The economy of a biogas plant consists of large investments costs, some operation and maintenance costs, mostly free raw materials, e. g., animal dung, water, aquatic weeds, terrestrial plants, sewage sludge, industrial wastes, agricultural wastes and income from sale of biogas or electricity and heat (Amigun and von Blottnitz, 2007). The economics of biogas production and consumption is dependent on a number of factors specific to the local situation, as shown in Table 4. The economics of biogas production and use, therefore, depends upon the specific country and project situation

a. Cost of biomass material, which varies among countries depending on land availability, agricultural productivity, labour costs, etc

b. Biogas production costs, which depends on the plant location, size and technology, which vary among countries

c. The cost of corresponding fossil fuel (gasoline, diesel) in individual countries

d. The strategic benefit of substituting imported petroleum with domestic resources____

Table 4. Economic factors which affect biogas production and commercialisation

The main limitations to the adoption of large-scale biogas technology are both institutional and economic. Establishing a self-sustaining institutional system that can collect and process urban waste and effectively market the generated biogas fuel is a complex activity that calls for sophisticated organisational capability and initiative (Karekezi, 1994b). The energy transition in Africa is an incremental process and not a leapfrog process, dependent upon household, national and regional accumulations of technological capabilities. Biogas technology absorption, therefore, cannot occur without the proper social, cultural, political and economic institutions to support adoption, dissemination and appropriate contextual innovation (Murphy, 2001). The Taka Gas Project in Tanzania (Mbuligwe and Kassenga, 2004) is a very good example of how large-scale biogas technology projects have failed to take off in Africa. The main objective of the Taka Gas Project was to obtain biogas through anaerobic digestion of municipal solid waste from Dar es Salaam city and serve as a model for other urban areas in Africa to emulate. The project was well prepared with analysis of solid waste as feedstock for the project, strategies for operationalising the project, environmental impacts and economic feasibility and other technical and non-technical and socio-economic issues studied for the project but it has never took off the ground due to bureaucracy.

The investment cost of even the smallest of the biogas units is prohibitive for most rural households of sub-Saharan Africa. Evidence from the experiences in Eastern and Southern African countries is still limited, but the general consensus is that the larger combined septic tank/biogas units that are run by institutions such as hospitals and schools have proved to be more viable than the small-scale household bio-digesters. There is need for subsidy-led programmes which will be demand-driven and market-oriented to increase the adoption of biogas plants. Subsidies are justified to make up for the difference between ability to pay and the higher societal benefits (maintenance of forest cover, prevention of land degradation, and reduction in emissions of greenhouse gases) and private benefits (reduction in expenditure for firewood and kerosene, savings in time for cooking and firewood collection and health) accruing to users. Besides the expense, many consumers are hesitant to adopt the biogas technology reflecting the lack of public awareness of the relevant issues. To date, this combination of factors has largely stifled the use of biogas technology in Africa.