The subsidy scheme for solar panels installation launched by the government last fiscal year has failed to attract desired number of households. The Alternative Energy Promotion Centre (AEPC) has received 600 applications, only about 15 percent of the set target, till date.

Ram Prasad Dhital of the AEPC said the plan was to provide the subsidy to 4,000 houses by the end of the current fiscal year.

Urban Solar Programme was introduced by the government to encourage households in urban areas to install solar power stations in their homes. In this fiscal year 2015/16, the government approved subsidy scheme for the programme to be implemented by AEPC. Consumers can get up to 75 percent discount on bank loans for installing solar power systems while there is cash subsidy of up to Rs 15,000. For installing a solar power system of capacity between 100 watts and 1,500 watts for domestic purposes, consumers can get bank loans at a concessional interest rate of 2.25 percent without collateral. For solar power systems with capacity of or greater than 500 watts, there is also a cash subsidy of Rs15,000. A solar power system of 100 watts power costs somewhere between Rs 60,000 and Rs 75,000 whereas a 500 watts solar power system costs up to Rs 175,000.

For commercial purposes or for solar power systems with more than 1,500 watts capacity, the government provides loan at concessional interest rate of 4.5 percent and Rs 15,000 cash subsidy. As per the scheme, the government also offers the organisation to deduct 50 percent depreciation on the cost of the solar power system, resulting in lower income tax at the end. These heavy duty solar power systems costs around Rs500,000 in the market.

Despite the low number of takers, recent trend is encouraging, officials said. Mukesh Ghimire, senior officer for solar energy at the AEPC, said that the number of households installing solar power systems has increased due to the recent fuel crisis and increase in load shedding hours. “Almost all of the 600-odd households that have applied for subsidy have come in the current fiscal year. Despite the slow start, the recent trend is encouraging,” he said.

Solar power is considered as the most viable energy source for Nepal as the country has to import all of its fossil fuel demand while large hydropower projects are slow to complete. A 2008 Solar and Wind Energy Resource Assessment in Nepal report prepared by AEPC states that there is a possibility of generating about 1,830 megawatts of electricity from solar power in the country if only two percent of the area is taken as suitable for power generation. This is more than the peak power demand of the country which Nepal Electricity Authority puts at about 1,300 megawatts.

The AEPC is planning to make the subsidy scheme more favourable for encouraging more households to install solar plants in their homes. The government has already approved the idea of increasing the cash subsidy to Rs 20,000 and making them available for solar power systems with capacity of 200 watts or more, bringing down the threshold from the earlier 500 watts, according to Ghimire. “Most households are interested in installing solar power systems between 200 and 400 watts so we have made the subsidy offer more attractive for them,” he said. “Although we might not be able to reach our target of 4,000 houses by the end of the fiscal year, the demand should definitely increase now.”

In order to make the urban solar programme more comprehensive, the government in December last year made it mandatory for all public, commercial and institutional buildings in urban areas to generate a quarter of their electricity requirement (at least 1,500 watts) by themselves, using solar power system. The regulation also extends to private houses built on plots larger than 10 annas and with roof area larger than 2,500 sq ft.