In 1981, the government started subsidizing micro-hydro plants, with a subsequent boost in their number. Turbine mills were fitted with a small dynamo to generate power in what were mostly off-grid, isolated plants serving local villages
Modern life is unthinkable without energy-power. We need energy to cook food, to get to our offices and even to enjoy our favorite movies. As such, with growing urbanization, Nepal’s energy needs are also increasing.
The country gets its energy from various sources, mainly hydro plants, fossil fuel, sun and biomass.
The government-owned Nepal Electricity Authority (NEA) is the main stakeholder of most hydropower plants in Nepal.
The country has two types of hydropower plants: micro and large. Large-scale hydropower generation started with a 500kW capacity plant in Pharping in 1911. It was followed by two other projects in Sundarijal (1936) and Panauti (1965), respectively.
Eight decades after the start of the first hydropower project, the government introduced the Hydropower Development Policy in 1992, inviting both domestic and foreign private investment. There are now 113 working large-scale hydropower stations in Nepal.
The NEA was formed on 16 Aug 1985 under the Nepal Electricity Authority Act 1984. It came to being following the merger of the Department of Electricity under the Ministry of Water Resources, the Nepal Electricity Corporation, and other related development boards, with the goal of creating a consolidated, one-stop organization.
The NEA’s primary objective is to generate, transmit and distribute adequate, reliable, and affordable power by planning, constructing, operating, and maintaining all generation, transmission, and distribution facilities in Nepal’s power system.
Micro-hydro plants have been installed in Nepal since the 1960s, mainly for agro-processing, with locally developed turbines replacing diesel engines. The Agriculture Development Bank Nepal also started providing loans to village entrepreneurs to set up paddy mills, oil expellers, etc. But until 1980, the focus was primarily on large-scale hydro stations.
In 1981, the government started subsidizing micro-hydro plants, with a subsequent boost in their number. Several turbine mills were fitted with a small dynamo to generate electricity in what were mostly off-grid, isolated plants serving local villages.
Office of Alternative Energy Promotion Center (AEPC) in Mid-baneshwor, Kathmandu | Photo: Pratik Rayamajhi
In 2000, the Alternative Energy Promotion Center (AEPC) was formed to look after the 10-100kW micro-hydro power plants. The objective was to generate renewable energy and boost efficiency of energy resources to improve the living conditions of people and combat climate change.
The center also works on the development of commercially viable alternative energy industries. Besides hydropower, it focuses on other renewable energy sources like solar, wind, improved biomass, and biogas.
In 2015, the NEA and the APEC agreed to join the Syaurah Bhumi Micro Hydro Project (23kW) to the national grid. The project came on steam on 11 January 2018, delivering 178,245 units of electricity annually. As of now, there are 17 micro-hydropower power plants in Nepal.
Ajoy Karki, director at Sanima Hydro and Engineering, a hydropower consultant, says micro-hydro projects were all the rage until a decade ago but investors these days prefer larger-scale projects.
“As important and profitable micro-hydro projects are, larger investments in big projects result in bigger profits, too” he says.
Karki is of the view that people in rural Nepal should collectively invest in micro-hydro, and with the help of local governments seek to generate both electricity and capital.
Half a million households from 54 districts across Nepal use community electricity via the Community Rural Electricity Entities (CREEs)—with the National Association of Community Electricity Users-Nepal (NACEUN) as their primary stakeholder.
CREEs buys electricity from NEA in bulk and distributes it to remote consumers. The organization currently has a network of over 300 CREEs.
Vidhyut Utpadan Company Ltd, Rastriya Prasaran Grid Company Ltd, and Hydroelectricity Investment and Development Company Ltd are the other major government stakeholders in Nepal’s hydroelectricity generation.
The state-monopoly Nepal Oil Corporation (NOC) was established in 1970 to import, store and distribute petroleum products throughout the country.
Nepal depends on import of refined petroleum products from the Indian Oil Corporation (IOC). Besides the NOC, no other public or private entity is allowed to import petroleum products.
The NOC renews its agreement with the IOC every five years for the smooth supply of petroleum products. LPG is imported from privately-owned bottling industries from different parts of India under an NOC product-delivery order.
According to the NOC, Nepal currently consumes 150,000kl of diesel and 60,000kl of petrol a month, with a total burden of Rs 30bn on the exchequer. In recent times, the import of petroleum products–largely consumed by households, motor vehicles and industries–has increased by 15 percent a year.
In the fiscal 2020-21, Nepal’s consumption of petrol, diesel, kerosene, aviation fuel, and LPG was 587,677kl, 1,698,427kl, 23,427kl, 70,400kl and 477,753mt respectively, informs petroleum products expert Chakra Bahadur Khadka. “We must act immediately to reduce this consumption by switching to renewable energies as import of fossil fuels helps neither our foreign reserve nor the environment.”
The corporation incurs a per-liter loss of Rs 24.70 on petrol and Rs 18.01 on diesel used in public transport, industry and projects. In LPG alone, it incurs a loss of Rs 751.14 a cylinder.
Wind-solar hybrid power system in the Hariharpurgadi village of Sindhuli district, financed by the Asian Development Bank (ADB).
Various studies suggest Nepal has great potential in solar energy, but the country has yet to realize this potential. It is said that Nepal can generate up to 50,000 terawatt of solar power annually–100 times what can be generated from our rivers and 7,000 times the current electricity consumption.
Anecdotally, solar panels were first installed at Bhadrapur Airport in Jhapa district in 1962. Officially, solar panels officially came into operation from Damauli Telecommunication Office (then Aakashbani) in 1975.
Solar energy started off as a household energy source before recently making its way to the national grid–where it is making only a small contribution.
In 2020, the government inaugurated the first phase of its first 25MW solar array that feeds electricity directly into the national grid, in what is the biggest among the four large-scale solar power plants the NEA has launched. A few other private entities are also contributing to the development of solar energy in rural areas via community-based projects. Some of them send the surplus power to the national grid.
According to new laws, any household can produce electricity (without installing batteries) and send surplus energy to the nearby national grid. But many people are unaware of this scheme due to lack of publicity.
“Say, 100,000 houses of rich people in Kathmandu install solar panels. In that case, the surplus energy they generate could meet a sizable chunk of the valley’s energy needs,” says Jagan Nath Shrestha, a solar energy expert.
Part of why solar energy is not attracting investment in Nepal, Shrestha says, is the pricing.
“The price of a unit of solar electricity was Rs 9. But the rate was inexplicably reduced to Rs 6 a unit. At this rate, it may not be viable for the private sector to supply to the national grid,” he adds.
As for wind energy, Nepal is still in its early days. While the AEPC has installed wind turbines in a few areas, they are not completely wind-driven. As wind flow is not uniform across Nepal, these power stations also rely on solar energy.
A couple of decades ago, wind turbines were installed in Mustang district. But they were damaged due to excessive wind.
“The private sector is not interested in wind-power as there is no security of their investment,” says Madhusudhan Adhikari, executive director of the APEC.
A biogas plant installed in a house of Madhes province | Photo: Renewable World
Most rural households in Nepal still rely on firewood for cooking. Energy experts and environmentalists see biogas as a viable alternative to this. Biogas is a form of clean, eco-friendly source of renewable energy which is both economically and environmentally viable.
It is produced from organic waste and can be used for multiple purposes. For example, the slurry that the biogas system produces is a convenient source of organic fertilizer. The energy of biogas could also be used as a fuel for heating purposes other than cooking. It can be compressed, much like natural gas, and used to power motor vehicles as well.
The commercial beginning of biogas in Nepal can be traced back to a program carried out by the United Missions to Nepal in the context of the Agricultural Year 1974/1975. The Agricultural Development Bank Nepal assisted in financing the plants by providing a special credit framework and established the Gobar Gas Company in 1977.
Biogas technology can also generate plenty of green jobs in Nepal. Most villages in Nepal have biogas plants. Studies show that biogas plant installation goes hand in hand with the improvement in local health and sanitation measures, while also curbing deforestation.
But biogas use is not widespread, with firewood still the main source of cooking fuel in rural Nepal.
Even when 1.4m rural houses of Nepal can potentially use biogas technology, only half a million households have installed it, says Shekhar Aryal, chairperson of Biogas Sector Partnership-Nepal.
“The cost of biogas technology, with nearly Rs 100,000 needed to install a plant, has increased with time, which in turn has reduced its attractiveness for villagers,” he says.
“This technology will live up to its potential only when the government gives them enough subsidies,” Aryal adds.
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