Investigation of scale economies for African biogas installations

Biogas technology can serve as a means to overcome energy poverty, which poses a constant barrier to economic development in Africa. This technology can be built on a wide range of scales, and conventional financial wisdom is that larger installations have advantages resulting from economics of scale. This study analyses the statistical evidence bearing on the existence of economies of scale in the small to medium scale production and use of biogas to support faster estimation (at the order of magnitude level) of investment costs for different plant sizes. Investment cost data were gathered for 21 biogas plants in the 4-100 m(3) range built since 1999 in eight African countries. Statistical regression indicates diseconomics of scale in the size range of the biogas industry investigated with a cost capacity factor (n) of 1.20 (R-2 = 0.90). The cost capacity factor obtained is notably greater than the conventionally used 0.6 factor rule. The result illustrates that the average cost size relationship is statistically significant with +/- 40% average estimating error. (c) 2007 Elsevier Ltd. All rights reserved.