce at least 20 kg of dung, which is minimum requirement for a household to qualify for the installation of a smallest sized biogas plant (4 m3). The findings suggested that 95% of the total households have enough cattle dung to install a domestic biogas plant. o Eighty one percent of the respondents replied that they are often encountering smoke-borne diseases where as 19% think smoke has never been a big problem. The main reason for incidence of such diseases is the smoke-filled cooking environment due to poor ventilation in the kitchen. o The respondents reported that there are negligible major social and cultural taboos associated with the use of biogas and bioslurry. However, some people during informal discussions raised the issue of impurity of biogas produced with the digestion of night soil from toilets. Hence some of the farmers might resist the attachment of toilets to a biogas plant. There are no cultural inhibitions to the handling of dung. o The exposure of communities to biogas technology is limited. Thirty one percent of the respondents were familiar about biogas technology where as 40% of them had never heard about it. The remaining 29% had heard a little about it but do not know anything about it. The level of knowledge on biogas technology was relatively better in Samtse, Thimphu and Trashigang whereas people in Bumthang, Mongar and Trongsa had limited knowledge on it. However, ninety percent of the HHs are interested/willing to get substitutions for the conventional sources of fuel because they are expensive and difficult to obtain and 72% of the total HHs think biogas is best suited to fulfil their domestic demand for cooking fuel. This information indicates the necessity of effective awareness raising initiative as one of the main components of a national biogas programme. o Biogas plant is perceived as an expensive undertaking by 25 households whereas two of them think it is cheap. Ten respondents were unable to comment on the cost of installation. The remaining 41 respondents were of the view that the cost is reasonable. Out of the 14 households who think the investment cost will be an inhibiting factor for them to install biogas plant, 12 of them expressed that they will install biogas plant if more than 40% subsidy is provided by the government. One of them thinks biogas plant is cumbersome to operate and the remaining one respondent believes that the family does not have enough capital to invest. Sixty two percent of the HHs felt that they have enough saving per year to invest in biogas plant. o It was revealed that taking a loan or credit for agricultural activities is not a common practice in Bhutan at the household level although 50% of the respondents said that they have taken loan at least once to overcome a financial difficulty. Out of those who have taken a loan, very few persons (8%) were iii reported to have obtained it more than once. When asked if they need loans to install biogas plants, more than half replied affirmatively. The anticipated interest rates on biogas loan were reported to be in between 6 to 12% per annum. Seventy seven percent of the respondents believe that biogas plants will result in substantial financial saving which could be used to repay the loan on time; whereas 19% assume biogas will not help in financial saving considerably. The remaining 4% claimed that they are not in a position to give their opinion whether biogas plant generates financial saving or not. o The data suggested that the average burning hours of conventional cook stove in the sampled households was 3.84 hours per household per day. The maximum and minimum burning hours were reported to be 7 hours and 1.5 hours respectively.