Introduction
Biogas can be described as the gas produced through the breakdown of organic matter. This breakdown of organic matter is normally done in the absence of oxygen. According to Deublein et al, (2011), biogas is a gaseous fuel which is obtained from the breakdown of various organic matters, which includes, but not limited to, the following; dead animal and plant materials, kitchen wastes, and animal feaces.
Biogas can be used as a cooking gas, and also used in heating applications. It is to power generators that are used to produce electricity. It can also be compressed like any other natural gases in order to power motor vehicles (Nijaguna, 2006).
This essay is going to evaluate the industry analysis of biogas as a renewable energy source.
Industry analysis
Our business idea of biogas falls under the energy industry sector. The energy sector is considered one of the most important economic sectors. It constitutes a 50% contribution to the development of the world economy. The energy sector is also considered one of the most expensive sectors to invest in.
This is attributed to the limited sources of energy in the industry. Currently, the most widely used forms of energy include hydroelectric power, nuclear power and the solar power (Junginger, 2010).
Recent developments and researches indicate that there is an alarming increase in the energy demand. The demand for energy is projected to increase by 40% in the next six years. With such an alarming increase, there is need to have some sustainable, and cheap sources of energy (Junginger, 2010).
Also, according to some researchers the most widely sources of energy like fossils fuels are being depleted, and if less is done to cub this situation, then, the world is going to be plunged into an energy crisis. Biogas represents a cheaper and a viable alternative solution to solving the energy crisis that is imminent (Junginger, 2010).
Cost analysis
Variable costs are those changing costs that are incurred by a business while fixed costs are those costs incurred by a business which are static and do not change. Our business idea of biogas like any other business will incur some variable costs as well as fixed costs (Horngren et al, 2002).
The following table indicates a summary of the projected variable and fixed costs the business is likely to encounter
The cost of equipment and building cost are almost fixed because they have a very low degree of variance. On the other hand, labor costs, and cost of raw materials are going to vary considerably (Junginger, 2010).
Conclusion
It is evident that, the business idea of a biogas is quite viable because it is an area that is emerging, and has not been exhaustively explored. Biogas presents a cheaper and affordable means and source of energy, hence, our business idea of biogas will boom due to its flexibility, and wide range of applications.
The cost of setting up a biogas unit is quite cheap because of the fixed and variable costs associated with the set up. Also, the cost of labor involved in setting up a biogas unit is cheap, hence underpinning the fact that, biogas is a cheap, and affordable source of energy which can be used as an alternative to other expensive sources of energy.
Works Cited
Deublein, Dieter, and S. Angelika. Biogas from Waste and Renewable Resources: An Introduction, Weinheim: Wiley-VCH-Verl, 2011. Print.
Horngren, Charles., S. Foster, and D Srikant. Cost Accounting: A Managerial Emphasis, Upper Saddle River, N. J: Prentice Hall, 2002. Print.
Junginger, Martin. Technological Learning in the Energy Sector: Lessons for Policy, Industry and Science, Cheltenham: Edward Elgar, 2010. Print.
Nijaguna, Tom. Biogas Technology, New Delhi: New Age International, 2006. Print.