Econ-ity-Energy Mix for Nepal



econity-pic for blogEnergy discourse in Nepal has been heavily geared towards either hydro or solar power. However, what Nepal needs now is the right kind of energy mix which has not been able to materialize due to hurdles in the existing policy scenario of the country. To discuss on this, Samriddhi, The Prosperity Foundation and Federation of Nepalese Chambers of Commerce and Industry (FNCCI) organized Econ-ity on “Energy Mix to Power Nepal” on January 27th, 2014.

Mr. Kushal Gurung, Wind Power Nepal
Mr. Gurung of Wind Power Nepal highlighted the example of renewable energy use in Europe especially in Denmark where wind contributes to 20-50% of the energy needs. Nepal also hosts some areas which have huge potential for wind energy and can produce 10% energy without grid optimization. He also stated that wind power can be beneficially only in a commercial scale due to its technicality and is not possible in a household level.

Mr. Kishor Rimal, Gham Power
Mr. Rimal highlighted the energy demand in the country has been growing and even in the rural area energy demand was not just for lighting purpose but for economic growth as well with high demand in agro-processing mills. He further emphasized the feasibility of mini-grid in such locations and that people in rural areas were willing to pay for energy source, given the unavailability from the national grid.

Mr. Subarna Das Shrestha, Immediate Past President, IPPAN
Mr. Shrestha opined there is a high need to change peoples’ view towards energy mix in the country. Energy mix differs from country to country and in Nepal’s context energy mix includes hydropower and other renewable energy such as wind, solar, biogas. Efficient policies are needed for energy mix and reverse metering as well as energy banking are very important aspect to the energy mix in Nepal. Mr. Shrestha highlighted that hydropower is very crucial for commercial and industrial usage while other renewable energy sources such as solar; wind and biomass can be used for domestic purposes.
He suggested that an ideal energy mix in Nepal should include 80% of hydropower and 20% of other renewable energy sources and that hydropower should include 60% run-of-the-river (ROR) and 40% storage type.

Dr. Govind Raj Pokharel, Alternate Energy Promotion Center (AEPC)
Dr. Pokharel highlighted the main projects at AEPC which also included a pilot project of a 40KW solar system which has till date, found two buyers purchasing per unit of energy at NRs. 13 which indicated solar energy’s prospective market. He further stated that AEPC has achieved reducing the energy disparity from a regional prospective through its solar energy project in Rolpa, Jumla and other trekking areas that are currently using solar lights and panels. These, according to him were conducted under its pre-electrification scheme and if people got accustomed to alternative energy it would open up the market potential and also bring about bigger grid opportunities.

He stated that for the energy mix in Nepal three categories need to be catered to— industrial, domestic and transportation. Electricity is applicable for all three of the sectors. He also highlighted the need to use blended ethanol with the availability of sugar processing factories in Nepal; this could help save nearly 5% of petrol which is being consumed at the rate of 7 lakh liters per day.
He also mentioned how the transportation industry was one of the biggest consumers of energy especially fossil fuel and how the consumption has increased in recent years with the allocation of nearly NRs. 33 million in funds for VDC which is mostly used for road construction that has increased vehicle that run on fossil fuel.

Questions from the audience

Q.N. 1 How long will it take to achieve the stated energy mix that involves 80% hydropower?

Mr. Anil Chitrakar, Moderator
He highlighted that nearly 19% of domestic usage is fulfilled by LPG which needs to be imported. Therefore, most of our foreign exchange which comes from remittance is being spent in purchasing LPG from outside the country. He emphasized that such issues also need to be addressed.

Q.N. 2 For ideal situation, nearly 80% of the energy mix should be hydropower. As being discussed, solar power of 3 KW to 9 KW was installed in Accham. What is the total cost of installing solar panels?

Mr. Kishor Rimal, Gham Power
The cost depends on the site and availability of sun power per day and days of autonomy. It costs about NRs. 3 to 6 lakh per KW.

Dr. Govind Raj Pokharel (AEPC)
He also reiterated that cost of solar panels differ according to where it is to be installed and that each panel as per the location and 5 days of autonomy would cost around NRs. 0.3 million per KW. He talked about how the government could ask hotels and other businesses to install solar light ensuring that it has net metering and that they could sell the extra power to the grid. He also talked about the EPC contract at NRs. 100-110 million per MW without battery and he further shared Chinese companies have been interested.
Dr. Pokharel also stated that the growing urban population in Nepal have the financial means to purchase alternative energy as they already spend millions on interiors in their houses but are still using candle lights. He stated the failure in attracting people to use solar power has been because of lack of aggressive marketing from Solar Companies as well as the weakness of AEPC in not being able to expand beyond rural areas.

Mr. Anil Chitrakar- Moderator
Mr. Chitrakar stated the possibilities of generating nearly 100 MW of solar energy per day through installation of solar panels in open spaces in urban areas like Tundikhel. Using solar panels would allow the storage of summer water for nearly 6 to 7 hours which could help in providing electricity at night from 6 to 10 p.m.

Q.N.3. Mr. Bihari Krishna Shrestha wanted to know more about viability of wind power in Nepal and prevalence of barriers for users and beneficiaries.

Mr. Kushal Gurung, Wind Power                                                                                                      Mr. Gurung said that a hybridized technology for wind power energy such as solar, hydro or diesel could be used. The whole idea was if energy generation was less from wind during certain time, hybridized technology along with wind would be very efficient and viable. He also talked about how Nepal needed guidance from external management due to technological difficulties.

Dr. Govind Raj Pokharel (AEPC)
Dr. Pokhrel stated that lack of awareness has been at the root of the problem in terms of growth of alternative energy. He recounted an example of the wind power energy project in Mustang. Apparently, the wind blades that were used for Mustang’s project was slightly big and the size the blades were cut in a local workshop in Pokhara. Due to this, technical problem came about and the windmill did not work deeming the project unsuccessful in the end.
In terms of governance he gave the example of Baglung where local people contributed 535 working days to construct a 100 KW project and took a loan of NRs. 5.3 million. They were also able to sell the energy generated at NRs. 18 per unit. Since there was no political interference and it managed by the community they were able to pay off the loans.
Dr. Pokharel also talked about the provision of the 9th plan about the inclusion of private sector in the hydropower which has unfortunately not been successfully implemented due to political interference. He also talked about the lack of coordination between different ministries involved in the energy sector and the lack of the strong lobbying the private sector.

Mr. Subarna Das Shrestha, Immediate Past President, IPPAN
He stated that private sector involvement in hydropower has not been long as the opportunity opened only after 1992. The reasons for the lack of involvement were governance, policy issues and lack of competition. Most of the private sector is involved in the retail and food sector as these have greater profit margins.
According to him, hydropower as an energy source is user friendly as the cost of installation is very low and more efficient while the cost of installation for alternative energy is very high and not so effective.
He stated that trust depended on regulatory mechanism. Private sector should be given freedom but they also have to be regulated. He also stated that to bring in more investment the government should provide short term subsidies and incentives.

Q.N.4. Mr. Anil Chitrakar- Moderator- how will we pay for energy generation?

Mr. Subarna Das Shrestha, Immediate Past President, IPPAN
Mr. Shrestha opined that it would be possible if people from rural to urban sectors were targeted as end consumers. He further stated that in the next 10 years consumption per person would be 500 KW/ hour. People should also have the choice in terms of the energy sources (solar, wind, hydro)

Q.N. 5. Mr. Anil Chitrakar, Moderator-Where are you getting your finances from?

Mr. Kushal Gurung, Wind Power
Mr. Gurung stated that wind power also falls under AEPC’s jurisdiction and it has a subsidy scheme that is divided into 2 categories. 50% subsidy is given when community owns it however privately initiated projects do not receive subsidies. He also stated that communities would not be able to oversee technological aspect. Therefore, they have been working on private and community partnership projects. Wind power plants cannot easily upscale because of bankability issues and narrow road.

Mr. Kishor Rimal, Gham Power
Mr. Kishor Rimal talked about the three types of Gham Power schemes: The first scheme is targeted towards urban residence and has been their biggest market. They had also partnered with Clean Energy Development Bank for financial services. The company took a 10% down payment prior to installation and later the purchaser would work with the bank paying at 13% interest rate. The second scheme is known as Business Mirco-grid which is targeted towards offices and hotels and finance is provided through loans, and re-investment of their capital investment. The third one is rural Mirco-grid. It is complex and has not been implemented so far.

Mr. Anil Chitrakar, Moderator

Q.N. 6. How to move forward?

Mr. Subarna Das Shrestha, Immediate Past President, IPPAN
Mr. Shrestha opined that policymakers should develop suitable modality for developing hydropower projects where hydropower developers, experts, and entrepreneurs could give inputs. The concept of constructing hydroelectric projects with participation of local and general people is more sustainable.

Mr. Kushal Gurung, Wind Power
He suggested streamlining of government issues including issue of tax. He further highlighted the need of 1 year data for bankability.

About Astha Joshi

Astha completed her undergraduate degree in Politics, Philosophy and Economics (PPE) and is working as a research assistant at Samriddhi, The Prosperity Foundation.