Energy security is a term that entails the protection of a nation against any possible threats caused by energy insecurity in the future. To understand energy security, we need to analyse the possible threats that may arise in national energy systems.

Nepal’s energy threats stem from two causes. The first relates to climate change. Climate change may alter energy systems and reduce or interrupt the energy supply. The second relates to possible high costs of fossil fuels and a subsequent supply constraint, especially when it comes to petroleum products.

Ensuring a sustainable supply

The objective of energy security should be to ensure an uninterrupted and smooth supply of energy that is easily available, cost-effective and efficient. Energy security can be achieved by ensuring a sustainable energy supply, promoting clean and efficient use of energy, establishing efficient market mechanisms and promoting cross border transactions.  

The energy system must have a large indigenous production capacity to ensure a sustainable supply. Nepal’s energy supply is highly reliant on hydropower for electricity generation, and biomass for meeting cooking energy demands. There is considerable danger that accompanies this reliance on only a few energy sources. This is why energy sources should be diversified. Nepal has considerable hydropower, solar, biomass, and wind potential. However, the contribution of solar and wind energy is negligible in the total energy supply within the nation. Nepal should ensure that 10 to 20 percent (or more) of its electricity comes from sources other than hydropower to ensure sustainable supply of energy. Solar resources will no doubt be a potential source for the future because of its declining price trend in the world market. Nepal also needs to start strategic moves to harness its wind power potential. However, its large-scale use is contingent upon the development of other infrastructures, especially road infrastructure.

Even within hydropower, there are different types of production methods. Nepal has so far relied more on run-of-the river (ROR) plants. There should also be a proper mix of reservoir storage, peaking ROR, and ROR plants; and small mini/micro-hydropower plants should also be given due consideration. The storage plant should also comprise pumped storage, which can contribute remarkably towards energy security.     

Energy infrastructure generally has a long life span, ranging from 25 to even 100 years.   As large investment is required to build energy infrastructures, they should be of a quality that can withstand the rigours of time. It should also be resilient enough to withstand the likely impacts of nature and climate change. Furthermore, the utmost care should be given to maximise the electricity generation per drop of water. The same also applies to electricity generation using other resources.

Focusing on the demand side

Nepal has low energy productivity per unit of use. Therefore, there should not only be supply side strategies but also a demand side focus.

Urban infrastructure such as houses and buildings should be designed to run on low levels of energy consumption. Big houses and housing complexes should be mandated to follow a design which requires them to have their own electricity generating capacity, for example, they can install a solar system on rooftops and other free spaces. The distribution system must have smart-grid operation. The system should follow a low carbon development path so that the future demand for clean and efficient energy systems is fulfilled. It is also important to attract global funds targeted to mitigate climate change impacts.

Without an efficient market mechanism, energy security is hard to achieve. The price of electricity should reflect the marginal cost of supply. The government should make a judicious provision of subsidies and taxes depending on external benefits and costs associated with their production and use. There should be efficient business models to attract funds from the banking and private sector in infrastructure development, operation and management.

Furthermore, cross border cooperation is paramount in energy security; it helps all participating countries. While cooperation may also depends on the national interests of individual participating countries, it is fundamentally influenced by diplomacy. Nepal and India have been exchanging electricity for a long time, and yet meaningful electricity trade has not yet begun. 

It is time for Nepal to broaden its vision to include energy security provisions in its development process. Nepal should immediately adopt two strategies. The first involves diversifying the energy supply through the energy mix. We should not rely only on one or two sources for supplying energy. The second requires gradually replacing the fossil fuels used in cooking and in transport sector with clean energy. 

Adhikari is an energy economist