Renewable Nepal

  • Efficient use of solar, micro hydro, biogas and wind can help solve Nepal’s energy crisis

Jan 22, 2013-

The Census Report of 2012 published by the Central Bureau of Statistics speaks volume of the “medieval period” at which Nepal is stuck primarily due to energy issues. Out of the 54,23,297 households in Nepal, 64 percent use firewood for cooking, 21 percent use LPG gas, 10 percent use cow dung, 2.4 percent use biogas, 0.1 percent use electricity and the rest use other sources. The trend towards using biogas, electricity and LPG Cylinder is increasing, but the fact that still 64 percent of households rely on firewood  for day to day cooking is a massive development problem. That is why the mission of the Alternative Energy Promotion Center to provide all households with improved cooking stoves by 2017, which can have an immense public health and environmental impact, is a breath of fresh air.

Despite the gradual improvement made in electricity access over the past two decades, still, less than 30 percent of rural households and only 2,100 out of the Nepal’s 3,915 VDCs are connected to the national grid. The important fact to remember is that having access has not resulted into having actual electricity — fact urban dwellers can witness from the power-cut of 14-16 hours a day. Nevertheless, the improvement made by small scale renewable energy in both rural and urban Nepal is worth having a look.

Improvement in the solar industry has provided electricity to both rural and urban Nepal even though the cost per KWh generation is relatively expensive compared to other renewable such as wind and hydro. Nepal receives 3.6 to 6.2 kWh of solar radiation per square meter per day, with roughly 300 days of sun a year, making it ideal for solar energy. The mushrooming of photovoltaic industry in Nepal which receives subsidy for construction in rural areas has been instrumental in providing energy access to off-grid areas. However, the focus of many solar industries to remains as service providers means much business areas remain to be utilised in the manufacturing side of photovoltaic. Similarly, the biogas support program that started in 1992 has installed 241,920 biogas plants in over 2,800 VDCs and all 75 Districts. Currently there are around 81 private biogas companies operating in Nepal.

Nepal’s techno-entrepreneurs have made significant achievements and built in immense expertise in the area of micro-hydro. They are in the position to carry out all services for feasibility study, survey, design, manufacturing of turbines and other machines and equipment, installation, commissioning, as well as repair and maintenance required to micro hydropower plants. This expertise can be exported and the comparative advantage we acquire from the experience is a case study worth writing for schools of economics. Similarly, products such as improved cooking stoves, briquette, and solar lamps are essential improvement but glamour and efficiency should be associated in these as well as the other renewable products by creating R&D fund for product improvement. The subsidy policy of the government was instrumental in unleashing these industries, but many argue it is time to re-examine the subsidy policy on this industry that has been receiving it for the last 20 years.

Government policy was vital to promote above mentioned renewable at the initial stage. The subsidy policy for micro hydro and solar power is quite attractive when compared against direct subsidies in other countries such as Indonesia or Sri Lanka. There is also tax exemption for renewable products to reduce the fixed cost for technology.  Commodity import duties and Value Added Tax are waived for green energy products such as solar panels and hydro turbines, and a new policy is need to be expanded this benefits to wind energy raw materials as well. However, if these policies take into consideration both the ‘economic efficiency’ and ‘social equity’ aspects, is a debate that needs to be pursued. While social equity can be the immediate priority, economic efficiency in the long-run would ensure sustainability of the sector and reduce dependency.  

The banking sector’s increasing involvement in renewable energy is good news for Nepal. The financial products that are designed for renewable, such as micro hydro, solar and biogas, are steps towards capital market creation in the area of renewable. Policy to reduce interest rates by central bank on these products could go far away to expand the renewable portfolio of Nepal. Even though the initial running cost of renewable is high, there is no running cost which means a renewable plant with a life span for 20 years is basically prepaid for the next 20 years. Henceforth, long-term debt financing as seen in the housing sector is worth getting into for the banks in the area of renewable. Furthermore, rural companies and cooperatives working in the areas of renewable should be provided appropriate advisory and business support service along with the technical support to help them understand end use of electricity, accounting procedures and micro-financing. Last but not the least, the promotion of renewable energy is dependent on existing policy and implementing agencies at the macro-level, supply companies, dealers and financing institutions at the middle level and local community and household economy at the micro- level. Thus, there is an utmost need to synchronise these levels efficiently to take Nepal out of the lingering medieval period when it comes to energy.

Dhakal is the COO of WindPower Nepal Pvt Ltd

Published: 22-01-2013 08:20

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