Economics of renewable energy production and management: Evidences from Bati district in Ethiopia

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1 Available online at Journal of Dynamics in Agricultural Research Vol. 1(4), pp.29-35, November 2014 Article ID: JDAR14/ Journal Dynamics Original Research Paper Economics of renewable energy production and management: Evidences from Bati district in Ethiopia Fentahun Tesafa 1 *, Solomon Addisu 2, Belayneh Ayele 2 and Misganaw Teshager 3 1 Bahir Dar University, Lecturer in Agricultural Economics Department. 2 Bahir Dar University, Lecturers in Natural Resource Management Department. 3 Bahir Dar University, Lecturer in Disaster, Risk and Sustainable Development Department. *Corresponding author. fentish.te@gmail.com. Received 6 August, 2014; Accepted 16 October, 2014 Open Access article distributed under the terms of the Creative Commons Attribution License permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly credited. ABSTRACT The study aims to estimate the economic benefits and the natural resource conservations resulting from introduction of fuel efficient stove and solar lanterns to the smallholder farmers in Bati district, Ethiopia. The data collected from a sample of 156 households were analyzed using descriptive statistics and values of population parameters were projected based on the sample estimates. Accordingly, the results of analysis indicated that introduction of fuel efficient stove to a population of 4,660 households could save annually 1,044,585.6 bundles (about 522,292.8 m 3 ) of biomass and an estimated expenditure of 41,783,424 birr (about 2,089,171.2 US dollar) for firewood consumption. This suggests that use of fuel efficient stove was not only benefiting farmers economically by reducing their expenditures for firewood consumption, but also benefits the entire society by reducing rate of deforestation as well as enhancing the rehabilitation of natural resources in the district. Moreover, use of solar lanterns saved on average 24 liters of kerosene annually per household that is used as a source of light before the project, even more than this under certain conditions (for example, when the household wife gave birth, students used more time to study during night, etc). Introduction of this technology also saved 111,840 liters of kerosene and an estimated expenditure of 4,026,420 birr (about 201,321 US dollar) for fuel and oil consumption and 1,118,400 birr (about 55,920 US dollar) for mobile phone charging annually. This implies that besides conserving depletion of 111,840 liters of non-renewable oil and fuel per annum, use of solar lanterns also improves the livelihood of the farmers by reducing their expenditures for fuel and oil consumption as well as mobile phone charging. These technologies are highly appreciated by the farmers and key stakeholders, for they are affordable, simple to use and have multiple advantages such as reduce deforestation, reduce women work burden, improve family health, improve students academic performance and strengthen their social interactions. Key words: Economic benefits, renewable energy, fuel efficient stove, solar lanterns and forest resources. INTRODUCTION Energy problems must be seen in the wider perspective of agricultural and ecological development. The energy base necessary for this development will have to be both animal and human power. In the short term there is no scope for the mechanization of Ethiopian agriculture. Cultivation will continue to be carried out using animal traction. Ethiopia s energy sector, like many other Sub- Saharan countries, depends highly on biomass despite

2 30 J. Dyn. Agric. Res. the immense hydropower resource in the country. According to Halcrow and MCE (2006) in the year 2000, 73.2% of energy came from woody biomass, 15.5% from non-woody biomass (cow dung 8.4%, crop residue 6.4% and bio-fuel 0.4%), and hydropower 1%. About 95% of the total energy consumption in Ethiopia is provided by wood, dung, charcoal and crop residues. Biomass consumption for fuel in 1980 was about 24 million m 3 of firewood, 7 million tons of dung, tons of charcoal and 6 million tons of crop residues (FaWCDA, 1982). Given the current firewood consumption of 1 to 1.2 tons per capita per annum, it has been estimated that forests in Ethiopia will be completely destroyed by the near future unless drastic measures are taken to reduce the present consumption level and to strengthen both the financial and manpower budgets of the relevant institutions (Beijer Institute, 1981). More efficient ways of firewood utilization need to be investigated. Substantial savings in firewood consumption could be achieved by the use of improved stoves and different cooking methods. The major tree species being planted in the highlands is Eucalyptus globulus. However, even if the present reafforestation programs attain the projected planting goal of ha/year, this will not be sufficient to maintain the existing woodlots which are being cut at an estimated rate of 200,000 ha/year (Beijer Institute, 1981). Furthermore, although Eucalyptus species are highly suitable for woodlot establishment, they are not very effective in controlling hillside erosion. Urgent reforms are therefore needed. Possible measures to be taken include controlled livestock grazing on hillsides, which should be enforced so that slopes do not become denuded. In areas where erosion has become severe, livestock should be kept off hillsides for at least 3 to 4 years to allow the total biomass to regenerate. In addition, conifer species should be emphasized in these areas. In the Geleb area north of Lake Rudolf in the GamoGofa administrative region, windmills are used to supply households with water and for irrigation (Fraenkel, 1975). Prototype windmills for electrical and mechanical applications are to be built in the MelkaWerer area of the Awash valley (Cocks, 1981). By employing windmills for irrigation, it should be possible to grow two or three crops a year instead of one. The potential for increasing the use of windmills or wind generators in Ethiopia depends on the altitude of the chosen site, the average wind speed and the duration for which a particular wind velocity is maintained. Even very efficient units cannot operate when wind velocities are 3 m/s or less (Earthscan, 1981). As the altitude increases air density decreases. A study in 1980 done by International Livestock Centre for Africa (ILCA) at DebreBirhan showed that the power available from wind at a particular velocity was three quarters of what it would be at sea level. In addition, a windmill could be expected 2014 Journal Dynamics to pump the required amount of water only for two to three months a year because there would either be no wind or average wind speed would be too low during the rest of the year (Campbell, 1982). In Ethiopia solar radiation is used extensively for drying crops, animal forages, fruits and fish, for the production of salt by evaporation of seawater or inland brines, and as fuel. However, harnessing its power in the form of electricity, heat storage or mechanical energy at the village level has so far been minimal or non-existent, despite the successful research into solar cookers, heaters and distillation plants (Hobbs, 1965). Potential areas for developing solar energy should probably be limited to passive solar driers and ovens, irrigation pumps powered by photo-voltaic and flat plate collectors (Beijer Institute, 1981). However the cost of such solar apparatus would be prohibitive to smallholders, and the equipment is still complex, difficult to maintain and potentially hazardous to the ill-trained. Therefore, compared with existing sources of energy, the prospects for large-scale introduction of solar power remain poor in the immediate future. Given the scarcity of firewood and the prevalent use of dung for cooking, biogas plants would appear to be an appropriate means of reducing the current usage of these renewable energy resources. However, despite the expensive experimental work undertaken by the Ethiopian National Energy Commission only a few biogas plants have so far been established in the Ethiopian highlands. The major difficulties encountered are maintenance, proper management and public acceptance and cooperation. Most thermal plants producing electricity in Ethiopia operate on diesel fuel. While these units generated 26.6% of the total electricity produced in the country in 1970, their output in 1978 fell to 14.7%, largely due to an increase in the number of hydropower plants and problems in operating thermal plants efficiently (ECA, 1980a). It is reported that only 2.3% of Ethiopia's hydropower potential has been developed, and that of the electricity generated only 50% is being utilized, primarily because electrical appliances are beyond the reach of most of the population and electrification has not yet to reach many rural areas of the country (Varet,1978). Increased use of electrical power in the country will depend on more accurate long-term planning in all sectors of the economy (especially the industrial sector), better returns on assets and better adherence to projected time schedules for completion of new generating plants. At present, little progress has been made in tackling these problems (Beijer Institute, 1981). Geothermal exploration began in Ethiopia in Three sites were selected for drilling, two in the Afar depression and one in the Rift Valley (ECA, 1980a). Depending on the outcome of the drilling in the Lake Langano area of the Rift Valley, additional wells may be drilled (ECA, 1980b). The use of geothermal energy would extend electrification to isolated rural areas where the supply of electricity through other means may not be feasible. Aware of this problem, Organization for

3 Tesafa et al. 31 Source: Own survey GIS data, Figure 1. Map of the BACCI Project Area. Rehabilitation and Development in Amhara (ORDA) in partnership with Canadian Hunger Foundation (CHF) has been implementing Bati Adapts to Climate Change Impact (BACCI) Project in Bati district from 21 st December 2012 to 31 st March, 2014 with the aim to increase the adaptive capacity of 4,660 households or 23,300 people (11,697 males and 11,603 females) in 12 kebeles (the smallest administrative unit of Ethiopia similar to village) of Bati district to withstand the impacts of climate change. This study was therefore conducted with the main objectives of evaluating the economic and ecological effects of the disseminated energy efficient stoves and economically sound technologies (solar lanterns) by the BACCI project. RESEARCH METHODOLOGY This study was conducted in Bati district of the Oromo Administrative Zone in Amhara National Regional State (Figure 1), North Western Ethiopia. According to CSA (2007), the total population of Bati district was 107,387, of which 49.8% are females. About 82% of the population is living in rural areas and 18 % are urban settlers. There are three major ethnic groups, including Oromo (92%), Amhara (7%) and Afar (1%). Agro-ecologically, it is classified into low land (81%) and middle altitude (19%). The landscape is classified into rugged terrain (42%), gorge (28%), mountainous (20%) and plains (10%). The mean temperature of the area ranges c and annual precipitation ranges mm/year. From the total estimated 124,700 ha of land, about 70% is cultivated, 7% is grazing, and 11% is bush land. The main sources of livelihood are mixed farming (83.4%), wage (5%), petty trade (5%), handcrafts (4%) and others (2.6%). The average land holding size per household is 0.7 ha. The major types of crops grown in the area are sorghum, teff, maize, and sesame. Livestock production is the second major source of livelihood for the rural people. The district consists of 33 kebeles, among which the BACCI project covers only 12 kebeles (namely Birra, Malkalego, Quamie, Salmenie, Fura, Awarie, Chefahurso, Ela, Chachatu, Jeldite, Mamede, and Harto). Since this study was focused on the renewable energy production and management resulting from use of fuel efficient stove and solar lanterns distributed by the project, the population of this study is defined as the total number of rural households who are the BACCI project beneficiaries in those 12 kebeles. The size of the population is 4660 rural households. The household size ranges from three to ten persons and the average size of households in the study areas is five. The sampling frame of the population, list of the project beneficiaries registered on the basis of kebele categories, was obtained from the BACCI Project Office. The required size of sample households was determined following the formula of Cochran (1977). 2 z pq no n o n 2 d no 1 1 N Where, no = the desired sample size when the population

4 32 J. Dyn. Agric. Res. Table 1. Summary of Sample Households (HHs). Beneficiary Kebeles Birra Melkalego Quamie Salmenie Fura Total beneficiary HHs Sample beneficiary HHs Awarie 509 ChefaHurso 557 Ela 501 Chachatu 189 Jeldite 441 Mamede 461 Harto is greater than 10,000; n = the number of sample size when population is less than 10,000; z = 95% confidence limit (that is, 1.96); P = 0.1 (proportion of the population to be included in the sample- that is, 10%); q = = 0.9; N = Total number of population; and d = margin of error or degree of accuracy desired (0.05). Accordingly, a total of 5 households need to be selected from a population of To increase the level of accuracy, a 15% non-response rate was considered, and hence the total sample size of 156 households were drawn using disproportionate stratified random sampling technique. Thus, households from the sampling frame of each kebele, and overall, a total of 156 from the list of 4,660 households were chosen by simple random sampling technique (Table 1). For this study a sample of households were drawn from each of the 12 kebeles (serving as strata) with the assumption that more representative data or information for the study would be collected by drawing equal sized sample, instead of drawing more samples from one kebele, which has similar socio-economic characteristics. For the purpose of data collection, enumerators (one from each kebele) were trained on how to approach and interview the respondents and collect data based on the questionnaire prepared. Then they were appointed to interview the respondents orally and fill the data collection format accordingly. If the selected respondents could not be available during the time of data collection, the spouse would have been taken as the information source. The study used both primary and secondary data collected on quantitative and qualitative variables. The primary data were collected from respondent farmers using semi-structured questionnaire and field observations, district key stakeholders or institutions related to the project interventions using key informant interview (KII) guideline and community members representing cross-section of the beneficiaries (male, female, young, old, local authority and religious leaders) by focus group discussion (FGD). Secondary data as background information for the study were collected by reviewing the documents or reports of the implementing and other related institutions at regional and district levels such as ORDA, Agricultural Office, Cooperative Promotion Office and Central Statistical Agency of Ethiopia. Finally, the collected data were organized and analyzed by descriptive statistical techniques using SPSS computer software. RESULTS AND DISCUSSIONS The Bati Adapts to Climate Change Impacts (BACCI) Project, which is implemented and jointly managed by Canadian Hunger Foundation (CHF) and Organization for

5 Tesafa et al. 33 Rehabilitation and Development in Amhara (ORDA), has introduced fuel efficient stoves and solar lanterns at affordable prices to smallholder farmers in Bati district since December The data related to these technologies were collected after one year of the project intervention. The farmers reported that these technologies are highly adopted by the project beneficiaries even within this shortest period of time, for they only have more advantages without having any disadvantages. The major benefits of the Bati Adapts to Climate Change Impacts (BACCI) Project are listed below. i. reduction of the work burden placed on women in collecting firewood, ii. reduction in the health problems created particularly on women when they cook foods using the state-of-the art and fire the traditional source of light (locally called Kuraz), iii. reduction in household expenditures on firewood and kerosene consumption, iv. increase use of improved farming technologies and practices leading to a rise in their real incomes, v. improved livelihoods of farmers by creating an alternative source of non-farm income through manufacture and sale of fuel saving stoves to the local community, and vi. reduced deforestation and degradation of natural resources. Even by understanding thoroughly the benefits of these energy efficient technologies, most of the respondent farmers as well as the focus group discussants reported that these technologies should be distributed to the wider community to the extent most farmers in the district are to be included. As shown in Table 2, 97.4% and 98.7% of sample HHs own fuel efficient stove and solar lanterns, respectively. As indicated in the baseline survey (20) report, there were no any solar lanterns used by the households in the study areas and even only 0.2% of the HHs were using fuel efficient stoves. The study estimated firewood consumption of a typical rural household per week via before and after the project situations. The results of this analysis indicated that the average bundles of firewood consumption of a household reduced from 5.22 to 2.12 per week after the project intervention as the stove reduced wastage of energy during flaming. This implies that the project enables the household to save on average 4.67 bundles of firewood consumption weekly. In general, the typical household and the total 4,660 beneficiary households could save on average and 1,044,585.6 bundles of biomass per annum respectively from being consumed as firewood. As was the information of the focus group discussant, the average price of one human bundle of firewood in the local market is about 40 birr. A given household in particular and the total beneficiaries in general could also save an estimated cost of 8,966.4 and 41,783,424 birr per year that would be incurred for the purchase of firewood. Thus, the introduction of fuel efficient stove to the study areas was not only benefiting the beneficiaries economically by reducing their expenditures for the purchase of firewood, but also benefits the entire society by reducing rate of deforestation as well as enhancing rehabilitation of natural resources in the district. In the rural areas of Bati district there is not yet supply of electricity as the source of light. The farmers in these areas conventionally used candle-like container (locally called Kuraz) filled with kerosene as a source of light. Cognizant of this problem, BACCI project, distributed solar lanterns to 4,639 households in 12 kebeles of Bati district. These households received solar photovoltaic systems with proper installation and other technical supports. They used the solar lanterns as source of light for their households during night-time and for charging their mobiles. The project has also established 12 solar lighting user groups (one group in each of the study kebele) to oversee sustainable maintenance and cost sharing of households for solar photovoltaic system. The technology is highly appreciated by the beneficiary farmers and key stakeholders. According to beneficiaries view, the technology is simple to use and have multiple advantages such as reduce deforestation, reduce women work burden, improve family health, improve students academic performance and strengthening their social interactions. The results of focus group discussion (FGD) revealed that the household saved two liters of kerosene on average per month, even more than this figure under certain conditions (for example, when the household wife gave birth, students used more time for study during night, etc). Thus, a total of 24 and 111,840 liters of kerosene were saved by a household and 4,660 HHs per annum, respectively. The price of kerosene is about 18 birr/liter. Hence, the whole beneficiaries could save 4,026,420 birr from fuel and oil consumption. Moreover, this technology is used by the farmer to charge his or her mobile through use of solar energy. Consequently, it also saved him or her from mobile phone charging cost. The results of FGD also showed that the typical household charges mobile phone on average twice a week with an average cost of 2.5 birr per charge and hence the household incurred 5 birr per week for mobile phone charge prior to the project. Thus, a single household in particular and the total project beneficiaries in general saved 240 birr and 1,118,400 birr per annum from mobile phone charging costs respectively. In a nutshell use of solar lanterns in the study areas saved 5,144,640 birr annually. Both the key informants and focus group discussants also reported that the farmers in the study areas travel twice a week from their home to the local town to charge their mobile phone and purchase fuel gas. The estimated distance of one round trip the farmer travels from his home to local town is on average 20 km and in total he travels 40 km per week. This made the farmer not only tiresome, but also sacrificed his benefit (opportunity cost) that could earn as his labor units for traveling was used

6 34 J. Dyn. Agric. Res. Table 2. Use of Solar Lanterns and Fuel Efficient Stoves and Firewood Consumption before and after the project, n = 156. Fuel efficient stove and firewood consumption Before HHs own solar lanterns (%) *** HHs own fuel efficient stove (%) *** Average bundles of firewood usedby HH per week *** Average bundles of biomass saved due to the project intervention by HH per week Farmers trained on use and maintenance of fuel efficient stove 88.1 Source: ORDA baseline survey report (20) and own survey data (2014). ***, **, and * denote it is significant at 1%, 5% and 10% level of significance. After for productive activities instead at his farm. Even some farmers might not come back to their home within a day once they went down to town for charging their mobile phone as they were attracted by the urban environment. Besides conserving depletion of 111,840 liters of nonrenewable oil and fuel per annum, use of solar lanterns also improves the livelihood of the farmers by reducing their cost for fuel and oil consumption as well as mobile charging. So in order to make these results sustainable and effective in addressing problems of climate change in this regard, the project has also given training for about 72% of the total households on the use and maintenance of fuel efficient stoves and solar lanterns (Table 2). For sustainable use of solar lanterns and fuel efficient stoves, the Cooperative Promotion Office also established groups or associations of communities with its own by-laws and income generating activities like fuel efficient stoves making women groups and solar lanterns user associations to install, maintain and repair stove and solar technologies respectively at affordable prices to the local community. Conclusions More than 85% of the people in Ethiopia in general and more than 88% in Amhara region in particular lived in rural areas and whose livelihoods mainly depend on agriculture. Majority of these people have not yet got access to electricity that can serve as an alternative source of energy for cooking foods and for giving light. As the results of this study revealed, most of the rural people in the region in general and in Bati district in particular used firewood and kerosene as the main sources of heat and light energy, respectively. This would significantly lead to degradation of natural resources (such as forestry, land and water conservations) and depletion of nonrenewable energy resources (like kerosene and other related matters). Thus, the dissemination of fuel efficient stove and solar lantern technologies to the rural areas help curb these problems in the one hand and improve the livelihoods, work burden, family health, students academic performance and social interactions of people in these areas on the other hand. All these benefits were generated by the activities facilitated and done by the BACCI project within its one year life. By now the project was however phased out at the end of March 2014 in that area. Thus, all the relevant stakeholders including the policy makers or planners particularly the development and extension workers should focus their works to better disseminate these technologies to the wider community in the study areas as well as in Amhara region at large. The introduction of renewable energy in the form of solar lanterns and fuel efficient stoves has improved the lives of the rural people in Bati district of Ethiopia. The energy problem of the rural people is being addressed. If the project can be replicated in other districts of Ethiopia, the country will be contributing to climate change mitigation. Moreover, in order to make sustainable use of these technologies in the rural communities, ORDA and other related government officials should be able to facilitate the trainings and other technical supports as well as strengthen the capacity of the groups of people already began to manufacture, repair and maintain the technologies locally until they are capable of managing the proper utilization of these technologies by themselves. Finally, we conclude that like the usual extension packages (use of improved seed, fertilizer, seed rate and farm implements) the extension workers considered in the crop production systems, they should also take their turn in considering these technologies as part of packages in the natural resource management, extension systems. References Beijer Institute (1981). Policy issues in Ethiopian energy development. Summary of workshop proceedings. Stockholm, Sweden. Campbell JK (1982). Feasibility study on employing windmills to provide water for livestock at ILCA's DebreBerhan Station, Ethiopia. Internal document. Department of Agricultural Engineering, Cornell University, Ithaca, New York. Cocks RJ (1981). Environmental degradation in the

7 Ethiopian highlands. Internal document. Dept. of Agriculture, University of Reading. CSA (Central Statistics Authority) (2007). Population and Housing Census. Federal Democratic Republic of Ethiopia Population Census Commission. Earthscan (1981). New and renewable energies 1 and 2. Published in association with Development Forum and for the Joint United Nations Information Committee, London. ECA (Economic Commission for Africa) (1980a). Report of the technical panel of experts on biomass (including fuelwood and charcoal). Regional preparatory meeting on new and renewable sources of energy. ECA, Addis Ababa. ECA (Economic Commission for Africa) (1980b). Report of the technical panel of experts on geothermal energy. Regional preparatory meeting on new and renewable sources of energy. ECA, Addis Ababa. FaWCDA. (Forestry and Wildlife Conservation Development Authority) (1982). FAO/Ethiopia national workshop on fuel wood. FaWCDA, Addis Ababa. Fraenkel P (1975). Food from windmills. Intermediate Technology Publications Ltd., London. Halcrow and MCE (Metaferia Consulting Engineers) (2006). Awashi Basin Flood Protection and watershed Project Annex WP3. Unpublished report. Hobbs W (1965). Heating water with solar energy for household use in Ethiopia. Miscellaneous Publication No. 6. College of Agriculture and Mechanical Arts, Dire Dawa, Ethiopia. ILCA (International Livestock Centre for Africa) (1980). ILCA: The first years. ILCA, Addis Ababa. Varet J (1978). Prospects of geothermal energy utilization in Ethiopia. Ethiopian J. Sci., 1(1): 11. Tesafa et al. 35

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