This paper discusses the impact of dung availability and economic importance of biogas plants in Integrated Rural Energy System (IRES). Fixed Cost, maintenance cost, feedstock cost and manpower costs of community biogas plant are presented. IRES selection for four villages using the Mixed Integer Linear Programming (MILP) optimization model is presented. Analysis of selection of IRES and energy is presented. Analysis of selection of IRES and energy costs with short term and long term policies of improving dung availability is given which highlights the importance of biogas plants in IRES and costs of energy to a village.