Techno-Economic Viability Assessment of a Household Scale Agricultural Residue Composite Briquette Project for Rural Communities in Nigeria

Abstract

This study evaluated the technical and economic viability of a household scale composite briquette project. The objectives were to assess the quality of briquettes, estimate the cost of production, and determine the feasibility of the project. Briquettes were made from a blend of corncobs and the bark of oil palm trunk using a manual press. Production cost was estimated from the market price of commodities and specific economic indicators were used for feasibility analysis. Sensitivity analysis was performed on some essential input parameters that may affect the profitability of the project. Economic analysis revealed that the unit production cost of the briquettes was USD 0.16 per kg. The net present value was USD 6755.91 from the sale of briquettes at USD 0.26 per kg. An accounting profit is possible once briquette sales are above the break-even point of 7329.8 kg. Households could save about 25% from their per-capita expenditure on fuelwood when briquettes are utilized. Overall, the household briquette project is technically and economically viable in Nigeria. The significance of this study lies in the provision of a piece of baseline information to encourage local bio-energy development and serve as a guide for stakeholders in Nigeria with a potential interest in investing in briquette technology.

1. Introduction

Affordable and Clean Energy is the 7th goal of the United Nations’ Sustainable Development Goals (SDG 7). The daily life of the global population depends on reliable and affordable energy services such as heating and cooling, electricity supply, and transport systems. The United Nations states that the number of people with access to electricity increased by 1.7 billion between 1990 and 2010 [1]. Still, with the rising energy prices, the over 1.2 billion of the world’s population who do not have access may as well increase. One of the main targets of the goal is to ensure universal access to affordable, reliable, and modern energy services by the year 2030. The energy sector in any nation is pivotal to the development of its economy and the general well-being of its citizens. The demand for energy for domestic cooking and other applications is ever increasing because of the growing population and industrial development.

In Nigeria, local energy demands are met using either electricity, liquefied petroleum gas (LPG), kerosene or charcoal, and firewood. However, more people, especially low-income rural dwellers, depend on charcoal and fuelwood for cooking and heating. The prices of electricity and LPG are high for many Nigerians and the supply is grossly insufficient even when they are available [2]. The cost of energy in Nigeria has been on the rise for the past 20 years. For instance, the pump price of premium motor spirit (PMS) otherwise known as petrol moved from USD 0.07/L in 2002 to USD 0.25/L in 2012 [3]. As projected, the electricity tariff rose from USD 0.02/kWh to USD 0.03/kWh within the same period [4]. Just recently, the Federal Government of Nigeria (FGN), through its regulatory agencies, announced the increment in the pump price of petrol and electricity tariff again. The pump price of petrol was increased from USD 0.38/L to USD 0.40/L [5] whereas the electricity tariff has been raised from USD 0.08/kWh to as much as USD 0.16/kWh [6]. According to the National Bureau of Statistics, the current average price of LPG is USD 10.80 for a 12.5 kg gas cylinder whereas kerosene is USD 0.91 [7]. Based on a market survey, current prices of charcoal and fuelwood are USD 0.52 and USD 0.26 per kg, respectively, and could be higher depending on location. Apart from petrol that has been subsidized until now, there is neither subsidy nor any incentive given for the consumption of energy from these sources.

The International Energy Agency reported that fuelwood and charcoal constitute about 73% of the cooking energy in Nigeria [8]. Wood, which is generated mostly from the forest, is consumed either directly by burning in open fires or converted to charcoal before use. The indiscriminate harvesting of wood, open burning, and charcoal production are all inefficient and unsustainable. They lead to several environmental problems such as deforestation, soil erosion, land degradation, and air pollution from the emission of greenhouse gases. According to Shaaban and Petinrin [9], about 350,000 hectares of forest and natural vegetation are lost annually with a much lower afforestation rate of 50,000 hectares per annum. The consequences of deforestation are so massive that between 1990 and 2005, Nigeria lost a staggering 79% of its old-growth forests [10]. In addition, Bolaji [11] reported that fuelwood, roots, agricultural residues, and animal dung all produce high emissions of carbon monoxide, hydrocarbons, and particulate matter. Women and children who are exposed to such are likely to suffer from elevated blood pressure which leads to an increased risk of stroke, kidney, and cardiovascular diseases [12], including pneumonia amongst children less than five years of age [13]. Recently, between 106,900 to <605,100 deaths were recorded due to indoor air pollution caused by cooking with biomass in Nigeria [14].

The rising cost of petroleum products and erratic electricity supply has made the use of fuelwood inevitable and a significant source of energy for households and small to medium businesses [15]. The need to replace these resources—especially fuelwood—with an alternative that is cheaper, cost-effective, and more environmentally friendly for rural dwellers will be a welcome idea. To articulate the sustainable development and application of all viable renewable energy resources, a National Energy Policy (NEP) was approved in 2003 by the Federal Government of Nigeria [16]. Some of the key elements in the national policy are to de-emphasize and discourage the use of wood as fuel, and to promote efficient methods in the use of biomass energy resources, especially in rural areas. The briquetting technology is an appropriate means of converting biomass residue into solid fuel for domestic cooking in rural areas. The addition of briquettes to the energy mix will not only complement other fuel sources but reduce dependence on fuelwood and save some valuable time and money when preparing meals. However, the technology is not so popular in Nigeria, possibly due to the attendant apprehension placed on new technologies based on technical know-how and the cost of setting up. A cost analysis should be done to determine the financial viability of such a technology, as it is a critical consideration for any project, including a household briquette project. According to Eriksson and Prior [17], the economic feasibility of incorporating briquetting technology anywhere will be subject to the relationship between the cost of production and the price of alternative fuels. Additionally, it is determined by the type of equipment used, biomass, skills of human resources, and investment capital [18].

Recently, studies have analyzed the techno-economic viability of briquette production from agricultural residues using evaluation models. For instance, Bot et al. [19] focused on the conversion of coconut shells, rattan waste, sugarcane bagasse, and banana peels based on a small-scale production plant in Cameroon. Economic analysis was carried out for a 20-year span and sensitivity analysis was conducted to assess the feasibility of the business. Result showed that the net present value (NPV) was found to be between −44,932 E and 67,189 E. From sensitivity analysis, briquette production was sensitive to briquette market price, discount rate, and capital cost. Similarly, Ifa et al. [20] researched the techno-economic analysis of bio-briquette from cashew nut shell waste in Indonesia. One of the study objectives was to examine the economic feasibility of cashew nutshell bio-briquette waste. The production of briquettes was investigated based on investment rate, pay out time, and break-even point. The authors reported that the total production cost was USD 842,304/year and a net profit of USD 147,402/year. The study concluded that the economic feasibility of briquette production as analyzed from the investment rate was 23.55%, 3.42 years payout time, and 50.09% as the break-even point.

In another study, Pradhan et al. [21] assessed the economic feasibility of agricultural waste pelletization in rural India. The economic evaluation was made using indicators such as net present value (NPV), internal rate of return (IRR), and discounted payback period (DPBP). Results showed that the NPV, IRR, and DPBP were USD 0.13 million, 41%, and 2.8 years, respectively. The cash flow statement showed a strong debt paying ability for the project. Pellet price was the most sensitive factor followed by annual operating days on pellet plant economics. What is noteworthy in these studies is the analysis of briquette production at small and medium scales but clearly beyond the level of a household which is the interest of this study. The current research is an attempt to contribute to the feasibility study of a household scale briquette production in rural Nigeria. Its significance lies in the provision of a piece of baseline information on the economic viability of briquette production at that level.

As the economics of briquetting is site-specific and depends on the local conditions of regions with different outcomes, it becomes necessary to conduct this study in a Nigerian context. It has been noted that for biomass densification to expand, residue availability, adequate technologies, and the market for briquettes should not be uncertain [17,22]. Nigeria has varied and abundant agricultural residues generated from its vast agricultural activities and extensive landmass, some of which are shown in

Table 1. Some major agricultural residues in Nigeria.

Product	Residue	RPR	Residues in 1000 Tons
Cassava	Peels	0.64	37,773.5
	Stalks	0.60	35,691.5
Coconut	Husks	1.01	291.5
	Shells	0.41	118.3
Groundnut	Husks/Shells	0.79	1899.7
Maize	Cobs	1.00	11,192.0
	Stalks	2.44	27,308.5
Oil palm	Empty bunches	0.31	2405.4
	Fiber	0.61	4694.4
	Shells	0.53	4073.7
Plantain	Stem	4.46	14,099.6
Rice	Husks	0.26	2564.7
	Straws	2.18	21,504.2
Sorghum	Straws	4.13	28,623.4
Sugarcane	Bagasse	0.61	906.2

RPR: Residue-to-production ratio is also known as the residue yield or straw/grain ratio. Source: Adapted from Jekayinfa et al. [30].

. These could be potentially used for sustainable bioenergy production. Moreover, there are a plethora of studies that dealt with the technical viability of briquetted fuel [2,23,24,25] including the development of local technology [26,27,28]. Similarly, the potential and existing market for it, due to the high cost of fossil fuels and dependence on fuelwood has been reported [29,30]. Nevertheless, there is hardly any empirical investigation into its economic viability, whether on a small, medium, or large scale. Insufficient data about the economic viability of briquette production could be a hindrance to potential investment and a reason for its low expansion in the country’s energy sector. The determination of such can be a valid measure of evaluating consumers’ ability to afford the briquetted fuels.

Therefore, this study is an attempt to analyze the technical and economic viability of a household scale composite briquette project for application in rural communities in Nigeria. The objectives were to assess the quality of briquettes, estimate the cost of production, and determine the feasibility of the project using specific economic indicators. As a strategy for reducing the cost of production, a comprehensive sensitivity analysis was performed on the essential input parameters that may affect the profitability of the household briquette project. This study hypothesized that household briquetting projects in rural communities have good profitability and therefore are financially viable. The outcome could be a guide for householders in Nigeria with a potential interest in investing in briquette technology.

2. Materials and Methods

2.1. Material Processing and Briquette Development

The agricultural residues used in briquette development were corncobs and the bark of the oil palm trunk (OPTB). The raw materials were collected from local farms in Nasarawa state, Nigeria. The selection of the materials was based on their availability in large quantities. Additionally, they are treated basically as waste, with no meaningful alternative use and low nutritional value to avoid food resource problems. Waste papers were also used as binding material since the densification was of a low-pressure technique. Corn cobs and OPTB were chopped into smaller pieces and then dried to reduce the moisture content. Both materials were reduced further by grinding and were then passed through a 2 mm sieve to obtain the desired particle size ≤ 2 mm. The waste papers were initially shredded and then soaked in water for 2 days. The soaked material was blended in a grinder to form a pulp. The paper pulp was used as the binding material because it has a good combustion property.

To prepare the sample for densification, the ground materials were formulated into different samples mixed with waste paper pulp as the binder. The individual (corncobs and OPTB) and mixed materials were measured into 1000 g portions following a similar method by Lubwama and Yiga [31]. Each portion was mixed with 100 g of waste paper pulp binder (i.e., 10% by weight of the measured portions). A total of three different mixtures with distinct identities were formulated according to the quantities of corncobs to OPTB as stated in

Table 2. Material composition of CC, OPTB, and composite briquettes.

S/No	Sample ID	Corncobs (g)	OPTB (g)	Wastepaper Pulp (g)	Ratio of Raw Material to Binder
1	CC	1000	0	100	100:0:10
2	OPTB	0	1000	100	0:100:10
3	Composite	500	500	100	50:50:10

. The briquettes were produced in a laboratory using a manually operated hydraulic piston press (Figure 1). The mixture was fed into a mold with dimensions of 56.6 mm inner diameter and height of 74 mm. Compression pressure of ≤7 MPa was applied during compaction at a room temperature of 28 °C. The properties of the produced briquettes were determined after drying in a locked room with enough aeration for 30 days (Figure 2).

2.2. Technical Assessment of Briquettes

The technical assessment of briquettes was basically concerning their quality and fuel performance in cooking. This was conducted to examine the handling, transport, storage, and combustion characteristics of the briquettes. Specifically, the quality was assessed by determining such parameters as moisture content, density, water resistance, shatter index, and compressive strength. These parameters were determined in accordance with the procedures described in [25]. Others include proximate and elemental composition including calorific value. Additionally, water boiling time, burning rate, specific fuel consumption, and thermal fuel efficiency, which constitutes fuel performance, were determined according to the procedure described in [32].

2.3. Economic Analysis of Briquetting

The economic analysis was conducted to determine the total production cost, the unit cost of briquette (per kg), and the feasibility of the briquette project from a household point of view with specific reference to the composite briquettes. The cost analysis focused on capital, operation, and repair and maintenance costs. This study is among pioneer studies in Nigeria to conduct an economic analysis of briquette production. Therefore, accuracy in cost estimation is the priority, taking two considerations:

• To closely represent the actual cost of briquette production in Nigeria. For instance, assumptions are made based on local input for labor and miscellaneous costs.
• The determination of the types of costs for briquette production are actual costs for briquetting in Nigeria and the elements of the costs were cross-matched with related studies [19,33,34,35].

In this study, all the financial data are given in United States Dollars (USD). Total cost was estimated from the capital expenditure (CAPEX) and operating expenditure (OPEX) (

Table 3. Total cost of a household composite briquette project at production capacity of 5.79 kg/h.

Item	Rate (USD)	Amount (USD)
(A) Fixed Cost (Initial investment)
A.1: Briquette machine	261.78	261.78
A.2: Miscellaneous equipment	52.35	52.35
A.3: Installation cost	26.17	26.17
A.4: Storage facility	392.67	392.67
Sub-total		732.98
(B) Operation cost
B.1: Raw material cost	0.029/h × 8 h/day × 300 days	69.86
B.2: Raw material processing cost	0.3926/h × 8 h × 300 days	942.40
B.3: Labor cost	0.3926/h × 8 h × 300 days	942.40
B.4: Depreciation	10% of A	73.29
B.5: Miscellaneous	5% of sum of B.1–B.3	97.73
Sub-total		2125.71
(C) Repair and maintenance cost
C.1: Repair and maintenance cost	10% of A	73.29
Sub-total		73.29
Total investment.		2932.00

). The values were derived from actual field data collected along with certain assumptions.

2.3.1. Estimation of Cost of Production

Assumptions

The capacity of the machine is 5.79 kg/h, and this was derived based on the ratio of the mass of briquette (in kg) produced by the briquetting machine to the average time used in the production of the briquettes. Production time comprises times for the loading of raw material, compression of raw material, briquette residence, and ejection of the briquette. Given that the briquette technology is new to Nigeria and being a household project, the expected economic life of the briquette machine was assumed to be 10 years as also found in Pradhan et al. [21]. It is unlikely that a manually operated machine may last beyond 10 years without needing replacement. The machine will be operated for 8 h a day. The total number of days to be operated is 300 days annually making the capacity utilization of the briquette machine to be about 82%.

The discount rate was assumed to be 10% following Pradhan et al. [21]. This rate was used because normally the current worldwide approaches use a similar value. Finally, for revenue generation purposes, the proposed selling price of the produced briquettes was pegged at USD0.26 per kg. The assumption of this value was based on the average market selling price of USD0.52 per kg and USD0.26 per kg for charcoal and fuelwood, respectively. The price of these traditional biomass fuels was derived from communication with vendors from a market survey in the study year.

Capital Cost

In calculating the capital cost, also known as depreciation, the present analysis focuses its attention on the cost of equipment plus accessories, installation, and storage facility. The capital cost is a one-time expenditure and could also include the cost of land and building. In this study, the depreciation was calculated using the straight-line method following Kaoma and Gheewala [35]. The equation for the calculation is based on Equation (1)

$$C_c=\frac{E{Q}_c}{E{Q}_l}$$

(1)

where

• C_c = Capital cost
• EQ_c = Cost of equipment
• EQ_l = Economic life of equipment.

Operation Cost

The raw biomass material may be available for free; however, a price of USD0.005 per kg was assumed based on the projected cost of agricultural residues at USD5 per ton as reported in Gujba et al. [36]. This cost was projected based on an annual growth rate of 0.1% from the US Energy Information Administration and may remain the same till 2030 as projected [37]. As the machine output capacity was assumed to be 5.79 kg/h, it then implied that the average cost of biomass material will be USD0.029/h. The price of raw material also includes the transportation, preparation, and processing of the residues. Expenses on operations such as cutting, chopping, drying, grinding, and sieving were included in the total cost of raw materials. A value of USD0.3926/h was assumed for these operations. Therefore, the total cost of raw materials was USD0.422/h. Currently, the monthly minimum wage in Nigeria is USD78.53 [38]. However, this amount is unrealistic for those who work in the informal sector such as the briquette project under proposition. Workers at the federal government level enjoy the minimum wage, but only a few state governments can even afford to pay it. Unskilled workers like laborers and artisans who are paid on a daily basis get far less than the recommended minimum wage. Based on this scenario, this study considered half of the monthly minimum wage (USD39.26), and therefore labor cost was assumed to be USD0.19 per hour or USD1.57 per day. It was also assumed that two workers would be required to produce the briquettes with one feeding and compressing while the other collects and packs. It implies that for two workers, the labor cost was USD3.14 per day. There are miscellaneous expenses that may relate to unforeseen circumstances during operation, and this was assumed to be 5% of operation cost (i.e., the sum of labor and raw material cost). Being a project by households in a rural community with hardly any steady supply of electricity, and the usage of a manual briquette press, densification, and other operations will be done manually without the need for electricity. Thus, no cost was assumed for electricity.

Repair and Maintenance Cost

Maintaining the briquette machine in terms of cleaning, oiling, and replacement of loose screws and other accessories like molds and compression dies when they get weak or spoiled, is taken from repair and maintenance costs. This cost was determined by adapting the repair and maintenance cost model proposed by Oluka and Nwani [39]. Using the model, accumulated repair and maintenance cost is given by Equation (2)

$$A_{rm}=A{\left(A_{wh}\right)}^b$$

(2)

where

• A_rm = Accumulated repair and maintenance
• A_wh = Accumulated working hours
• A & b = Model parameters: parameter A was used to express the magnitude of the repair and maintenance costs while parameter b describes the distribution of repair and maintenance cost throughout the machine’s life.

Following Equation (2), repair and maintenance cost as percentage of the initial investment was derived using Equation (3)

$$\% Repair and maintenance cost=\frac{ A_{rm}}{ C_{invst}}\times 100$$

(3)

where

• C_invst = Initial capital investment

Determination of Unit Cost of Briquette

The unit cost of briquette production is calculated by Equation (4) adopted from Tripathi et al. [33]

$$U_{bp} =\frac{Y_{cc}+Y_{oc}+Y_{rm}}{Y_{bp}}$$

(4)

where,

• U_bp = Unit cost of briquettes production
• Y_cc = Yearly capital cost
• Y_oc = Yearly operation cost
• Y_rm = Yearly repair and maintenance cost
• Y_bp = Yearly briquette production

2.3.2. Feasibility of Briquette Production

As parameters were valued and all costs have been generated, the feasibility analysis of the composite briquette project was performed by deploying specific fundamental economic indicators. These include net present value (NPV), internal rate of return (IRR), payback period (PBP), and benefit–cost ratio (BCR) as per Adeoti et al. [40].

Determination of Net Present Value

NPV is the difference between the present value of all future returns and the present money required to invest. It can be computed by subtracting the total discounted present worth of the cost stream from that of the benefit stream. NPV is calculated using Equation (5)

$$NPV={\displaystyle \sum }_{t=\dot{O}}^n{\left(C_b-C_c\right)}_t{\left(1+\mathrm{i}\right)}^{-t}$$

(5)

Determination of Internal Rate of Return

The IRR is the highest interest that a project could pay for the resources used if the project is to recover its investment and operating costs and still break even. It reflects the profitability of the project. When it is greater than the standard financial cut-off discount rate, i, in financial analysis, the project can be accepted. The cut-off discount rate that makes the NPV equal to zero is calculated by Equation (6)

$${\displaystyle \sum }_{t=\dot{O}}^n{\left(c_b-c_c\right)}_t{\left(1+\mathrm{i}rr\right)}^{-t}=0$$

(6)

Determination of the Payback Period

This is the time period from the inception of the project till the net value of the incremental production stream is equal to the overall amount of capital invested. It indicates the length of time between cumulative net expenditure recovered in the form of annual net income. In other words, it is the number of years that it will take, from day one of a project, before the investment cost is fully recovered. It is calculated by Equation (7)

$${\displaystyle \sum }_{t=\dot{1}}^{Pt}{\left(c_b-c_c\right)}_t{\left(1+\mathrm{i}\right)}^{-t}=0$$

(7)

Determination of the Benefit–Cost Ratio

The benefit–cost ratio is the ratio of the equivalent worth of benefits to the equal value of costs. It is obtained when the present value of the cash inflow is divided by the present value of the cash outflow. A condition used to measure the worth of a project for acceptance is when the benefit–cost ratio is 1 or greater. This is expressed by Equation (8)

$$B/C=\frac{{{\displaystyle \sum }}_{t=1}^n{C}_b{\left(1+\mathrm{i}\right)}^{-t}}{{{\displaystyle \sum }}_{t=1}^n{C}_C{\left(1+\mathrm{i}\right)}^{-t}}$$

(8)

where,

• C_b = Cash benefit of the investment
• C_c = Cash cost of the investment
• (C_b − C_c) t = Net cash flow in the year (t)
• n = The calculation period, which is equal to the project life-cycle
• i = The cut-off discount rate

Break-Even Point Analysis

Break-even analysis is used to determine the least quantity of briquettes to be sold that would safeguard the project against encountering any loss. It shows the point where the total income from sales of briquettes is equal to total fixed and variable expenses on production known as the break-even point (BEP). It can be calculated using Equation (9) according to Tsorakidis et al. [41]

$$BEP =\frac{FC}{SPU-VCU}$$

(9)

• BEP = Break-even point
• FC = Fixed cost
• SPU = Unit selling price
• VCU = Unit variable cost

Sensitivity Analysis

Several factors or input parameters can influence the economic performance of a briquetting project. In this study, discount rate and other input parameters such as initial investment (fixed cost), operating and maintenance cost (O&M), and the selling price of briquettes were varied to determine the sensitivity of NPV on profitability of the project. These factors were chosen because they can introduce uncertainties due to their dynamic nature from the existence of market forces. Two different discount rates (10% and 16%) were used in performing the analysis. The 10% discount rate was used as the base case, and this is generally considered as the current conventional rate used in annualizing capital investments. It is essential to note the interest rate that households may pay could be much higher, particularly if they are borrowing from a formal financial institution such as commercial banks or informal financial institutions like private money lenders. The 16% discount rate was also used considering that currently (at the time of this study), the prime lending rate charged by a commercial bank in Nigeria was about 16% for short-term consumer loans [42]. The justification for the use of a 10% discount rate was based on being the conventional rate generally used and the 16% discount rate based on being the prevailing rate at the time of this study. This variation caters to any eventuality leading to a higher discount rate.

For the parameters of initial investment, O&M cost, and the selling price of briquettes, a ±20 percent change was used to vary each parameter while keeping the others constant. The basis for this variation is because of the occurring dynamics in the demand and supply of input requirements for briquette production. A typical example is the effects of inflation rates on capital costs which can either increase or decrease due to instability. Moreover, costs related to raw materials can change, mainly when the raw material acquisition initially available for free will now have to incur a payment. Eriksson and Prior [17] noted that where briquetting has become economically feasible to an extent, residues tend to acquire a market price where hitherto they were free. Additionally, households could supply labor from within to save cost or will have to hire workers externally. These scenarios can influence all expenses relating to capital, operation, repair, and maintenance. Based on past, present, and projected trends in market situations in Nigeria [43], it is predicted that all these costs may not exceed a 20% rise or drop, hence the basis for it being the focus of this study.

3. Results and Discussion

3.1. Technical Assessment of Produced Briquettes

Briquettes were produced from corncobs, OPTB, and a blend of both that resulted in composite types. All the categories of briquettes were analyzed for their physical, mechanical, and thermal properties. They were also tested in terms of combustion behavior which determined their performance in cooking.

Table 4. Summary of the technical assessment of briquettes.

Property	CC	OPTB	Composite
Physical and Mechanical *
Moisture content (%)	10.24	9.24	9.75
Volatile matter (%)	74.68	79.30	76.23
Ash content (%)	2.20	7.41	3.73
Fixed carbon (%)	23.12	13.29	20.04
Calorific value (MJ/kg)	16.65	17.78	16.65
Density (g/cm3)	0.35	0.43	0.39
Water resistance (%)	86.20	93.20	88.30
Shatter index (%)	99.20	99.05	98.16
Compressive strength (MPa)	10.26	22.33	21.09
Fuel properties **
Volatile matter (%)	74.68	79.30	76.23
Ash content (%)	2.20	7.41	3.73
Fixed carbon (%)	23.12	13.29	20.04
Carbon (%)	42.15	41.94	41.61
Hydrogen (%)	6.41	6.26	6.27
Nitrogen (%)	0.09	0.11	0.13
Sulphur (%)	0.17	0.22	0.23
Oxygen (%)	42.58	41.79	42.38
Performance **
Briquette ignition and water boiling time (s)	22.28	19.51	17.54
Thermal fuel efficiency (%)	15.31	13.52	17.25
Fuel burning rate (kg/h)	0.54	0.62	0.69
Specific fuel consumption (kg/L)	0.17	0.14	0.16
CO2 emission (gCO2e)	281	241	264

* [25], ** [32].

summarizes the technical assessment of the briquettes. All briquette types had satisfactory qualities in terms of the physical, mechanical, and thermal properties. The calorific values of the briquettes also meet the standard requirement of ISO 17225-7 [44] and can provide enough heat for domestic cooking. The OPTB briquette displayed the greatest qualities in this respect. However, its weakness lies in its high ash content. On the other hand, the greatest strength of the CC briquette is its low ash content. The ability of corncob to compliment OPTB and vice versa presents the composite briquette as a better option.

Based on its performance in cooking, all briquettes displayed similar outstanding performance in terms of the total time taken to ignite briquettes and boil water, burning rate, and specific fuel consumption. However, composite briquettes demonstrated better performance in terms of thermal fuel efficiency and produced less ash during combustion. For combustion efficiency, lower ash content is preferable in order to avoid slagging, and also allows for air to penetrate the stove, thereby accelerating the burning rate. Overall, the composite briquette was considered the optimum combination and the one with the best performance. Results from the experiment showed that the composite briquettes have adequate handling, transport, storage, and combustion characteristics. Therefore, it was on this basis that the composite briquette was chosen for economic evaluation.

3.2. Economic Analysis of the Composite Briquette Project

3.2.1. Cost of Briquette Production

The total cost comprising fixed costs and O&M costs incurred in the production of the composite briquettes is detailed in Table 3. The fixed cost comprises of cost of the equipment and accessories such as the briquette machine including its installation, miscellaneous accessories, and the storage facility. The O&M cost comprises the cost of raw materials and their processing which also includes transportation. Other costs in this category include labor, repair, and maintenance. The cost of the storage facility (USD392.67) accounts for the largest share of fixed cost, whereas the raw material cost (USD1012.27) accounts for the largest share of the O&M cost.

Table 5. Cost of production and annual revenue from the sale of composite briquettes.

S/No	Items	(USD)
1	Total cost (USD/year)	2932.00
2	Unit cost (USD/kg)	0.16
3	Annual revenue (USD/year)	3637.70

shows the unit cost of producing the composite briquettes (USD0.16) and the annual revenue that can be generated from the sale of the same. As earlier mentioned, the selling price of the composite briquettes per kg was assumed to be USD0.26, which turns out to be higher than the unit cost. This result contrasts with the observation in Kaoma and Gheewala [35] where the unit costs of briquette production associated with the 4 kg/h capacity plants were higher than the proposed selling price. Additionally, with machine capacity at 5.79 kg/h, operated for 300 days annually, 13,896 kg of briquettes will be produced. Based on this, the annual revenue generated for the first year and subsequent years was found to be USD3637.70. The overall cost of production ultimately affects the unit cost of the briquetted fuel. Where the price is high as compared with existing fossil fuels, it limits the use of biomass briquettes as fuel. In recent times, studies on biomass briquette places emphasis not just on technical qualities, but also on ways of reducing the cost of its production.

A panacea for turning briquettes into a viable alternative is to ensure that the overall cost of production would translate to lower prices compared with the existing fuels they are meant to complement or replace. The total cost of briquette production suggests that rural communities in the study area can produce this at a minimal cost. Hence, it can be made readily available to consumers. The composite briquettes can complement domestic cooking fuels like firewood, charcoal, and kerosene, thus decreasing the high demand for such fuels.

3.2.2. Feasibility of Briquette Production

Table 6. Cash flow (USD) of the composite briquette project.

Year	Cash Outflow	PV of Cash Outflow	Cash Inflow	PV of Cash Inflow	Net Present Value
1	2	3	4	5	(5) − (3)
0	2931.996	2931.996	0	0	−2932
1	2199.012	1999.101	3637.696	3306.997	1307.895
2	2199.012	1817.365	3637.696	3006.361	1188.996
3	2199.012	1652.15	3637.696	2733.055	1080.905
4	2199.012	1501.954	3637.696	2484.596	982.6411
5	2199.012	1365.413	3637.696	2258.723	893.3101
6	2199.012	1241.285	3637.696	2053.385	812.1001
7	2199.012	1128.441	3637.696	1866.713	738.2728
8	2199.012	1025.855	3637.696	1697.012	671.1571
9	2199.012	932.5955	3637.696	1542.738	610.1428
10	0	0	3637.696	1402.489	1402.489
Total		15,596.16		22,352.07	6755.914

presents the cash flow data, which shows the details of income and expenditure from the briquette project over 10 years. The economic indicators that determined the feasibility of the project were calculated based on the cash flow data.

In

Table 7. Analysis of economic indicators on the feasibility of the briquette project.

S/No	Indicator	Value
1	Net Present Value (USD)	6755.91
2	Internal Rate of Return (%)	48.84
3	Payback Period (years)	2.40
4	Benefit–Cost Ratio	1.43

, the result of the analysis of the economic indicators is shown. The NPV of the project at 82% capacity utilization and at 10% discount rate was USD6755.91. The obtained value is greater than zero, which confirms financial profitability and investment viability. The capacity of the briquette plant may have been a major factor. In a related study, negative NPV’s were reported for plants with low capacity (4 kg/h) but positive for plants with higher capacities [35]. In terms of economic viability, the study by Hakizimana and Kim [34] on peat briquettes yielded an NPV of USD17.2 million which justified its commercialization. Moreover, following the study by Ifa et al. [20], briquette production was expected to produce an NPV of USD611,230 over a 10-year period. The NPV plays a vital role in the decision-making of long-term investment projects.

The IRR for the briquette’s development was 48.84%. As earlier stated, the IRR is the discount rate that makes the NPV of the cumulative net benefit stream or cumulative cash flow equal to zero. From the cash flow of the composite briquettes project, the NPV for the composite briquettes would be equivalent to zero at discount rates of 49%. Based on this, a negative NPV will be obtained should the interest rate be above 49%, and by implication, the benefits to be accrued for the briquette project will be far less than the cost of investment. A project of this nature, from the household’s point of view, should not take a loan whose yearly interest rate is above the discount rate that will make the NPV equal to zero.

The PBP was found to be 2.40 years, as indicated in Table 7. This result suggests that it will take only a few years for the project to recover its initial investment based on the annual net cash revenues. The BCR was greater than 1, and it provides a financial justification for the briquette project to go ahead. BCR, being a ratio, does not tell the potential profit by implementing the project, but it must be considered before a final decision is reached [40]. The BCR in this study implies that there is excess income over expenditure which confirms that it is a worthy investment opportunity.

The analysis of the level of sales at which a briquette project would make zero profit determines the BEP. The result in Figure 3 indicates that the total cost and revenue slope lines crossed at 7329.8 kg of briquettes. This is the BEP where the briquette project experiences no loss or profit. So, for the project to make an accounting profit, the sale of briquettes needs to be above 7329.8 kg. The surplus quantity (6566.2 kg) from the annual production (13.896 kg) can effectively address the market risk involved. Sahoo et al. [45], opined that meeting the short, medium, and long-term goals of any investment based on revenue generation, loan repayments, and keeping the business afloat can only be achieved by selling the products.

Sensitivity Analysis

As stated earlier, the sensitivity analysis was performed at two different discount rates (10% and 16%), and input parameters of initial investment, O&M costs, and the selling price of briquettes were varied on the basis of a ±20 percentage change.

Table 8. Sensitivity analysis for composite briquette production.

Discount Rate	Parameter	Economic Indicator (NPV USD)
		Normal	−20%	20%
10%	Initial investment		7100.68	6411.15
	O&M costs	6755.91	9530.20	3307.45
	Selling price		2285.50	11,226.33
16%	Initial investment		4633.70	3913.11
	O&M costs	4273.40	6574.65	1972.16
	Selling price		757.04	7789.77

summarizes the results of the sensitivity analysis for each discount rate. Both positive and negative variations of these parameters, including the increased discount rate, resulted in NPV values greater than 0.

Expectedly, the value of NPV (USD4273.40) at the 16% discount rate showed a decrease compared with the values obtained at the 10% discount rate. Though the respective values were all positive and not significantly different, the profitability of the briquette project can be decreased with higher discount rates. A similar trend was reported by Bot et al. [19] in the case of coconut shell and rattan waste briquetting systems. Should the current interest rates in Nigeria drop as low as the conventional rate of 10%, the briquette project would generate a high profit as obtained in Table 6. However, the 16% discount rate, which resulted in lower NPV, appropriately represents an accurate and more realistic position of the economic evaluation of the briquette project and its profitability.

A reduction of 20% in the amount invested initially on the briquette project led to an increase in the NPV. The NPV, in turn, decreased when the initial investment was upped by the same figure. In rural Nigeria, the challenge in raising funds for businesses that are capital intensive such as this is one of the major factors preventing householder investment. It has been suggested that more user-friendly, low-cost, and energy-effective technologies at various scales should be developed [46]. Such technologies would suit rural communities and help to increase the interest of potential investors.

A change in the O&M cost caused a substantial difference in the values of NPV. Studies have reported that the cost of raw material is among the significant components of total expenditure [33,47,48], and this study has corroborated the same position. The risk of the NPV reducing significantly from an increase in the cost of raw material is negligible. However, to ensure the sustainability of profits from the briquette project, a reliable source of raw material supply should be established.

The fluctuation in NPV was significant as a result of the ±20% change in the selling price of briquettes. Specifically, a 20% increase in the selling price of the briquette raised the NPV by over USD4470.41 at a 10% discount rate and USD3516.36 at a 16% discount rate. Additionally, it reduced by a similar margin after the 20% decrease in the price of briquettes, following the same trend as the change in O&M cost. Similar studies have reported changes in NPV as a result of fluctuations in the price of briquettes, e.g., ±10% change [49] and ±20% change [21,50].

Figure 4 and Figure 5 portray the relationship between the NPV and the input parameters at the two different discount rates. The steepness of the slopes signifies the magnitude of the sensitivity of the economic indicator to the input parameters. The result of the analysis shows that the NPV was more sensitive to the O&M cost and the selling price of briquettes. However, the latter appears to be the most sensitive factor in consonance with Pradhan et al. [21]. Elsewhere, sensitivity to briquette selling price was also observed, though capital cost and discount rate also determined the economic viability [19]. As a strategy to reduce the selling price of briquettes, capital expenditure (CAPEX) and operation expenditure (OPEX) should be reduced. It is possible to sell the composite briquettes at a lower price and still make gains. For instance, reducing the CAPEX and OPEX by 20% would make the total cost of production USD2345.62 and by extension the unit cost of the composite briquettes USD0.13. Selling the composite briquettes at the reduced price of USD0.21 would generate annual revenue of USD2910.16 and a net profit of USD1150.92. The NPV would still be superior to the cut-off value (NPV: USD4723.77 > USD0.00).

Adeoti et al. [40] observed that the viability of a project is sensitive to estimates of costs and benefits. Thus, the profitability of the project is guaranteed if costs are kept to a bare minimum and benefits optimally maximized. Overall, the positive results obtained, even after the variation of discount rates and other input parameters, are indicative of the ability of the proposed project to generate profits.

3.3. Environmental and Economic Impact of Composite Briquettes

This study is not only about making briquettes cheaper than fuelwood or charcoal but it is also concerned with the impact that their production and utilization have on the environment. Briquettes can be produced from waste materials such as agricultural residues whereas fuel wood and charcoal are produced from wood that must be cut down from the forest. As noted in Hakizimana and Kim [34], the production of 1 ton of wood-based charcoal requires around 5 tons of wood with two-thirds of its energy lost to the atmosphere in the process. As this study has shown, briquettes can be produced from waste materials such as agricultural residues with little to no negative impact on the environment. Instead, recycling waste materials through briquetting gives the opportunity for waste management and preventing deforestation.

Based on the feasibility of the study conducted, the production of briquettes for a day from one briquette plant will help to reduce about 50 kg of agricultural residue from the environment. This translates to approximately 15 tons of waste material in a production year. If this quantity of waste were to be sold ordinarily based on the estimated price of the agricultural residue of USD5.00/ton, only a meager sum of USD75.00 would be generated. Based on the assumption of the briquette machine capacity of 5.79 kg/h in this study, 13,896 kg of briquettes could be produced in a year. When the briquettes are sold at the rate of USD0.26/kg as proposed in this study, the annual revenue will be USD3637.69 and the net profit will be USD1438.69.

As earlier stated, dependence on fuelwood for cooking and heating is found mostly among the low-income rural dwellers in Nigeria. The per capita consumption of fuelwood in rural areas in Nigeria was reported as 511.2 kg/person at USD0.26 per kg [23] and the calorific value of fuelwood as 15.5 MJ/kg [51]. Based on these, the heat requirement for a household of about 5 persons would be 39.62 MJ/kg from 2556 kg of fuelwood and would cost the household about USD669.11. The composite briquettes in this study (calorific value of 16.65 MJ/kg) would supply the same amount of heat requirement from 2379.46 kg of briquettes. If the briquettes are bought at the same USD0.26 per kg as proposed by this study, the household would save USD42.21, which is about 6.9%. This amount could potentially increase to about USD170.80, i.e., 25.5% if the price of the briquettes is reduced to USD0.21 per kg.

Eriksson and Prior [17] noted that in many countries, lower prices of fuelwood may effectively rule out the commercialization of briquettes. However, there are also countries, including Nigeria, where it seems likely that deforestation will cause a rise in prices imminently. In such circumstances, the briquetting of agricultural residues can have a legitimate economic role without any need for subsidies.

4. Conclusions and Policy Recommendations

This study was carried out to analyze the techno-economic viability of producing briquettes from agricultural residues with specific reference to corncobs and OPTB. The objectives were to assess the quality of briquettes, estimate the cost of production, and determine the economic feasibility of the briquette project using specific economic indicators. Additionally, economic feasibility was limited to the level of a household scale briquette production in a Nigerian context where energy poverty is inherent, especially in rural communities. A composite briquette project is an alternative to fuelwood as an energy source that possesses indirect benefits including a reduction in deforestation and less carbon emission. These indirect benefits are the added values to the benefit of the composite briquette project; however, they are not estimated in this study due to the unavailability of their market prices. Based on the findings the following conclusion has been drawn:

• The unit cost per kg of the briquette was USD0.16 and can sell for USD0.26, which makes it cheaper compared to the price of charcoal and fuelwood.
• The NPV of USD6755.91 was positive and shows high profitability based on the annual net cash revenues the project will generate.
• The highest interest rates a household should take in order to not make losses should be 49%. Anything beyond that will make the project unprofitable.
• The PBP was less than 3 years which shows an immediate prospect of initial investment cost recovery and the project will make an accounting profit as long as briquette sales are above 7329.8 kg.
• The NPV was more sensitive to the selling price of briquettes and a higher selling price of briquettes could lead to higher economic benefits. However, as a strategy to reduce the selling price of briquettes, the CAPEX and OPEX should be reduced.
• Households could save about 25% from per-capita expenditure on fuelwood when briquettes are utilized.

Overall, the composite briquettes have adequate handling, transport, storage, and combustion characteristics. They are also environmentally friendly and cost efficient. Thus, developing composite briquettes from corncobs and OPTB is technically and economically viable even at the current interest rate (16%) obtained in Nigeria. The extraction of useful energy from a blend of corn cob and OPTB could bring significant environmental and socio-economic benefits to the rural communities of Nigeria.

The positive assessment of the technical and economic viability of the composite briquette project leads to a new direction for energy policy in Nigeria. Instead of solely depending on raw resources (e.g., fuelwood), the use of composite briquette promotes dependency on renewable resources. This will stimulate more innovations towards producing renewable energy sources and boost economic growth in Nigeria by increment in gross domestic product and creating more job opportunities for locals. Additionally, given the significant capital investment required to produce briquettes, government support is needed to guarantee that interest rates are as low as feasible for households looking to borrow money to invest in the technology. This calls for the establishment of microfinance institutions expressly for briquette and related technologies in order to promote the development of local briquette factories and, more crucially, to provide incentives for sustained operation.

In relation to the limitation of this study, future research can include the estimation of the indirect benefits of the composite briquette project into NPV estimation. For a comprehensive economic analysis, a cost-benefit analysis should be carried out to compare the economic indicators (NPV, IRR, and BCR) between composite briquette and fuelwood (the status quo of energy sources in rural Nigeria). The study also recommends that similar studies should be carried out to determine the economic viability of medium- and large-scale briquette projects.