It is essential for Nepal to diversify and increase the production of electricity in order to achieve higher socio-economic development. However, achieving this goal has been hamstrung by a number of factors, not least by the decade-long conflict, red tape, continued political instability, unrealistic expectations of local stakeholders, shenanigans by middle men who hoard power-generation licenses for easy profiteering, and an Indian monopsony on our power exports.

With all our tall claims of hydropower potential, the fact remains that 25 percent of Nepal’s population still lives without access to electricity and our annual per capita electricity consumption, at 132 kWh, is the lowest in South Asia.

Our run-of-the-river hydropower plants may have a total installed capacity of 956 MW, but their very nature entails that they are dependent on the seasonal changes in water level. Which means these plants produce a paltry 571 MW at the height of the dry season, when domestic electricity generation plunges more than 30 percent. As such, there is no way that the current peak electricity demand that hovers around 1,300 MW can be met. Nepal has long turned towards its southern neighbour for energy imports; only last month, energy imports swelled to 477 MW from 400 MW in December. But relying on India to make up for the energy shortfall in domestic production is not a viable answer.

Popular discourse would have Nepal turn towards the development of large hydropower projects as a sustainable solution. But there are also other avenues to pursue that would entail a shift to cleaner energy sources. And it seems that the government is coming to realise the need for innovative renewable energy solutions. In January, it asked the Nepal Electricity Authority (NEA), the state owned power utility, to promote solar and wind energy sources so that they make up 10 percent of the total installed capacity in the country. And this month, the Ministry of Energy issued guidelines on the development of alternative sources of electricity which can be connected to the national grid.

As per the Guidelines for Development of Alternative Energy Connected to Grid 2018, individuals, organisations and commercial producers can feed electricity generated from solar, wind and biogas plants into the national grid. The NEA will pay producers Rs7.30 per unit. Special priority has been given to solar energy. All producers will have to file an application at the NEA to be permitted to link up with the national grid, and will be required to obtain approval from the Department of Electricity Development (DoED) before installing such stations. In case of solar plants with an installed capacity of 1 MW or above, producers will require a survey license from the DoED. Those owning wind or biogas plants with an installed capacity of 1 MW will have to obtain a survey and generation license which will be valid for 25 years.  

Such developments are encouraging, and indicate that the government is aware of the imperative to develop new business models to shift to cleaner energy sources. Doing so would result in gains in productivity, employment creation and raise overall wellbeing.