community biogas, and a micro â hydro project in Nepal. ..... Relative success in the dissemination of Micro Hydro and renewables like ..... Upper Tamakoshi.
MSc Dissertation Thesis MSc in Sustainable Energy Systems Sustainable Energy For All: Barriers and the opportunities for equitable energy access in Nepal Bishwaraj Bhattarai S1650436 August 2017
School of Engineering The University of Edinburgh
Project Mission Statement
i
ii
Abstract
Less than a quarter of the population of Nepal has access to clean cooking fuel whereas more than a third of the population does not have an access to electricity. Access of clean, affordable, and sustainable energy services is vital for health, wellbeing, prosperity and human development. In this context, the government of Nepal, the international development partners, and the United Nations have been working on an ambitious plan to achieve universal access to sustainable energy throughout the world by 2030. This study looks at the ongoing efforts and the progress made in this regards in Nepal. The aim of this study is to explore the barriers and the opportunities in the ongoing initiatives for the provision of sustainable energy access and to recommend measures to address the challenges. The research is based on desk review of relevant academic and non-academic literature, interviews with experts representing the key stakeholders in energy sector in Nepal, and field visits to a community biogas, and a micro – hydro project in Nepal. A number of socio – economic, institutional, policy, and technological barriers are constraining the wider dissemination of sustainable energy services, and limiting the access and uptake of energy. This study recommends several revisions in the existing framework for the planning and implementation of the energy access project to facilitate participative planning, cross – sectoral linkages and partnerships, and open innovation, all of which can play a significant role in achieving inclusive and equitable energy access.
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Declaration of Originality
I declare that the work presented in this thesis is my original work, except where stated otherwise. This thesis has ee a ied out i a o da e ith the U i e sit ’s requirements and has never been submitted for any degree or examination to any other University.
……………………………………….. (Signature)
…………………………………. (Date)
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Table of Contents List of Figures …………………………………………………………………………………………………………………………………………… x List of Tables ……………………………………………………………………………………………………………………….…………………… xi 1.
Introduction.................................................................................................................................... 1
1.1.
Motivation for Research ............................................................................................................ 1
1.2.
Research Questions ................................................................................................................... 2
1.3.
Scope of Work ............................................................................................................................ 2
1.4.
Methodology.............................................................................................................................. 3
1.4.1.
Data Collection……………………………………………………………………………………………………….. 5
1.4.2.
Case Studies……………………………………………………………………………………………………………. 5
1.4.3.
Layered Model for Research…………………………………………………………………………………… 6
2.
Background and Literature Review ............................................................................................. 7
2.1.
Energy Scenario in Nepal ........................................................................................................... 7
2.1.1.
Total Primary Energy Supply…………………………………………………………………………………… 7
2.1.2.
Sector wise Energy Consumption……………………………………………………………………………. 9
2.2.
Energy Resources in Nepal ....................................................................................................... 10
2.2.1.
Traditional Biomass………………………………………………………………………………………………. 10
2.2.2.
Modern Biomass & Municipal Solid Waste……………………………………………………………. 11
2.2.3.
Biogas…………………………………………………………………………………………………………………… 12
2.2.4.
Hydropower…………………………………………………………………………………………………………. 13
2.2.5.
Solar Energy…………………………………………………………………………………………………………. 15
2.2.6.
Wind Energy…………………………………………………………………………………………………………. 16
2.2.7.
Other……………………………………………………………………………………………………………………. 16
2.3.
Institutions and Stakeholders .................................................................................................. 17
2.3.1.
Government and Public Institutions……………………………………………………………………… 17
2.3.2.
International Development Partners & INGOs………………………………………………………. 19
2.3.3.
Private and Non-Governmental Organizations……………………………………………………… 20
2.4.
Current Energy Policies and Prospects .................................................................................... 22
2.4.1.
Subsidy Policies…………………………………………………………………………………………………….. 22
2.4.2.
National Strategy and Prospects …………………………………………………………………………… 24
2.5.
Energy, Poverty and Sustainable Development ....................................................................... 26
2.6.
New Paradigm in Sustainable Energy Planning........................................................................ 28
2.6.1.
Sustainable Energy Access and Sustainable Development…………………………………….. 29
2.6.2.
Sustainability of energy access projects vs. Energy equity……………………………..……… 30
2.6.3.
Revisiting the role of state and non – state stakeholders……………………………………... 31
v
3.
Layers of Sustainable Energy Access: Barriers and Opportunities .............................................. 34
3.1.
Government and State Institutions ......................................................................................... 34
3.1.1.
Policies and Strategies………………………………………………………………………………………….. 34
3.1.2.
Resource Allocation………………………………………………………………………………………………. 37
3.1.3.
Implementation……………………………………………………………………………………………………. 39
3.1.4.
Knowledge Management, Research and Development………………………………….……… 41
3.2.
Non – state Institutions and Development Partners ............................................................... 43
3.2.1.
Planning and Implementation Framework……………………………………………………………. 43
3.2.2.
Partnerships and Linkages…………………………………………………………………………………….. 48
3.2.3.
Enabling Public and Private Sectors………………………………………………………………………. 49
3.3.
Private Businesses and Financial Institutions .......................................................................... 50
3.3.1.
Sustainable Energy Technology Providers…………………………………………………………….. 51
3.3.2.
Financial Institutions…………………………………………………………………………………………….. 52
3.3.3.
Rural Micro and Small Enterprises………………………………………………………………………… 53
3.4.
Local Communities and Organizations..................................................................................... 54
3.5.
Summary of Barriers and Opportunities .................................................................................. 56
4.
A Revised Framework for Sustainable Energy Access Planning ................................................ 58
4.1.
A Participative and Holistic Planning Process .......................................................................... 59
4.2.
Revised Implementation Strategy............................................................................................ 64
4.2.1.
Building Linkages and Integrating Interdependent Projects………………………………….. 65
4.2.2.
Building Businesses and Partnerships at National and Local Level ………………………… 67
4.2.3.
Open Data and Innovation……………………………………………………………………………………. 70
4.3. 5.
Revised Roles of Stakeholders ................................................................................................. 72 Discussion and Conclusions ........................................................................................................... 75
5.1.
Limitations of the Study ........................................................................................................... 75
5.2.
Conclusions and Recommendations ........................................................................................ 77
6.
Answers to Research Questions .................................................................................................... 81
Acknowledgements ............................................................................................................................. 83 Bibliography ........................................................................................................................................ 84 Appendix ............................................................................................................................................. 98 Appendix A: Summary of Interviews………………………………………………………………………………………….. 98 Appendix B: Health and Safety / Travel Risk Assessment Form………………………………………………….. 99
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List of Symbols
o
C
Degree Centigrade
GJ
Giga Joule
GW
Giga Watt
GWh
Giga Watt hours
hp
Horsepower
kg
Kilogram
km
Kilometre
kW
Kilo Watt
kWp
Kilo watt power
kWh
Kilo watt hours
m
Metre
m2
Square metres
MGJ
Million Giga Joule
Mtoe
Million Tonnes of Oil Equivalent
MW
Mega Watt
MWp
Mega Watt Power
Wp
Watt power
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Glossary
ACAP
Annapurna Conservation Area Project
ADB
Asian Development Bank
AEPC
Alternative Energy Promotion Centre
BSP
Biogas Support Program
CBO
Community Based Organizations
CDM
Clean Development Mechanism
CES
Centre for Energy Studies
CFUG
Community Forest User Groups
DANIDA
Danish International Development Agency
DFID
Department for International Development
ESAP
Energy Sector Assistance Programme
EU
European Union
GDP
Gross Domestic Product
GIS
Geographical Information System
HH
Household
ICS
Improved Cooking Stoves
IEA
International Energy Agency
INGO
International Non-Governmental Organizations
IOE
Institute of Engineering
JICA
Japan International Cooperation Agency
LPG
Liquefied Petroleum Gas
M&E
Monitoring and Evaluation
MDG
Millennium Development Goals
MEDEP
Micro Enterprise Development Program
MSME
Micro Small and Medium Enterprises
NAST
Nepal Academy of Science and Technology
NEA
Nepal Electricity Authority
NGO
Non – Governmental Organizations viii
NORAD
Norwegian Agency for Development Cooperation
NPC
National Planning Commission
NPR
Nepalese Rupees (£1 = 133 NPR approximately)
NRREP
National Rural and Renewable Energy Programme
OECD
Organization for Economic Cooperation and Development
PPA
Power Purchase Agreement
PV
Photo Voltaic
R&D
Research and Development
REDP
Rural Energy Development Programme
RERL
Renewable Energy for Rural Livelihood
RETS
Renewable Energy Test Station
SDG
Sustainable Development Goals
SE4ALL
Sustainable Energy for All
SHS
Solar Home Systems
SREP
Scaling – up Renewable Energy Program
SWAp
Sector Wide/Wise Approach
UK
United Kingdom
UN
United Nation
UNDP
United Nations Development Programme
VDC
Village Development Committee
WHO
World Health Organization
WWF
World Wide Fund for Nature
ix
List of Figures Figure 1.1: Structure of Thesis …………………………………………………………………………………………………………..4 Figure 2.1: Energy Mix of Nepal in 2014 – 15 from ……………………………………………………………………………7 Figu e . : Yea
ise e olutio of atio al e e g
Figu e . : Co pa iso of a ess a d uptake of Figu e . : A ade i lite atu e e te si el
i ……………………………………………………………….…… 8 ode
……….……………………………………………………..… 8
uote a ess ……………………………………………………………… 28
Figu e . : The t e d of atio al udget allo atio ………………………………………………………………………. 38 Figu e . : A outli e of the atio al g id o e age ………………………………………………………………………. Figu e . : A outli e of the e isti g f a e o k fo …………………………..…………………………………………. Figu e . : A outli e of the e ised f a e o k fo ………………………………………………………………………. Figu e . : Steps a d stakeholde s i ol ed i the …………………………………………………..…………………….
x
List of Tables
Table 2.1: Major hydro power projects in ……………………………………………………………………………………… Table 2.2: Some of the major hydro power……………………………………………………………………………………. Table 2.3: Key international de elop e t……………………………………………………………………………………… Ta le . : Su
a
of the u e t su sid ……………………………………………………………………………………
Table 2.5: Summary of the national strategies ………………………………………………………………………………. Ta le . : Ke go e Ta le . : A su
a
e t i stitutio s ………………………………………..................................................... of the ke
a ie s ………………………………………………………………………………………. 6
Ta le . : Case studies de o st ati g the ………………………………………………………………….………………… Table 4.2: Case studies demonstrati g the ………………………………………………………………….………………… Ta le . : Case studies de o st ati g the ………………………………………………………………….………………… Ta le . : A su
a
of e isio s e o
e ded ………………………………………………………………………….
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1.
Introduction
1.1. Motivation for Research Despite undergoing severe socio – economic and political challenges, Nepal has made commendable progress in the provision of clean, affordable, and sustainable energy systems for its citizens. Particularly, for the provision of access to electricity, the Nepalese model of Micro Hydro development for rural electrification is widely regarded and has been a subject of study for other developing nations. Relative success in the dissemination of Micro Hydro and renewables like Solar Photovoltaics means that over three quarters of the population in Nepal have access to electricity, while less than 10% of the total population had such facility until 1995 [1]–[3]. However, despite over two decades of coordinated effort from government institutions and international development partners, Nepal still has a long way to go in achieving universal access to clean, sustainable and affordable energy services, particularly for cooking and heating needs. To this date, over three quarters of the population use solid biomass fuel, derived from fuelwood, animal dung, or agricultural residue, for cooking and space heating; and traditional biomass remains by far the largest contributor in Total Primary Energy Supply of Nepal [2], [4]. Also, the quality, reliability, and affordability of electricity, particularly in rural areas, is often questioned by experts in a nation where the capital itself faced long power cuts lasting over 12 hours a day until recently. Energy is widely accepted to be one of the principal factors, a
e a le , for poverty
alleviation and for achieving several aspects of human and sustainable development[5]. Nepal remains one of the Least Developed Countries in the world, ranked 144th out of 188 in Human Development [6], and 191st out of 212 in terms of Gross Domestic Product (GDP) per capita [7]. Unsurprisingly, per capita energy consumption of Nepal, which is often used as an indicator of economic and human development, is also very low, putting Nepal within the bottom 15 out of over 130 countries assessed by the International Energy Agency (IEA) [8]. Over a quarter of the population lived below the poverty line until 2010 -11, while the 2015 earthquake is believed to have resulted in an additional 2.5 % - 3.5 % of the total population below the poverty line [9].
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The relationship between energy and development is bidirectional [5]. While it is widely appreciated that energy is essential for development, an examination of the systemic limitations and failure of countries like Nepal in providing sustainable energy access to its citizens despite decades long coordinated effort reveals that societal and human development is equally essential for promotion and uptake of modern energy services. The contemporary paradigm for planning and provisioning energy access has largely assumed a unidirectional relationship between energy services and development, focusing mostly on designing and optimizing fo the
est ,
ost effi ie t , o
ost economical te h i al solutio s. While this app oa h o ked to an extent, it requires rethinking if we are to achieve the universal access goal by bringing in the sizable proportion of the population that remains at the bottom of the pyramid. Integrating efforts of societal and human development with the efforts of energy access could potentially overcome many existing barriers in the sustainable energy access agenda or even transform those barriers into opportunities for sustainable development.
1.2. Research Questions The main objective of this research is to understand the barriers and opportunities for Nepal in achieving universal energy access. The objective is divided into the following research questions: R.Q. 1: What are the existing framework and the roles of different stakeholders in planning and implementation of sustainable energy projects in Nepal? R.Q. 2: What are the barriers and the limitations of the existing framework, and the dynamics of the relationship between the stakeholders? R.Q. 3: How can we improve the existing framework or Energy Access Planning approach based on our own and relevant experiences from other countries?
1.3. Scope of Work This study is primarily focused on understanding the ongoing efforts towards the provision of sustainable energy in Nepal, the roles of key stakeholders, and in understanding the existing barriers and the opportunities. With these understandings, the research proposes recommendations and suggests changes in the current sustainable energy planning and implementation framework to overcome some of those barriers and leverage those opportunities.
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The focus of this research remains in sustainable energy, and energy equity; thus, the scope of this study is confined to alternative and renewable energy systems, and does not include fossil fuels like petroleum, which constitute one of the most obvious energy solution/service. Likewise, electricity access through the national grid extension has not been prioritized in this study, as it naturally is the most attractive solution for the consumers, despite high economic, environmental and logistic costs for the government and the grid operator. Instead, this study prioritizes locations and the communities that are poor, backward, and remote, where grid extension is unlikely in the foreseeable future. Thus, renewables based off – grid generation systems, and bio – energy based clean cooking and heating fuels are the priorities of this study. However, the technology and engineering behind these systems and their limitations are not the primary focus of this study. It is assumed that such technological and logistic limitations only exist because of other existing socio – economic, institutional, and regulatory constraints, and this study prioritizes the understanding of those elements over the specific technologies and their limitations. Likewise, energy efficiency and other aspects of demand side management are beyond the scope of this research as their relevance is limited in this context since physical access to energy services, and actual energy consumption, are both severely limited for the communities focused on this study. Based on the understanding of current scenario, the barriers and the opportunities, this study proposes a revised framework for planning and implementation of energy access projects in Nepal. However, quantitative analysis and test of the proposed theoretical framework are beyond the scope of this study, as it requires a significant amount of additional research which could not be completed due to time and resource constraint at this stage.
1.4. Methodology There are three fundamental stages involved in the development of this research. These stages are interdependent, and they contribute towards the fulfilment of the overall research aim by addressing the research questions. The first stage involves extensive literature review comprising a wide variety of academic and non – academic sources to understand the current energy scenario in Nepal, ongoing efforts towards the provision of sustainable energy access, and the role of key stakeholders involved in the process. This stage addresses the first research question of this study. The second stage also involves extensive literature review, combined with interviews with stakeholders and field visits in Nepal to uncover and understand the barriers and the potential
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opportunities that exist at each layer of sustainable energy provision. This stage addresses the second research question. The final stage of this research proposes a revised theoretical framework for addressing the challenges and for capitalizing the opportunities explored in the second stage, based on the lessons lea t f o
stakeholde s i te ie s, field isits, e o
pu li atio s, a d esea he s o
e datio s of academic and non – academic
i sights. This add esses the thi d esea h uestio .
The outline of thesis structure is presented in Figure 1.1.
Research Methodology Literature Review and Secondary Data
Interviews with Stakeholders
Field Visits and Case Studies
Insights of Researcher
Stage – I
Stage – II
Stage – III
Understanding current energy scenario in Nepal, ongoing efforts and roles of key stakeholders
Exploring the barriers and opportunities in current energy planning / implementation framework
Propose a revised theoretical sustainable energy planning / implementation framework focused on energy equity
Conclusions and Recommendations Figure 1.1: Structure of Thesis
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1.4.1. Data Collection This research is primarily based on the qualitative and quantitative information derived from the academic and non-academic publications. A substantial part of this research is based on the secondary data from a wide variety of sources including the peer reviewed journals, books, databases, conference proceedings and workshops, etc. However, the researcher encountered difficulties in finding an adequate number of peer – reviewed and other academic publications relevant to the context of this study, particularly concerning the provision of clean cooking fuel in Nepal. On the other hand, non-academic publications from the government, international bilateral and multilateral institutions, International Non – Governmental Organizations (INGOs), etc. have been extensively referred to in this research. In this process, rigorous care has been taken to implement the principle of triangulation, to verify the findings with evidence from multiple sources, wherever possible. Also, the researcher has been meticulous to avoid drawing straight conclusions based on unverifiable data and information, particularly from the non – governmental, and non – academic sources, when such sources or institutions may have had direct or indirect involvements in / benefits from the project, activity or situation, to which the data and information correspond. Despite due diligence of the researcher, there has been limited use of primary data and information in this research, fundamentally, due to access issues. However, useful information and valuable insights, mostly qualitative, could be gathered during a brief field visit in Nepal. Altogether, 12 experts representing all the key stakeholders in the planning, development and operation of sustainable energy projects in Nepal, were interviewed. These loosely structured interviews are focusing on current scenario, roles of stakeholders, and potential challenges / opportunities, were complemented by 2 site – visits involving a community biogas plant, and a micro – hydro projects for rural electrification.
1.4.2. Case Studies Case studies are useful tools to improve the understanding of complex issues, particularly when the relationship between phenomenon and the real – life contexts are not apparent [10]. In this research, altogether 16 cases have been studied, albeit, in a slightly unconventional method. Each of these cases may represent one or more physical locations or sustainable energy projects, and they demonstrate certain phenomena or issues that influence the success or failure of energy access initiatives. Thus, the purpose of these case – studies is to exhibit the underlying cause of success /
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failure, or limitations in planning and implementation approach, all of which demonstrate the relevance of fundamental arguments made by this research.
1.4.3. Layered Model for Research During preliminary research design, this research identifies four layers involved in the process of sustainable energy provision, with each layer corresponding to the certain key stakeholder(s). The top – down approach of energy planning and project implementation has led to a clear demarcation of these layers. The top layer constitutes the national government and focal public institutions, followed by the second layer of international development partners. These two constitute the most dominant layers, followed by the private sector, which plays a uninfluential but vital role in the deployment and operation of the energy solutions or technologies. Unfortunately, the bottom – most and the least influential layer in the traditional approach of energy planning constitutes the local people and the communities i.e. the end users of these energy solutions. This study explores the current energy scenario in Nepal, and outlines the major barriers and the opportunities in the process of achieving universal access to sustainable energy, by examining and understanding each of these layers. In the end, a more heterogeneous approach for participatory planning and implementation of energy projects is suggested.
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2. Background and Literature Review
2.1. Energy Scenario in Nepal 2.1.1. Total Primary Energy Supply According to the IEA s latest data [11], the total primary energy supply in Nepal was equivalent to 11.69 Mtoe i.e. approximately 489 MGJ. However, the government reports [12], [13] slightly higher values, approximately 609 MGJ. Traditional biomass, primarily fuelwood, comprises the largest portion of the energy mix, followed by petroleum products. Due to the acute energy crisis, and long hours of power cuts, the use of diesel generators has increased over three times in the past decade. There are estimates that diesel generators with over 500 MW capacity had been installed throughout the nation until 2015, which is a comparable capacity with the total installed capacity of hydro power, the primary source of electricity in Nepal [14], [15]. Thus, the increased use of petroleum (diesel), has partly been attributed to electricity generation.
3% 2% Traditional Biomass Fossil Fuel (Coal+Petroleum)
33%
Grid Electricity 62% Renewables (Micro Hydro/Solar/etc.)
Figure 2.1: Energy Mix of Nepal in 2014 – 15 from official governmental records [16] shows remarkably less consumption of biomass, while other sources like the IEA quote up to 80 % contribution of biomass [11].
700
609 M GJ
600 500
369 M GJ
400 300
420 M GJ 67
459 M GJ
470 M GJ 199 66
181
60
200 294.46
335.66
2011/12
2012/13
376.10
381.17 254.10
100 0 2013/14
2014/15
2015/16*
Year Traditional Biomass
Fossil Fuel (Coal+Petroleum)
Grid Electricity
* First 8 Months Only
Millions
Energy Consumption - GJ
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Renewables (Micro Hydro/Solar/etc.)
Figure 2.2: Year wise evolution of national energy mix indicates slow but consistent growth in total energy consumption [12], [16]. It is noteworthy that although over three quarters of the population in Nepal still predominantly use traditional biomass for cooking and heating, its share on the total national energy consumption has been reducing gradually due relatively higher growth in total energy consumption from other sectors compared to the growth in traditional biomass consumption. However, the per capita energy consumption of Nepal remains one of the lowest in the world at approximately 17 GJ, significantly below the world average (80 GJ), and below the averages of Sub Saharan Africa, and South Asia. Also, the per capita electricity consumption remains one of the lowest in the world, despite almost three quarters of the population having access to electricity, as shown in Figure 2.3.
Figure 2.3: Comparison of access and uptake of modern energy in Nepal. Data derived from OECD/IEA/World Bank database* [17].
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* Data from the most recent census carried out by the Nepalese government in 2012 estimates that approximately 67% (contrary to over 80%) of the total population has access to electricity [18]. Thus, it is evident that sustainable energy is not merely an access problem, meaningful solutions should focus equally on reliability, affordability and productive uptake of energy. Also, it is equally important to consider energy security aspect as the import of petroleum products is the major reason for a large trade deficit in Nepal [3], and there have been recurring supply issues [19], [20].
2.1.2. Sector wise Energy Consumption With minimal industrialization and limited demand from the transportation sector, the residential sector, by far, remains the biggest consumer of energy in Nepal and accounts for around 80% of the total national energy consumption [21]. Traditional biomass, namely fuelwood, animal dung, and agricultural residue, is predominantly used for cooking and heating needs in rural areas. The indoor air pollution associated with the use of traditional fuel for cooking has severe health consequences and is regarded as the fourth major cause of deaths in developing countries, affecting mostly women and children. In Nepal, World Health Organization (WHO) estimates that around 7,500 deaths occur annually due to diseases attributed to indoor air pollution [22]. Recently, renewables like biogas, improved cooking stoves, etc. are replacing traditional biomass to some extent. In urban and semi – urban settings, however, use of LPG for cooking, and grid electricity for lighting and power applications is common. The use of LPG has been growing by around 23% per year while the growth of electricity has only been around 10%. Adoption of solar home systems has been popular with the average annual growth of over 200%, while biogas is growing by around 15% every year. Overall, the energy consumption in the residential sector is growing by around 2% per year [23]. The Industrial/commercial sector accounts for around 6% of the total national energy consumption [21]. Coal, petroleum, and electricity are the primary forms of energy for the industries, with a small portion of energy coming from traditional fuelwood. Electricity and petroleum are the dominant forms of energy used in the commercial/service sectors. Due to severe socio – political, and economic issues, the industrial sector has been severely affected over the past few years with energy demand growing by less than 1% per year [23]. The transport sector, which predominantly uses petroleum fuel, is one of the fastest growing consumer of energy in Nepal, accounting for around 8% of total national energy consumption [21].
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Overall, the consumption in this sector is growing by around 9%, with the highest growth seen in the demand for diesel fuel. Increased ownership of private automobiles and the extensive use of diesel generators to compensate for long power cuts are the likely reasons [23], [24]. The agriculture sectors account for around 1 % of total energy consumption [21], despite contributing almost one – third to the national GDP. Traditional biomass, petroleum, and electricity are commonly used source of energy in agriculture sector which is largely traditional and is in dire need of modernization. Thus, it is apparent that the growth of energy consumption, which often indicates the growth of economic activities, has not been satisfactory. Despite years of coordinated effort, there has been limited progress in increasing uptake of energy in the residential as well as the commercial/industrial sector. While there are several social and geo – political reasons behind this, systemic limitations in the efforts to improve energy access have also been a key factor, which will be discussed in Chapter 3.
2.2. Energy Resources in Nepal 2.2.1. Traditional Biomass For this study, both woody and non – woody biomass derived from plants and animals have been classified under traditional biomass. Use of traditional biomass for cooking and heating is known to have severe effects on the health and wellbeing of families, and on the environment. However, despite many initiatives to reduce the dependency of the rural population in these fuels, their use will remain predominant for the foreseeable future [25], [26].
2.2.1.1.
Fuelwood
Studies from 2005 indicate that Nepal has around 5.5 million hectares of forest covers, which is approximately 37% of the total land area. More than a quarter of the total national forest is composed of community forests. It is estimated that the total annual sustainable fuelwood production potential of Nepal is close to 12.5 million dry metric tonnes [23], [27], [28]. While fuelwood currently forms the primary cooking fuel for most of the rural areas in Nepal, sustainable management of fuelwood can also help rural electrification in the coming days through biomass gasification. Gasification technology is relatively new in Nepal, and there have been limited studies and fewer trials/pilot projects. Assuming energy density of wood to be around 2 – 5 kWh/kg
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depending on the species type, size, and moisture content; estimated energy production from biomass in Nepal, without accounting for conversion efficiencies, is between 25,000 GWh to 62,500 GWh. For reference, in 2015, total electricity generation was approximately 5000 GWh of electricity, which indicates the immense potential of using sustainable wood production for rural electrification [12], [29].
2.2.1.2.
Animal Dung
Animal dung (mostly cow or buffalo) is another commonly used source of energy in rural areas. Known as the source of energy for the poor, it is often used as dry cakes or with other herbaceous biomass forming sticks. Although it is not a very good fuel due to low energy content and high moisture content, nevertheless, it is the second most commonly used fuel after fuelwood. It is estimated that Nepal has the total potential of around 14.9 million dry metric tonnes of animal dung biomass, out of which over 80% is available for utilization [23], [28], [30].
2.2.1.3.
Agricultural Residue
Agriculture is the most common profession in Nepal and contributes almost one third of the GDP [12]. In rural areas with no forest and limited fuelwood supply, cooking and heating needs are met using different forms of agricultural residues like by-products from the processing of cereal crops (paddy, maize, millet, and wheat), oil seeds, grain legume, fibre crops like jute, etc. A 2008/09 study had estimated total potential of 19.4 million dry tonnes, the equivalent of 243 million GJ, i.e. approximately 60% of the total national energy consumption for the same year. However, these agricultural residues are often used as fodder for cattle, and thus only around 50% of total available resource can be used for energy generation [28].
2.2.2. Modern Biomass & Municipal Solid Waste There have been initiatives to replace the traditional use of biomass using more efficient Improved Cooking Stoves (ICS). They can be made from mud or metal and can be used for both cooking and space heating. While reducing fuelwood consumption by almost half, they also reduce indoor air pollution by 30% to 90%, thus reducing the health implications among families and limiting the greenhouse gas emission by about 2.5 ton per year per stove [31]. Use of ICS also helps to minimize the gender inequality as it saves a significant amount of time for women, who are almost exclusively involved in collecting fuelwood, preparing meals, and cleaning the dishes. Approximately 1.3 million units of ICS have been installed as of July 2016 [31].
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Despite the immense potential, modern use of biomass gasification for thermal use or electricity generation has been limited to a handful of pilot schemes. For thermal applications, the AEPC quotes 2 pilot studies: in Kathmandu and in Ilam, used for meat drying and tea processing respectively. For rural electrification, despite studies showing good feasibility for installation of biomass gasification systems in multiple places using multiple biomass resources, only three (10 kW, and 11kW capacities) projects could be confirmed as operating. There is a paucity of information even for the projects that are known to be operating [32]–[36]. A technology that is increasingly getting more attention lately involves waste to electricity projects, based primarily on municipal solid waste. Management of municipal solid waste has been a serious issue for the authorities, and municipalities spend over 20% of their annual budget for waste management only. A study from 2008/09 estimated that municipalities in Nepal generate approximately 1350 dry tonnes of solid waste per day while projecting that the 5 cities inside the Kathmandu valley would alone generate over 775 tonnes a day by 2015 [23], [27]. More recent studies estimating the revised potential could not be found. However, the government has prioritized this sector and aims to generate at least 10MW electricity from municipal solid waste by 2030 [22]. Kathmandu Metropolitan City council recently commissioned a waste to electricity project with 14 kW capacity, the first of its kind in Nepal, while other municipalities like Biratnagar and Pokhara are also building pilot schemes [37], [38].
2.2.3. Biogas As mentioned earlier in section 2.2.1, Nepal has an abundant supply of animal manure, which is increasingly being used to generate biogas in rural, semi urban or even urban areas. At many places, biogas is also being promoted as a measure to maintain sanitation while supplying clean cooking energy by anaerobic digestion of human excreta combined and animal dung. However, estimates suggest that only 15 % of the total dung potential has been utilized so far and that up to 40% of the total national energy consumption can be met by effective utilization of animal manure alone. Nepal has an estimated potential to generate over 4 million cubic metres of biogas each day, which amounts to almost 3 million domestic biogas plants of 4 cubic metres digester. This estimate only considers cow and buffalo dung as feed, and the theoretical potential could be even higher if kitchen waste, agricultural residue, pig/goat manure or human excreta were included. According to the AEPC, almost 350,000 units of domestic biogas have been installed in Nepal so far, in a variety of plant sizes including – 4, 6, 8, 10, 15, 20 cubic metres [39]. Apart from domestic plants, construction of institutional biogas plants with sizes over 20 cubic metres has been increasing, particularly due to
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high interest from the security forces (police and army barracks), prison authorities, residential schools, etc. Over 300 institutional biogas plants have been installed so far. One large commercial biogas plant with a continuously stirred tank reactor of 3750 cubic metres has recently been commissioned, while a few others are in feasibility study stages [39], [40]. The biogas program in Nepal is considered relatively successful and has immense potential for reducing energy poverty amongst the rural population. It has been well studied, and many other least developed counties have been attempting to replicate the Nepalese Model [41], that has been supported by the Clean Development Mechanism (CDM) since 2005. However, under the current technology and the e isti g se i e deli e
e ha is , iogas alo e cannot be the panacea of
energy problems in Nepal . Mediocre performance of biogas digesters in hilly/mountain regions of Nepal during winter, scarce availability of water, high capital investment, land requirement, etc. are some of the issues that need to be addressed before biogas can reach the poorest of households, and those over 10,000 households who live at an altitude over 3000 metres [27], [30].
2.2.4. Hydropower For such a tiny nation, Nepal boasts having over 2% of the o ld s total f esh ate esou es, thanks to the chain of mountains forming the Hindu Kush Himalayas. There are around 6000 rivers with the theoretical potential of generating almost 83 Giga watts of hydroelectricity, over half of which is estimated to be technically and economically feasible [23], [27], [28]. Although the first hydroelectricity plant of 500 kW capacity was built in 1911, over a century ago, the progress of hydropower development has not been satisfactory in Nepal. For a country with such immense potential, the total generation capacity including small, micro and pico hydropower plants is approximately 900MW, as listed in Table 2.1. The progress in the development of hydropower in Nepal has been slow for various reasons including huge capital investment in an uncertain political environment, inefficient bureaucracy and poor accountability, poor long-term planning, etc. In recent years, lack of adequate transmission lines has also affected the development [42], [43].
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Name of Project
Capacity (MW)
Ownership
Kali Gandaki A
144.00
Private
Madhya Marsyangdi
70.00
Private
Marsyangdi
69.00
Nepal Electricity Authority
Khimti -I
60.00
Private
Kulekhani-I
60.00
Nepal Electricity Authority (Reservoir Based)
Upper Marsyangdi A
50.00
Private
Upper Bhotekoshi
45.00
Private
Kulekhani-II
32.00
Nepal Electricity Authority
Upper Madi
25.00
Private
Trishuli
24.00
Nepal Electricity Authority
Chilime
22.00
Private
Mai
22.00
Private
Gandak
15.00
Nepal Electricity Authority
Hewa Khola A
14.90
Private
Modi Khola
14.80
Private
Devighat
14.10
Nepal Electricity Authority
Jhimruk Khola
12.50
Private
Upper Mai Hydropower Project
12.00
Private
Sun Koshi
10.05
Nepal Electricity Authority
Sipring Khola
10.00
Private
Lower Modi -1
10.00
Private
Others
158.01
TOTAL
894.3
Table 2.1: Major hydro power projects in operation in Nepal [44] . Apart from these, micro and pico hydro with a combined capacity of almost 55 MW have been installed as of 2015/16 [39]. The government is now prioritizing the construction of some very
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large hydropower projects, as shown in Table 2.2. Almost 240 MW new generation capacity is due to be commissioned in 2017.
Name
Capacity
Remarks
(MW) Kulekhani 3
14
To be commissioned by 2018
Chamelia
30
To be commissioned by 2018
Upper Arun
335
Upper Tamakoshi
456
Upper Marshyangdi
600
Tamakoshi 3
650
West Seti
750
Upper Karnali
900
Arun 3
900
Budhigandaki
1200
To be commissioned by 2018
Reservoir Type
Reservoir Type
Table 2.2: Some of the major hydro power projects in the pipeline [3], [45], [46].
2.2.5. Solar Energy Nepal receives a fair amount of solar insolation ranging from 3.6 to 6.2 kWh/m2 – day, with a national average of 4.7 kWh/m2 – day. On average, the sun shines for 6.8 hours a day, and about 300 days a year. Thus, there is immense potential for harnessing solar energy for thermal applications or electricity generation. Recent studies by the AEPC have estimated that approximately 2100 MW of grid electricity could be generated using solar energy [27], [28]. So far, Nepal Telecommunication Corporation has been leading the adoption of Solar PV, with installations at over 3000 locations with a combined capacity of over 1 MWp. The AEPC estimates that over 600,000 units of Solar Home Systems (SHS) have been installed throughout the nation, with estimated combined capacity of 5 MWp [23]. The acute energy crisis and long hours of daily power cuts greatly contributed to the rapid adoption of Solar PV systems in urban areas in recent years, and the growth is now slowing down with the reduction in power cuts [47]. Also, no tangible progress has been made regarding the proposed 25MW grid connected the solar project to be built by the government [3]. It is worth noting that other grid connected solar projects worth almost 190 MW, all promoted by private companies, have received a license from the regulators for power generation, but not a single project has been
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reported to have made real progress [48]. Difficulties in obtaining Power Purchase Agreement (PPA) with the national utility company has been cited as one of the biggest obstacles.
2.2.6. Wind Energy Wind energy is one of the relatively unexplored and unharnessed technologies in Nepal. As of now, except for some pilot studies [49], [50], the wind remains a big unknown with no reliable studies on resource and potential besides some preliminary estimates. A study by the AEPC in 2008 had estimated commercial wind potential of almost 3000 MW. However, apart from an ongoing wind mapping project, no progress has been made towards harnessing the potential [28], [51].
2.2.7. Other Although the extraction is not feasible economically, there are limited deposits of coal and lignite worth 5 million metric tonnes in areas around Kathmandu, and Western / Mid – Western regions like Dang, Rolpa, Palpa, Arghakhanchi, etc. In fiscal year 2014/15, coal worth 19.5 MGJ was imported from India, which is equivalent to almost 3.2% of the total national energy consumption for the year. Studies have also indicated the occurrence of natural gas mines of 316 million cubic metre around Kathmandu valley, but commercial extraction has not been done yet. Although, there are speculations regarding the occurrence of other petroleum fuels, however, those are not backed by technical and economic feasibility studies [23], [27], [28]. Improved Water Mills are a common source of mechanical power in many rural areas. There are almost 25,000 traditional water mills, and approximately 10,000 improved water mills have been installed until July 2016, which are used for several end uses like grinding, paddy hulling and husking, rice polishing, etc. Water mills are sometimes used for electricity generation up to 5 kW, and around 25 such plants are recorded by AEPC [27], [39]. Biomass densification for the formation of briquettes is another potentially useful technology for Nepal as there is an abundant supply of crop, forest residue, and organic solid waste from industries and municipalities. When used for cooking, they are known to have reduced indoor air pollution by up to 90 %, thus could play a crucial role in the provision of clean cooking fuel for the rural population. However, apart from a few private businesses, attention from the public sector and policy makers towards bio – briquettes has been minimal, at best [27].
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Over the past few years, there have been some initiatives to promote biofuel production, particularly using Jatropha curcas, with studies estimating the potential of replacing up to 5% of national diesel demand. AEPC is currently supporting the development of 10 modern Jatropha nurseries. However, some people are concerned with the rationale of promoting biofuel production in a nation with severe food deficit [27], [52]. Nepal is also known to have 32 hot water spring sites in different parts of the country, with water temperature as high as 50oC. However, there have not been any studies regarding commercial utilization of those resources for geothermal energy generation [27].
2.3. Institutions and Stakeholders In Nepal, various institutions and stakeholders are involved in energy development sector. More details on the implementation strategy, the relationship between different stakeholders, and the challenges will be discussed in Chapter 3. Here, the institutions are briefly introduced in three broad categories.
2.3.1. Government and Public Institutions Several government institutions and ministries are involved in the energy sector. Particularly, the Ministry of Energy, Ministry of Finance, Ministry of Science Technology and Environment, Ministry of Local Development, and departments like the Department of Electricity Development, play a significant role in forming the long term strategies and policy making. Other government institutions with more direct and specific responsibility in the development of energy sectors and implementation of those strategies are explained in following subsections.
2.3.1.1.
Alternative Energy Promotion Centre (AEPC)
AEPC is a semi – autonomous state institution under the Ministry of Science, Technology and Environment. It as esta lished i
to
ake e e a le e e g a ai st ea
esou e th ough
increased access, knowledge and adaptability for improving the li i g o ditio s of people i Nepal. Apart from promotion, it seeks to develop and regulate the market for alternative and renewable energy in Nepal. Its executive board is chaired by the minister of its parent ministry, and has representatives from the Ministry of Finance, Ministry of Energy, Ministry of Local Development, National Planning Commission (NPC), and others representing private businesses, non-governmental, and donor organizations involved in the sector [53]. Despite its many limitations, the AEPC has been
P a g e | 18
a major driver behind the development of the alternative and rural energy sector over the past two decades.
2.3.1.2.
Nepal Electricity Authority (NEA)
The NEA is the state-owned utility company responsible for generating, transmitting, and distributing power throughout the country by constructing, operating, and maintaining the facilities. In the recent years, more electricity has been generated by independent or private power producers (See Table 2.1) than the projects owned by NEA. However, the transmission and distribution are still entirely owned by the NEA. Now that Nepal is adopting a federal system of governance, there have been discussions calling for the dissolution of the singular company into separate generation, transmission, and distribution companies, for swift and more effective implementation of projects, a d fo i
eased fo us o
u al ele t ifi atio to po e the people . Ho e e , o lea outli e o
plans for implementing these changes are published so far [15], [54].
2.3.1.3.
Others
National Planning Commission of Nepal is the apex advisory body of the government. It was formed in 1956 and has been primarily responsible for formulating periodic development plans in accordance with the framework of long term development perspective, along with several other advisory roles. It is the focal institution for planning and implementation of domestic and international long-term projects like the Millennium Development Goals, and the ongoing Sustainable Development Goals, both of which concern the promotion of sustainable energy access [55]. Investment Board of Nepal is another semi-autonomous institution headed by the Prime Mi iste , a d espo si le fo e io
e t . It
as fo
p o oti g e o o i de elop e t
eati g i vestment friendly
ed i 2011 and is actively involved in expediting and facilitating foreign
investment in the development of large hydropower projects in Nepal [56]. Department of Electricity Development was esta lished i
to p o ote ele t i it
sector and to improve the effectiveness of the sector at the national level by attracting private i est e t . It a ts as a egulato
od p o idi g o e
i do
se i e fo li e si g p i ate
hydroelectricity projects in Nepal by attempting to reduce bureaucratic delays and complications. It also aims to facilitate investment by assessing the feasibility of potential projects and maintaining a Basket List of feasi le p oje ts [48].
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Some other governments or public institutions are also involved in various aspects of sustainable energy planning or implementation. The Renewable Energy Test Station (RETS) department under Nepal Academy of Science and Technology (NAST) undertakes testing and certification of solar home systems. The Centre for Energy Studies (CES) at the Institute of Engineering – Tribhuvan University, in collaboration with Centre for Rural Technology Nepal carries out testing of improved water mill turbines, among other activities. The Kathmandu University runs its own Turbine Testing Laboratory [25]. However, review of published reports, and personal interviews with stakeholders highlights the lack of effectiveness of these institutions, particularly due to the lack of coordination amongst themselves and with other non – academic stakeholders.
2.3.2. International Development Partners & INGOs A number of international organizations like the United Nations (UN) institutions, bilateral and multilateral donors, financial institutions, non-governmental organizations, and charities, etc. are involved in the development of energy sector and for the promoting sustainable energy access in Nepal. Name of Major Project Organization United Nations Development Programme - UNDP
• •
Rural Energy Development Programme - REDP (2006 – 2012) Renewable Energy for Rural Livelihood – RERL (2014 – 2019)*
Generic Objectives
Remarks
•
Promotion of micro hydro, solar home systems, and productive use Promotion of clean cooking stoves and toilet attached biogas Micro enterprise development
•
Hydropower development, improvement and strengthening of transmission lines, and Rural Electrification Promotion of large off – grid biogas based electricity generation
•
Development of Cross – Border Transmission Line with India played crucial role in limiting and reducing power cuts in recent years
Electricity generation, institutional reforms at the
•
Installed a wind – solar hybrid system for rural
• •
*Included in National Rural and Renewable Energy programme of the AEPC, also involves World Bank The World Group
Bank
• • • • •
Asian Development Bank
•
A number of hydropower projects since 1975 Kabeli and Nepal – India Cross Border Transmission Line (2011) Nepal Grid Solar and Energy Efficiency Project (2014) Power Sector Reform and Sustainable Hydropower Development (2015) SREP supported Extended Biogas Project (2014 – 2019)
•
A number of hydropower projects development and
•
•
•
REDP is believed to have brought sustainable energy access to almost 1 million rural population RERL has so far brought electricity access to 36,000 households and promoted 1,180 micro and small enterprises
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transmission line projects since 1972 • SNV Netherlands Development Organization
•
• • DFID - UK, GIZ German Development Organization, KfW Development Bank, Denmark, Norway
•
Practical Action
•
•
• •
United Mission to Nepal, Renewable World, and others
•
•
Initiated and consistently involved in the development of biogas in Nepal through Biogas Support Program (BSP) since 1992. Promotes clean cooking through improved cooking stoves. Rural electrification.
•
Consistently involved in several AEPC projects including those involving biogas and improved cook stoves. Co t i ute fu d to AEPC s umbrella program involving all renewables.
•
Development and promotion of clean cooking stoves. Study for development of commercially viable wind power in Nepal. Improving sustainability of micro hydro.
•
United Mission to Nepal was one of the earliest institutions to be involved in the development of biogas in 1977. Renewable World – UK charity is involved in community biogas and solar pumping systems.
•
•
•
•
•
NEA, and rural electrification Scaling up small hydro
electrification, the first of its kind in Nepal
Provide clean cooking fuel to rural population through biogas and improved cook stoves. Provide access to electricity through improved water mills.
•
Improved access to clean cooking fuel and electricity Energy Sector Assistance Programme (1999) initiated by Danish Development Agency is believed to have brought sustainable energy access to almost 1.5 million people through micro hydro and clean cooking stoves.
•
While the specific details are not confirmed, DFID UK is shortly initiating a major project involving renewables since the ongoing umbrella project of the AEPC is coming to an end.
Improve access to clean cooking fuel and electricity in rural Nepal. Promotion of sustainable livelihood through renewable energy and rural enterprises.
•
Develop several innovative projects integrating energy access and poverty reduction, for instance through the vegetable market chain.
•
Over 150,000 households to be benefitted from clean stoves. Recently commissioned a rural electrification pilot project based on biomass gasification.
Improve access to clean cooking fuel, particularly amongst the poorest of communities. Promote women empowerment and girl education though solar and hydraulic ram powered water pumps.
Table 2.3: Key international development partners and organizations involved in sustainable energy access projects in Nepal. O tai ed f o i stitutio s e sites a d pu lished epo ts [15], [39], [57]– [64] .
2.3.3. Private and Non-Governmental Organizations Since the role of AEPC is primarily focused on regulation, promotion, monitoring and evaluation, and in subsidies management, much of the implementation work for every renewable
P a g e | 21
energy systems in Nepal is carried out by private businesses and, and non-governmental organizations. In the hydroelectricity sector, the majority of electricity flowing into the grid comes from independent or privately-owned projects (see Table 2.3). The umbrella association of private hydro projects in Nepal so far has over 120 member-projects/organizations and these private hydro projects play a key role in improving the energy scenario in Nepal. It is estimated that private hydro will alone add over 200 MW new capacity out of total 240 MW to be commissioned by 2017 [65], [66]. Likewise, the role of the private sector has been equally important for the promotion of sustainable energy systems like biogas, clean cooking stoves, and renewables like solar mini grids or small solar home systems. The AEPC has selected 113 companies for biogas, 33 companies for clean cooking stoves and biomass systems, 11 companies for improved water mill, 13 companies for solar thermal, 39 companies for solar PV, and 53 companies for both solar thermal and solar PV installation. These companies are responsible for the installation and commissioning of the designated systems in their respective, pre – defined locations, and claim the subsidies from the AEPC after collecting the rest of the amount from the owners. The AEPC has also selected 18 consulting firms who are eligible for survey, design or feasibility studies for wind projects. Also, there are 11 national and regional service centres throughout the nation for post installation services, mostly operated by nongovernmental organizations [39], [53], [67]. Other noteworthy organizations include BSP Nepal, the pioneer organization behind biogas, and now works in an advisory and supporting role for the AEPC. Centre for Rural Technology Nepal has been involved in the development and promotion of clean cooking stoves since 1989, and more recently in promoting improved water mills. Banks and private financial institutions form another key stakeholder for energy development projects. By nature, renewables and alternative energy require relatively high capital investment which forms a major barrier against widespread adoption. Experts and many studies regularly acknowledge the positive role of the Agricultural Development Bank during the 1970s for the initiation and promotion of biogas in Nepal though Biogas Support Program [57]. National and international academic and non-academic publications routinely highlight the important role that banks and micro finance institutions play for the success of any energy access project. In Nepal, lack of financing and poor access to credit facilities has been cited as one of the major reasons behind failure (or conversely, success) of sustainable energy projects [23], [27], [68]–[71].
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2.4. Current Energy Policies and Prospects 2.4.1. Subsidy Policies Subsidies have been instrumental in bridging the gap between the cost of sustainable energy systems and their affordability. All forms of renewable energy are being supported by the government though subsidies, the amount of which varies with location, potential end – use, socio – economic status of the households, size and type of the system itself, etc. among others. A summary of the existing subsidy policy for different systems has been compiled in Table 2.4. It is worth noting that the subsidies range also depends on the accessibility of lo atio , highest fo
e
e ote a d
lowest for a essi le . Sector
Capacity Feature
Micro and Pico Hydro
•
or Subsidy Amount (Nepalese Remark Rupees NPR)
10 kW – 1 MW
• •
•
Up to 10 KW
• •
Improved Water Mills
Solar PV – Area without Grid
NPR 28,000 – 35,000 / HH for distribution; NPR 100,000 – 205,000 / kW for generation NPR 10,000 – 11,500 / HH for distribution; NPR 50,000 – 70,000 / KW for generation below 5KW NPR 75,000 – 95,000 / KW for generation between 5 – 10 KW
• •
•
NPR 14,000 – 18,000 for grinding only; NPR 34,000 – 38,000 for grinding and hulling NPR 10,000 – 11,500 / HH for distribution; NPR 20,000 – 50,000 / KW for generation
•
Mechanical Power
•
•
Electricity Generation up to 5 KW
•
•
Solar Systems
•
NPR 4,500 – 5,000 /SHS for 10 – 20 Wp; NPR 8,000 – 10,000 /SHS for 50 Wp or more
•
•
Mini Grids
•
NPR 28,000 – 32,000 / HH for Distribution; NPR 150,000 – 175,000 / KWp for generation
•
Home
• Solar PV – Areas with Grid
Solar Thermal
•
Domestic Cooker
Approximate cost per kW ranges from NPR 400,000 to 450,000. Subsidies and other government support cover between 50% – 70% of total cost [72]. Additional NPR 4,000 per household fo ta geted g oup like women led house, earthquake victims, endangered communities, etc.
Up to 65% or up to NPR 500,000 for PV systems in public institutions like schools, hospitals Up to 60% of cost or up to NPR 1,500,000 for drinking water projects run by PV pumps, with additional NPR 4,000 / HH of ta geted g oup Up to 60% of cost or up to NPR 2,000,000 for irrigation projects
•
Different schemes for street lighting, domestic systems, or for institutional use
•
Beyond the scope of this study
•
40 % - 60% of cost without exceeding prescribed limit
•
Support limits usually reflect approximately same
P a g e | 23 •
Institutional Cooker Dryer
• •
50% - 75% of cost without exceeding prescribed limit Between 40% - 75% without exceeding prescribed limits, based on size of dryer
• • •
Mountains Hills Terai (southern flat land)
• • •
NPR 25,000 – 35,000 NPR 20 ,000 – 30,000 NPR 16,000 – 24,000
•
•
Commercial
•
NPR 20,000 – 36,000 based on size, location
•
Additional NPR 65,000/kW for electricity generation
•
Public Institutions Community Biogas
•
NPR 57,000 for Terai and 68,000 for the hills NPR 45,000 for Terai and 54,000 for hills for community biogas
•
Additional NPR 185,0000 /kW
•
Additional NPR 150,000 /kW
•
Biogas – Animal Dung (2/4/6+ Cubic metres) Waste to Energy Biogas
(Human excreta / solid waste / agriculture residue)
Biomass
Wind Energy Or Wind – Solar Hybrid systems
•
•
percentage of market cost as estimated in the policy
•
Subsidy for 6+ cubic metres plants to decrease by 5% / year Additional 10% of subsidy a ou t fo ta geted g oup
•
Municipal Waste
Solid
•
Up to 40% of cost for municipal projects without exceeding prescribed limit
•
Up to 40% of electrical cost not exceeding prescribed limit
•
Mud Improved Cook Stove
•
•
•
Metallic Improved Cooking Stove
•
Domestic ICS supported for households at over 1,500 metres with additional NPR 500 – 1, 000 for remote areas, and additional NPR , fo ta get g oups
•
Gasifier System for Thermal Use
•
•
Gasifier for Electrification
•
•
No subsidy from the AEPC, but local bodies may support vulnerable or needy household Up to 50% of cost of metallic ICS for domestic or institutional use without exceeding prescribed limit Up to 50% of cost, without exceeding NPR 150,000 for thermal applications in agro – processing enterprises NPR 28,000 - 32,000 / HH for generation; NPR 110,000 – 125,000 /kW
For rural electrification in area without grid, systems of 5 – 100 kWp
•
5 KW – 100 KW
•
NPR 28,000 – 32,000 / HH for distribution; NPR 150,000 – 175,000 /kW for generation
•
Additional support of 30 – 60% of extra investment if used for productive end use, and up to NPR , e t a fo ta get g oups
Table 2.4: Summary of the current subsidy policy for renewable and alternative energy in Nepal [23], [63], [73]. Thus, it is evident that on average, at least 50 % of the total establishment cost of the systems are covered by the government subsidies. For community oriented projects, apart from subsidies from the AEPC, different local authorities like village development committees, district development committees, or at times, influential local individuals and Non – Governmental Organizations (NGOs) may chip in as well and further reduce the equity and loan proportion of initial investment. This could
P a g e | 24
be a good thing or not, depending on the response of communities towards the project after commissioning. A more detail analysis on potential challenges and opportunities with such implementation strategy will be discussed in Chapters 3 and 4.
2.4.2. National Strategy and Prospects The Government of Nepal formulated the Rural Energy Policy in 2006 and acknowledged the vital role different sustainable energy systems could play for improving energy access, and for the overall rural development and improvement of livelihood through poverty alleviation. However, lack of coordination among implementing agencies within the government, and between government and development partners has been an issue [74], [75]. As of 2012, all the projects involving alternative and renewable energy initiated by every major international development partner and by the AEPC have been streamlined through a common umbrella program called National Rural and Renewable Energy Program (NRREP). This umbrella project integrates long term vision of the Nepal Government itself, with other two significant projects, namely, the Energy Sector Assistance Programme (ESAP) from Danish Development Agency, and the Renewable Energy for Rural Livelihood project initiated by the United Nations Development Programme (UNDP) with support from the World Bank. The NRREP project aimed to integrate the rather dispersed initiatives from different donors, and employ a more coordinated effort for addressing, not just physical access, but also other vital aspects of energy access spectrum, like productive end use, credit facilitation, gender equality and social equity, monitoring and quality control, etc. The program is now coming to an end with mixed success. While the program certainly brought more coordinated effort from state and non-state actors and focused on improving livelihood through productive energy use and through the establishment of micro enterprises, it still could not fully address many long-standing issues like innovation, research and development, access to credit, community engagement and ownership, etc. The limitations and the potential opportunities within the existing framework of implementation and in current policies will be critically assessed in Chapter 3. [63], [75]–[77]. Post NRREP, a new umbrella project to be initiated by DFID UK is scheduled to begin shortly, based on information obtained from interviews with stakeholders from the AEPC and beyond. Details of the project have not been made public yet. However, the project is expected to, in general, be in line with the current energy strategy of the Nepalese government. A summary of major strategies adopted by the government for the energy sector, based on the most recently available documents, is presented Table 2.5.
P a g e | 25
Sector
Strategies
Remarks
Hydropower Development
The transition from traditional biomass energy based nation to hydroelectricity intensive one with more studies and better project planning for each river basin to avoid potential conflicts among project, fast - track licensing and development process, and national priority on hydropower development.
National ambition to add 10,000 MW generation capacity by 2026 [78].
Rural Electrification – National Grid
Building on existing Community Rural Electrification Program, NEA to formulate Rural Electrification Master Plan – Nepal
Achieve universal access to electricity by 2025
Micro Hydro
Upscale existing micro hydro systems, improve grid integration readiness and adopt micro hydro based mini grids [72], [76].
Biomass
Replace traditional biomass with modern biomass for clean cooking and rural electrification, substitute use of diesel by bio diesel to possible extent
Renewables – Solar and Wind
Adopt solar PV for rural electrification and promote use in urban households, assess potential of wind resource, create wind map and national wind energy policy
Aims to achieve universal access to clean cooking, replace 10% of national diesel needs with biodiesel, generate at least 10 MW electricity from solid waste, etc. by 2030
Table 2.5: Summary of the national strategies concerning major sustainable energy technologies [2], [15], [22], [23], [79] . It seems that the government and the international development partners have realized the utmost importance of promoting sustainable energy, not just for reducing dependency on traditional bioenergy, but for the overall improvement of the livelihood of people, to kick-start rural development, and to enhance economic activities throughout the nation. However, it is unclear precisely how these ambitious targets will be met. From what little is known at this stage, and from past experiences, it is unlikely that the current model and methods of planning, implementation, and evaluation/quality control will achieve these ambitious and seemingly visionary targets.
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2.5. Energy, Poverty and Sustainable Development Access to modern energy services is vital for human wellbeing and prosperity. Provision of clean fuel for cooking and space heating, and electricity for lighting and mechanical power, etc. influences health, education, income, and other aspects of human and social development. However, over one third of the o ld s populatio i.e. o e
.
illio people i the o ld, and approximately
23 million in Nepal, do not have access to modern cooking fuel and thus use traditional biomass for cooking and space heating. Traditional use of biomass is known to have serious health impacts on the families due to indoor air pollution, while also having environmental impacts through deforestation. It is estimated that 3.5 million people die each year due to conditions caused by indoor air pollution. Likewise, 1.2 billion people in the world are believed to be deprived of access to electricity. Over the past few decades, there has been remarkable progress in the provision of modern energy services to the rural population, more so in some countries and regions compared to the others. However, global and national efforts seem disproportionately inclined towards electricity provision while clean cooking is often a secondary priority. For instance, China achieved universal electricity access in 2015, a remarkable achievement for the most populated country in the world, while one – third of its population still does not have access to modern cooking fuel. Globally, the population without access to modern energy services reside in rural parts of their countries and thus are deprived of other basic facilities like health services, education, clean drinking water, etc. as well [80]–[82]. According to a 2013 study by World Bank, almost 10.7 % of the
o ld s populatio ,
amounting to over 766 million individuals, are living in extreme poverty conditions below US$ 1.90 a day. However, this definition only considers income as a parameter for measuring poverty and does not account for other essential aspects of wellbeing like health, education, water, etc. Other more rigorous indicators like Multidimensional Poverty Indices are employed for broader assessment of poverty, including factors like health, education, and living standards [83], [84]. Nevertheless, it is generally agreed that the investment in human capital and essential (hard) infrastructure, interventions through local enterprises, modernization and development of agriculture, and adoption of suitable financial policies and other soft infrastructures play key roles in the alleviation of poverty [85], [86] . Access to energy is widely agreed upon as a driver for poverty alleviation, and for overall rural and national development. With this approach, the governments and international development sectors are increasingly focusing in the investment in the energy sector as a tool for rural and national development. The Nepalese government considers access to reliable and affordable energy services
P a g e | 27
to be fundamental in its effort to reduce poverty, improve health, increase productivity, and enhance economic growth in rural and national level. Likewise, rural energy development has consistently been an important sector of investment by the national Poverty Alleviation Fund of Nepal [25], [87]– [89]. While the popular paradigm and literature have extensively discussed the value and the potential of energy access in development, the converse is rarely studied. Many examples, from inside Nepal, and from other countries, have shown that extreme poverty can often be the biggest barrier to the provision of sustainable energy access to the rural and poor population. Economists, planners, and engineers almost always see poverty as an initial barrier in the implementation process and intend to address the issue by heavily subsidizing systems or even proving them for free. While subsidies and other forms of financial support are extremely important in many cases, many other projects fail simply because: •
Local communities, irrespective of their financial status, do not take ownership of the project, and expect government or the concerned organization to fix any issues that may arise (especially in fully subsidized systems);
•
Communities and households, despite acknowledging the positive impact of the project and its value in their lives, are simply too poor to pay for or maintain the system after its installation.
It comes down to whethe the o
u ities
a t to pay a d if the
a pa . I eithe
case, subsidies to bridge the financial gap for initial investment alone are not sufficient for the successful implementation and sustainability of the projects. Broadly speaking, techno – economic feasibility, and initial subsidies to establish and commission a system, which are almost exclusively the primary focus of a ade ia a d e e g pla lo al o
u it s
ill a d thei
apa it
e s u til o , a e e essa
that
o ditio s; ut it s the
akes suffi ie t g ou ds fo a su essful p oje t.
This study intends to look at the community aspects sustainable energy projects, and explore the
ethods to i p o e lo al o
u ities e gage e t a d o
e ship of the p oje ts. I doi g so,
creating and delivering systems and solutions that are within reach of the bottom of the pyramid population, who live around or under US$ 1.90 a day, should be the focus of energy planners.
P a g e | 28
Figure 2.4: Academic literature extensively quote access of energy to be the fundamental tool to break the vicious circle of poverty, but few of them provide details on how to improve the uptake of (productive) energy amongst the extremely poor segment of the population. Diagram developed by the Institute of Development Studies at the University of Sussex [90]. Access to modern energy services, if sustained and used for productive end use, would likely improve the income and the livelihood. However, ensuring that the households are willing and capable of continuing to pay for those services has been a key challenge, particularly in the projects targeting the poorest, the most vulnerable and underprivileged communities or households.
2.6. New Paradigm in Sustainable Energy Planning The pu suit of sustai a le e e g a ess has histo i all
ee
a ske ed pu suit of spe ifi
a ie o fuels a gues Reh a et. al. [91], st essi g that ele t i it has ee prima
i puts fo e o o i g o th a d de elop e t
ega ded as o e of the
hile elegati g the ode
e eg
eed fo
P a g e | 29 ooki g to a lo e le el of politi al o side atio
hi h is e ide t f o
the fa t that the e a e
oe
than twice the number of people without clean cooking fuel than there are without access to electricity in the world. Herington et. al. have summarised the evolution of energy access and development paradigm from the 1970s through 2010s [92]. Acknowledging that the energy planning and development paradigm sta ted i the Ma ket C eatio
app oa h i the
s as Do o Gift app oach, gradually evolving into a
s, and has now adopted a
De elop e t app oa h; he a gues that sustai a le e e g pla
o e pa ti ipati e Sustai a le
i g fo the rural and underprivileged
population needs a more participatory and equitable approach. These and a few other studies [93]– [96] have called for a revision on the contemporary paradigm of sustainable energy access, and sustainable development paradigm. Based on experiences in Nepal and abroad, discussion with different stakeholders, and review of the extensively published literature, this study has identified three broad areas where a revision may improve the efficacy of ongoing and future energy access and development projects.
2.6.1. Sustainable Energy Access and Sustainable Development It is not a coincidence that the majority of the population without access to sustainable energy comprises extremely poor, underprivileged and backward communities and households, often living in remote parts of countries with little to no modern mobility options like roads and vehicular transportation [97], [98]. The conventional approach for sustainable energy planning has largely been limited to techno – economic assessment of the potential system, and transfer of technical or hardware fixes while bridging the gap between the cost of su h s ste s a d the o
u ities
capacity to pay, through subsidies [91], [92], [96]. However, having physical access to energy does not automatically mean the energy services are affordable and reliable for all the households, including those at the bottom of the pyramid. For instance, one of the site visits made for this study involved a micro hydro project in Kaski district of Nepal that is within and promoted by the Annapurna Conservation Area Project, a trekking trail around Annapurna that attracts thousands of tourists every year. Discussion with Mr Tul Bahadur Bun, an operator of the plant, revealed the difficulty he and his manager has in collecting monthly tariffs from households without any other income generating activities besides subsistence farming. Although people realize the benefits of electricity, they simply do not earn enough to pay for the seemingly low tariffs. Likewise, Mr Prakash Lamichhane from Clean and Green Nepal NGO, which established community biogas plants for some of the most backwards communities in southern Nepal, shared his experience of having difficulties to convince the poorest, and the uneducated
P a g e | 30
households, to continue working together amongst themselves for maintaining and operating the system, as people ui kl
e e t to see i gl
f ee t aditio al ooki g fuel
he a
so io –
economic or technical issue arises, instead of trying to fix such issues. While these are only representative examples, there is a plethora of literature explaining a number of projects that failed either because people are not aware of the benefits, or because people refuse to take ownership of the project and continue maintaining them, which again could be either because they are too poor to continue paying, or because the see the p oje ts as e te al , something built by people they do not know, or the government they do not trust. Thus, efforts of poverty alleviation remain equally important for the success of energy access projects as peoples apa it to pa is vital for increasing the uptake of supposedly accessible and already available systems. Likewise, education, awareness, and more importantly, consultation with local communities since the inception stages of projects are also vital for increasing the sense of ownership. One potential approach to address these issues could involve acknowledging the bidirectional relationship between energy access and poverty alleviation or sustainable development. While energy access could promote poverty alleviation and enhance human development; for the poorest section of society, efforts to alleviate poverty and improve human development must arrive together, if not before the efforts to promote energy access. Energy access, poverty alleviation and human development complement each other, and this feedback relationship should be considered in planning energy access projects.
2.6.2. Sustainability of energy access projects vs. Energy equity While sustainable energy access and development planning started as a highly donor – centric process, with little to no inputs and say from the national governments themselves, let alone local communities; experiences over past three decades have made the process more participatory in recent years. However, despite significantly increased involvement of the national governments in identifying, planning, implementing and assessing the energy access projects, the process largely remains top – down, with minimal engagement of the local communities. The majority of academic literature and actual project proposals still are heavily based on techno – economic feasibility alone, with little assessment of social, cultural or environmental factors. The limited engagements with the local communities have been almost exclusively focused on gathering inputs for technical sizing of the systems, and for economic assessments, rather than for participatory decision making or for o side atio of peoples ultu e a d requirements [92], [95], [97].
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An increasingly popular and successful paradigm in the implementation of energy access project, particularly for rural electrification, is the productive end use approach. A vast number of academic [99], [100] and non-academic [72], [76], [77] literature have extensively covered the importance of productive end use for the sustainability of energy projects and for the overall improvement in the livelihood of concerned communities. A thesis by Anjal Niraula [101] has also discussed the importance of having productive end uses, a d o ho
ha i g so e a ho loads
could significantly improve the economic sustainability for upscaling solar mini grids in developing countries like Nepal. In recent years, with the increasing penetration of mobile phones in rural areas, mobile payments for enabling pay – as – you – go systems are being encouraged as a potentially viable business model [102]. While these approaches certainly play a vital role in the long term sustainability of energy access projects and should be promoted, these approaches alone cannot address energy equity and justice issue, a key barrier between availability of energy services and their uptake. Promotion of productive end use based projects, like tourism based micro – hydro systems inside ACAP, are widely regarded an ideal model for replication everywhere and are a matter of numerous studies [68], [69], [103]. However, as stated above, while such projects are financially sustainable, and indeed improve the quality of service and the earnings of local hotels who are the primary customer of the project in terms of capacity consumed, a number of poor households in the community who are engaged in subsistence farming and do not have other income generating enterprises struggle to pay for the basic electricity bill, and could even have their connections terminated. In theory, all those households who have once been connected to a supply, ha e a ess to ele t i it , while in practice, the uptake and use of electricity remain very low. Hence, unless the projects like these engage with local communities from the inception stage to identify and formulate a comprehensive and inclusive project plan that can benefit even the poorest of the population who are not in a position to invest or obtain credits for establishment income generating enterprises, projects may increase the access in numbers, but the actual uptake of energy will remain low, as it already is, in the case of Nepal.
2.6.3. Revisiting the role of state and non – state stakeholders As discussed above, it can be argued that the current paradigm for energy access project planning follows the sustai a le de elop e t app oa h afte ha i g ee th ough Do o Gift a d Ma ket C eatio app oa hes fo the past 3 decades or so. In 2015, the United Nations launched the Global Goals of Sustainable Development or SDGs to continue and add to the progress made through the Millennium Development Goals or MDGs which concluded in 2015. The SDGs include 17 different
P a g e | 32
goals concerning human livelihood and the environment, from ending poverty, access to health, education, clean energy, etc. to global peace, environment conservation and climate change mitigation [104]. Nations throughout the world are expected to prepare their own action plans and strategies for streamlined and focused efforts towards the fulfilment of these goals. The governments and international development partners are expected to implement their energy access and other development projects being in – line with the national strategies for the attainment of the SDGs. Currently, the planning and implementation of sustainable energy (and other development sectors as well) projects involve certain development partners focusing on certain aspects or technology of the issue, and the government agencies like the AEPC in Nepal, acting as a bridge between the donors and the beneficiary communities. While one could argue that the national governments and agencies like the AEPC, most of the time, only act as facilitating agencies for executing the projects and policies devised by international development partners. Even this arrangement, albeit with the limited role of state institutions in policy and strategic decision making, is relatively new for Nepal. All the projects concerning sustainable energy, promoted through every development partners were brought under a national umbrella programme called NRREP executed between 2012 and 2017. In this programme, for instance, the World Bank supported projects involving national grid enhancement, large and small hydro, etc., while the Danish International Development Agency (DANIDA) (with partners like DFID, KfW German Development Ban, etc.) continued their Energy Sector Assistance Programme (ESAP) project areas concerning biogas, clean cooking stoves, solar home systems and micro hydro to some extent. Meanwhile, the UNDP executed their own RERL program involving micro hydro, solar home systems, and clean cooking alternatives. Apart from these, a number of other INGOs like Practical Action, Renewable World, Winrock International, etc. have been executing a number of projects, often at their own initiative, but utilizing government subsidies where available [62], [63], [67], [76], [77], [105], [106]. While there have been serious and recurring questions on transparency and accountability of government institutions in Nepal, limiting the role of government institutions in policy and strategic decision making creates following issues: •
P oje ts a d poli ies a
e o e less te h ologi all – eut al as de elop e t pa t e s a e
likely to promote a technology or a system of their preference over others; •
Fragmented initiatives could lead to less efficient utilization of resources and altered
development priorities. For instance, for extremely poor and backward communities, provision of job creation or say, clean drinking water would be a more pressing issue than clean cooking fuel in the
P a g e | 33
form of community biogas. Building biogas with donor funds without ensuring they can make their ends meet could soon lead to abandoning of the system; •
Research and Development takes a a k seat as the state i stitutio s a e al a s lo
o
resources, and development partners have strict provisions on why, how, and how much of their funds can be spent by the government; •
Limited involvement of private sector in the overall energy access domain. A potential way to address these issues could be by redefining and adjusting the roles of
governments, development partners, and increasing the engagement of the private sector, particularly in innovation, research and development. While maintaining strict measures and requirements to ensure transparency, and accountability, the donor institutions could provide increased authority to state institutions on how, at least a certain proportion of the aid money could be mobilised, while development partners themselves mobilise a portion of their investment in apa it
uildi g of p i ate usi esses to d i e e te p ise led esea h a d lea i
o atio .
While these criticisms and the suggestions are seemingly oversimplified, this study is an attempt to explore how these shortcomings of existing planning and implementation framework could be addressed by revising some key aspects. Accordingly, the final section of this thesis will provide a more detailed theoretical approach for better understanding and for addressing these challenges.
P a g e | 34
3. Layers of Sustainable Energy Access: Barriers and Opportunities
There are four broad layers in the planning and implementation of sustainable energy projects in Nepal. Each layer involves certain institutions and stakeholders undertaking different responsibilities. Such institutional arrangements and implementation framework have led to many barriers as well as potential opportunities for more effective planning and implementation of the energy access projects in Nepal.
3.1. Government and State Institutions The government and public institutions are generally involved in formulating long term energy policies and strategies, allocating financial and non-financial resources for the implementation, mobilisation of different public and private actors, and for quality control, monitoring and research. The review of published literature and interviews with stakeholders revealed several barriers in achieving Sustainable Energy for All (SE4ALL) targets by 2030. Also, there are potential opportunities if the key challenges were identified, and addressed on time.
3.1.1. Policies and Strategies Nepal has made some praiseworthy progress in the provision of energy access to its citizens. Particularly, the national biogas promotion program, and the rural electrification projects using micro – hydro systems have been quite successful. However, there are some systemic limitations in the policies, planning approaches, and in the support system adopted by the government for promoting energy access.
P a g e | 35
3.1.1.1.
Planning and Policy Making
There is a fundamental lack of holistic planning and coordination among multiple but related departments and agencies within the government. The Ministry of Energy looks after the broad national energy scenario, including, and focusing on the grid electricity and petroleum. The responsibility of promoting the alternative and the renewable energy systems for rural energy access comes under the AEPC, which is within the Ministry of Science and Technology. The Nepalese politics is notoriously well-known for being unstable. There have been three Prime Ministers in the past two years, each from different political parties, carrying different ideology. Since such change of government almost always involves a coalition of parties, it is likely that the heads of ministries o e i g e e g se to a e the politi ia s f o oope ati g fo po e . Su h sho t – te
othe
ise
o peti g pa ties, that a e
leade ship lea es pe
a e t u eau ati
iefl
odies like the
National Planning Commission, and ministry officials with the responsibility to coordinate and plan cross – department policies, which is especially difficult when there is little agreement between the ministers themselves. The lack of holistic planning, and the necessity of integrated and cross – sectoral policy making has been highlighted in several publications [27], [107]–[109] . Some issues highlighting the lack of holistic and coordinated planning are briefly discussed in Table 3.1. Issue or Observation
Concerning Sectors Remarks or Departments
•
Lack of national plan for rural electrification with the spatial distinction between grid extension and off – grid systems. Failure to adopt progressive policies like Feed in Tariff, that promote distributed generation from renewables. NEA, and the government reluctant to look beyond hydro for electricity.
•
•
Setting targets without adequate planning and consultation with multiple stakeholders lead to poor implementation, thus underachievement of targets
•
•
Disproportionate distribution of resources favouring some technology over others leave rural energy needs, particularly cooking fuel, largely ignored (in priority and resources).
•
•
•
Studies show that with 4 km buffer with the grid, up to 18% of total area of Nepal can be electrified using wind and solar based hybrid systems only. [72], [100]
•
The NEA is now developing national rural electrification master plan.
AEPC with other government institutions and private sectors.
•
The government in 2013 set an ambitious target to make all kitchen smoke free (through ICS and biogas) by 2017. It failed, no documentation available on the progress of the project. [79], [110]
Departments within the AEPC, international development agencies, and other
•
The AEPC s epo t a k o ledges Biogas Energy Subcomponent is executing on much lower budget than a tuall e ui ed [67].
The NEA and AEPC primarily, with the involvement of other institutions like the NPC, District authorities, etc.
P a g e | 36
•
Most investment in grid electricity, least for clean cooking alternatives. Limited to non – existent role or inputs from local institutions like village or district development authorities in the formulation of national plans and policies, thus leading to programs that a e at ti es deta hed f o g ou d realities and requirements.
•
governmental institutions. The AEPC, concerned ministries, planning commission, and local institutions
•
•
Transfer of subsidies and other operations for AEPC projects to be a ied out at dist i t offi es a e ot full i te alized so e districts or take lo g ti e [67]. Association of District Development Committee Nepal has been lobbying for increased role in energy projects planning and execution [108].
•
While rural energy has been a key sector of investment, synergies between energy services for poverty alleviation and vice versa have not been internalized in the planning process.
•
Poverty Alleviation Fund Nepal, district and local authorities, concerned ministries
•
While Poverty Alleviation Fund Nepal undertakes projects concerning energy, irrigation, infrastructure, etc., annual reports have no mention of any projects integrating these sectors in a single community [71], [87]–[89].
•
Development of infrastructure, particularly the road network, and the importance of mobility for improving the livelihood to eventually enhance the uptake of energy services, is not integrated into the planning process for energy access projects.
•
Infrastructure development and finance ministries with the AEPC, planning commission, and local authorities
•
Improving the livelihood, and potential market creation/access for local enterprises, greatly depend on infrastructure and mobility options, promoting productive use alone is insufficient [71].
•
Energy equality and justice – i.e. affordability for the poorest households in the communities, has not been considered adequately in the national energy policies and planning processes
•
The AEPC, private financial institutions, local institutions
•
The local authorities and micro finances could set up a mechanism for easy, collateral free credit schemes for energy services [27], [71], [111]. Access to credit for the remote and extremely poor households is still a barrier as banks, and micro finance institutions do not serve remote locations and are unwilling to invest on the poor.
•
The absence of a central institution focusing on research and development of the renewables and the alternative energy systems.
•
Central government, academic institutions, etc.
•
The AEPC outsources consulting work, which leads to incoherent, and fragmented research (reactive). There is no existing system or public organization to study potential technical, economic and policy measures to set and achieve targets (proactive) which lead to inefficient plans/targets and underachievement.
•
Inadequate efforts to increase public awareness
•
The AEPC and local institutions
•
Brief training given before project commissioning or system installation has not been sufficient [27], [69].
•
Table 3.1: Key government institutions concerning the energy sector have non - existent mechanisms to facilitate cross - institutional planning and implementation of projects.
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3.1.1.2.
Subsidies
While the subsidy scheme for the alternative energy systems is relatively broad and supports varieties of technologies and features, a few adjustments could lead to even better dissemination. One of the fundamental issue with the rural energy projects in Nepal is the degree to which size and numbers are prioritized over equity and sustainability. By nature, the projects are heavily dependent on internatio al de elop e t pa t e s fu d, a d the metrics used for assessing the progress and success of the energy access projects depend primarily on the att i utes like apa it of s ste s , households o
e of u its ,
e ted , et . While these a e useful parameters to judge the
p og ess of p oje ts, the lead to a su sid s ste the
u
ased esse tiall o
igge the ette , the
oe
e ie p i iple. Su h p i iple, although works well enough for the middle class, does not
favour projects, usually small, serving the poorest and the underprivileged section of the society, often living in the most inaccessible locations. Smaller projects serving fewer households, with small demands seem e o o i all u feasi le . Also, the subsidies for solar home systems, which would be a prospective solution for such scenario, are criticized for not being enough despite seemingly higher support for remote areas. Besides, the businesses routinely complain about the cumbersome subsidy delivery process. Generally, the developer gets about 90% of the subsidy amount after commissioning the systems, while the rest is paid within the next 1 – 2 years as a guarantee for post installation service and repairs. However, for the projects like small hydro up to 1 MW, there could be as many as 4 instalments for the payment of subsidy. Other provisions like the requirement of a minimum 10% productive end use from rural electrification projects are also criticized for being deta hed f o
g ou d ealit [27], [69], [70], [73], [112]. Despite formulating a progressive and
broad support system for varieties of technologies, if equity is not adequately considered, subsidies can lead to further widening of the gap between the poorest and the relatively rich segments of the society as subsides may only reach those who can afford the remainder of the costs for installing or operating energy systems or services [93].
3.1.2. Resource Allocation Allocation of inadequate resources for the implementation of national plans and policies has been another major barrier for sustainable energy projects in Nepal. The recently concluded NRREP scheme that ran for 5 years between 2012 and 2017 had a total estimated budget of US$ 184 million, approximately NPR 19 billion i toda s e ha ge ate that is o side a l highe tha the exchange rate of 2012 [39]. It is noteworthy that the Nepalese government bears only 35% of this budget and the rest is contributed by funds from international development partners. The Nepalese
P a g e | 38 go e
e t s o t i utio a ou ts to app o i atel
illion NPR in current exchange rate (lesser
if 2012 rate considered) over the period of five years, meaning a contribution of less than 1.5 billion NPR per year. Thus, while acknowledging that there are understandably multiple pressing and urgent issues demanding limited government resources, it can be argued that the national government has hose to take a ea seat i the do ai of sustai a le e e g a ess [113]. This is also evident from the allocation of funds amongst different ministries in the national budget. While the energy sector has interrelation with multiple ministries and departments, Ministry of Energy and Ministry of Science and Technology (governs AEPC) are the primary institutions. Over the past five years, the combined budget allocated for these ministries is, on average, around 2 % of the total national budget.
1279 83.7 51
2017/18
4.9 8.8 19
1048 78.3 51
2016/17
5.2 9.1 13
Years
819 66.6 47
2015/16
4.6 8.5 6.5
618 53.2 39
2014/15
3.9 6.4 3.9
517 44.7 34 3.4 5.6 1.7
2013/14
0
100
200
300
400
500
600
700
800
900
1000
1100
1200
1300
1400
NPR in Billion Total Budget
Sum of 4 Sectors
Agriculture/Irrigation
Poverty Alleviaiton/Social Welfare/Labour
Science/Technology
Energy
Figure 3.1: The trend of national budget allocation into energy and related sectors in Nepal. Energy and rural development, clearly have not been the top priorities for the government. [114]–[117]
P a g e | 39
Based on Figure 3.1, it is evident that the energy sector has not been a top priority for the governments over the past few years. Also, for the meagre budget allocated to energy and science/technology ministries, the actual amount targeting the rural and the sustainable energy access programs remains even lower since the government still subsidizes fossil fuels like kerosene and LPG for poor households [118], [119]. Also, along with energy, other important sectors concerning rural development and livelihood improvement, like agriculture development, poverty alleviation, labour development, women empowerment and social welfare, etc. have not been the top priorities either. This results in private businesses having to make a significant initial investment towards off grid electricity and other alternative energy services establishment, which has limited the progress. Over the past few years, there has been increasing attention towards the potential to capitalize the Clean Development Mechanism (CDM) and carbon credit instruments like Gold Standards for the development and promotion of the energy access projects in Nepal. Biogas was the first sector registered for the CDM in Nepal, and by 2010 almost 20,000 plants were registered generating annual carbon revenue of approximately US$ 400,000 [120]. WWF Nepal installed 7,500 domestic biogas plants in 2007 earning approximately US$ 600,000 under Gold Standard Voluntary Emission Reduction Project. They plan on installing an additional 20,000 units by 2020 [121]. On the other hand, SNV Nepal is undertaking ICS promotion through Gold Standard [122]. While there is potential for exploiting carbon credits based funding mechanisms, experts have routinely criticized the cumbersome and complicated approval and delivery process involved. SNV calls CDM a p o isi g ut haza dous path
iti izi g the long processing and delivery time, and the regulations
often being impractical in contexts of countries like Nepal [120]. Meanwhile, low awareness and expertise, limited institutional capacity, etc. also form potential bottlenecks in the development of carbon markets in countries like Nepal [123].
3.1.3. Implementation Due to the fundamental issues with existing policy making and planning framework as discussed in section 3.1.1, the implementation of such policies and plans naturally experiences several challenges at different spatial and temporal stages. First, all the major policies and national plans are formulated at the centre, with inputs from international partners. There is little to no participation of the local institutions in project planning, for which the public institutions at the district and the community level, who are expected to take part in the implementation stages, do not take ownership of the project wholeheartedly, and often
P a g e | 40
lead to a slow and ineffective implementation [53], [67]. Frequent government changes, and thus the change of leadership at ministry governing the AEPC, has been an issue for the AEPC, for which it is seeking reforms to increase autonomy. A number of stakeholders during the interviews and several publications [38], [53], [67], [72], [108] consider inadequate accountability and lack of transparency as a major barrier in the timely and successful implementation of projects. Officials at the AEPC and other government institutions, on the other hand, point towards the reluctance of the international agencies to coordinate amongst themselves and with the government to streamline resources and initiatives for closely related projects. The AEPC considers overlapping of projects (redundancy) from multiple donors a pote tial isk, as de elop e t pa t e s a d the go e
e t a
e te pted to
design and implement energy programmes to carter their own objectives irrespective of the national programme – NRREP [53], [67]. On the local level, failure of the national policies in integrating other development and poverty alleviation agendas with the energy development las led to poor investment in infrastructure, lack of adequate awareness programmes, and little consideration of the local socio – cultural issues in the planning, which results in communities refusing to take ownership of the projects, that are often not well designed to suit local contexts [27], [69], [97], [99]. For instance, government make policies to promote rural enterprises at one hand and urge financial institutions to open and operate in rural locations on the other, which in theory, seems reasonable as rural enterprises and financial institutions could potentially serve and benefit from each other. However, the government fails to realize or fails to invest in the essential infrastructure like roads, telecommunication/internet, etc. which are necessary for the enterprises as well as the financial institutions [124], [125]. Meanwhile, the fact that Nepal is on the verge of transforming its government structure from centralized state to a decentralized federal system is of particular importance. Many stakeholders and publications acknowledge the necessity of increased participation of the local communities and institutions in the planning and decision making process. However, the centralized and top – down approach of the AEPC, so far, has often resulted in friction between the AEPC, which notes the failure of district offices in internalizing the AEPC projects in their systems; and the district offices who blame the AEPC of being i diffe e t to the local needs [53], [67], [108]. Thus, with the adoption of the federal system and with greater role of the locally elected institutions in project planning, it is possible that many issues and barriers discussed so far could be addressed. However, in a country like Nepal, with widespread and systemic corruption, there is a significant possibility that the handover of the decision making and resource allocation power from the AEPC, which is tightly constrained by the requirements of international agencies, to relatively unregulated local institutions could lead to
P a g e | 41
severe misuse of resources. Thus, it is imperative to have strong regulations for transparency and accountability before these administrative changes are adopted.
3.1.4. Knowledge Management, Research and Development (R&D) Access to high quality data is instrumental in the formulation of every development plans and policies. In Nepal however, the culture of generating, maintaining, and sharing data is not yet systematic and modernized. This has led to the formulation of policies based on incorrect assumptions, setting over - ambitious or under - ambitious targets, or even difficulties in ascertaining whether some targets have been achieved. Such understanding could provide important insights for future projects. Monitoring and evaluation (M&E) of projects and their progress have traditionally been the areas of relatively less importance in Nepal due to lack of indicators of socio – economic impacts . Due to issi g i di ato s o e e g a d po e t , se to al a d su – sectoral monitoring tools have not been comprehensive e ough . Mo eo e , the feed a ks e ei ed though monitoring and evaluation p o esses a e ofte
ot i teg ated i to de isio
aki g p o esses [108]. For instance, less than 2 %
of the total budget of the NRREP project is allocated for studies and reviews. However, due to consistent push from the international partners, there has been some progress over the past few years, and M&E is increasingly becoming a part of every project at every level of the government, and other institutions [53], [67], [75], [126]. Also, record keeping and maintaining a national database of projects, beneficiaries, and other parameters are now an integral part of every programme. However, based on the autho s pe so al e pe ie e, it is still i
edi l diffi ult fo public, academicians, or
businesses to access those data and information for personal, research or commercial use, unless there is a personal channel of communication inside the concerned institutions.
P a g e | 42
Figure 5: An outline of M&E process, developed by the ADB [126]. However, research and development in the sustainable energy sector remains largely ignored in Nepal. The AEPC is mainly focused on the dissemination of proven technologies through subsidies , while the government has not established an institution with the sole responsibility of research and development of sustainable energy technologies [27]. Based on the interviews, the AEPC currently outsources research to external consultancies, to address certain specific problems whenever necessary. However, there are no systems or institutions in place to consistently develop or refine the existing technologies, or innovate modern technologies and financial, policy or regulatory instruments. Apart from the support for feasibility study of micro – hydro systems [73], [112], there is no other support system in place for private enterprises to design and test innovative technologies or pilot plants. So far, there have been limited role of existing public institutions like NAST, CES/IOE, etc. Lack of coordination between public institutions of academic and non-academic background to work together has also been a barrier in the optimum utilization of existing research facilities, according to the stakeholders interviewed. Thus, research and implementation of pilot studies have also been left to the occasional initiatives of the international partners like ADB [49], SNV Nepal [33], etc.. Formulating a support system for the private enterprises in research and innovation of new systems or pilot projects could be a potential way to address the problem if the government decides against forming a central research institution, which seems to be the case so far. Lack of research and development has particularly hindered the promotion of sustainable cooking fuels like biogas and ICS. Newer micro – hydro systems in Nepal are regarded as comparatively sound in terms of technical and reliability parameters, with efforts now focusing on upscaling these systems and preparing them
P a g e | 43
for grid integration [72]. However, biogas systems are still largely based on the designs made over two decades ago, and fundamental issues like poor performance in winter, and in high altitude, potential for co – digestion of feedstock, inadequate water availability, etc. remain unsolved [30], [57]. For biomass energy, the ICS designs adopted in Nepal are routinely criticized for being i o pati le
ith t aditio al life – st le
hile little atte tio is gi e to raising awareness and
promoting the benefits of cleaner stoves which could lead to a wider adoption and appreciation of these stoves. Despite having good potential, development and promotion of bio – briquetting, a potentially low cost, and widely available technology, has been far from adequate [27].
3.2. Non – state Institutions and Development Partners As highlighted in Section 3.1.2, it can be argued that the Nepalese government has been taking a ea seat i te
s of i esti g ade uatel i the national projects concerning the provision
of sustainable energy. Also, from sections 3.1.1, and section 3.1.4; it is clear that the formulation of national policies and strategies, the development of monitoring and evaluation frameworks, and even the design and implementation of pilot projects involving new and innovative technologies, etc. are largely supported or undertaken by the international development partners. Therefore, one could argue that much of the national discourse in energy access, and the renewable or the alternative energy technologies has been defined by the international communities. While the consistent support from the international community for almost three decades certainly played a key role in the promotion of alternative energy and in the provision of modern energy services to millions, acknowledgement of the limitations and adjusting the existing approaches could potentially lead to more rapid and effective implementation of the p oje ts, a d o e effi ie t use of ta pa e s
o e .
There have been inadequate but significant improvements in the level of education and socio – political awareness among people, improvements in the go e
e t s apa it fo pla
i ga d
implementing projects, and improvements in the business environment, capacity of the private sector, and the availability of technology and human resources. Understanding and exploiting these changes could be key in the provision of modern energy services to millions at the bottom segment of the society who are beyond the reach of existing methods.
3.2.1. Planning and Implementation Framework It can be argued that there are three broad categories of international development partners in the energy and overall development sector in countries like Nepal. First, there are financing institutions like the World Bank, the Asian Development Bank, etc., who identify and invest in the key sectors concerning fundamental infrastructure and services like the road networks, health,
P a g e | 44
education, energy development, industries and agriculture, etc. to name a few. They have strict regulatory and policy requirements for funding certain areas or sectors. Thus, it is essential for the government to formulate the national policies and strategies that align with the framework of these institutions if the government seeks to ensure funding. Secondly, there are major bilateral and multilateral donors or development organizations like the DFID – UK, the USAID, the JICA, the DANIDA, the SNV, the EU, the UNDP, etc. Like international financing institutions, they also have their own preferred sectors, and they expect certain regulatory and policy frameworks under which the aid can be spent. Finally, there are INGOs like Practical Action, Winrock International, Renewable World, etc., who design and implement their own specific projects through charity funds or undertake consulting and implementation contracts for the projects promoted by the first two categories. International financing institutions like the ADB and the World Bank invest in many sectors in Nepal, including energy. However, the energy sector has not always been the top priority. Furthermore, investment in centralized generation (large hydro) and transmission systems, mostly serving the urban and semi urban sectors, is preferred over rural energy supply. The ADB has been a i po ta t pa t e i Nepal s energy sector development, bringing energy services to over 120,000 households, building or upgrading over 2,500 km of distribution lines, building over 1,300 km of rural roads, and undertaking many other projects in education, water supply, etc. Currently, out of ten projects in energy sector, majority of them involve building or enhancing the grid transmission and distribution lines while only one project is related to rural energy [59]. Likewise, the World Bank is also involved in a variety of development sectors, from agriculture, education, and forestry, to energy, information technology, public administration, etc. In energy sector, the major projects involve grid solar, extending and upscaling biogas, development of large and small hydro and associated mini grids, and the cross – border transmission infrastructure for electricity trade with India [58].The DFID – UK, which is one of the largest bilateral donor for Nepal, is so far focused on other development sectors like climate change and disaster reduction, economic development, governance, health, education, and gender quality, etc. Although, it has been contributing to the funding pool for the national energy access program – NRREP, energy access projects have not been the top priority so far. However, this is expected to change shortly, with the initiation of a new alternative/renewable energy project promoted by the DFID [63], [75], [127]. The SNV, DANIDA, and NORAD however, have been playing phenomenal role in the rural energy access by initiating some of the pivotal projects like Biogas Sector Partnership, and Energy Sector Assistance Programme. Besides the core area concerning biogas and ICS, they are increasingly diversifying their projects covering micro hydro, solar home systems, and a gasification pilot project [33], [57], [63], [120]. Meanwhile, the UNDP is undertaking its own renewable energy project covering micro hydro, solar home systems,
P a g e | 45
biogas and ICS [76], [77]. On the other hand, INGOs like Practical Action, Renewable World, Winrock International are independently carrying out their own projects involving almost all available technologies like micro hydro, wind, biomass gasification, biogas, ICS, etc. at various parts of the country [62], [106], [128] While the German development agency - GIZ is i ple e ti g E e gizi g De elop e t p oje t fo u al e e g a ess ased o g id extension and micro – hydro, the JICA s only involvement in energy sector is limited to large hydro power plants [129], [130]. The EU, on the other hand , does not have any projects concerning energy sector [131]. This study argues that there are three potential barriers in the provision of sustainable energy due to the existing methods of planning and implementation of projects by the international development partners. First, it is evident that the energy sector, particularly rural energy access, is not getting enough attention and resource allocation from the major international development partners either. Broadly speaking, all these institutions work in other important sectors like education, health, food security, clean water, etc., all of which, in the rural context, depends closely on the provision of modern energy services like electricity, and clean cooking fuel. Thus, there is an 2apparent lack of adequate investment and focus from both, the government and the international development partners. When there is an investment, much of the investment is directed towards the centralized generation and grid enhancement. Secondly, the projects designed or supported by the international institutions are largely based on techno – economic feasibility, designed by economists and engineers. Selection of the sector of investment, involved technologies, geographic location, implementation modality, etc., are finalized by in – house expertise of development partners, or out – sourced to international consultants. At best, the executives from the AEPC could be consulted, but little information is available to national institutions before the completion of initial planning, concerning vital details like location, technology, delivery mechanism, etc. The agreement is made with the government after the planning, and the communities may be consulted for demand assessment and sizing the systems rather than for participatory decision making. This results in communities failing or refusing to take the ownership of the project, and may abandon the project as soon as any technical or socio – economic issues arise. Also, such techno – economy centric planning by international agencies, and consequent adoption of similar attributes by the government in its national policies often lead to the technologies that are not acceptable socially/culturally, or policies that can be disconnected from the ground reality. For instance, the international agencies routinely promote larger (meaning relatively, for example, over 50kW instead of 5kW), and grid compatible (which have much higher technical requirements and financial returns) systems with productive end uses [72], which is an essential
P a g e | 46
approach for many areas with likelihood of interaction with the grid. However, setting the subsidy policy with a sole focus on larger, techno – economically attractive systems only, and a percent (of total energy consumption) requirement of productive end use for eligibility of subsidy will make plants at extremely remote locations, serving few households deemed unattractive. While one could argue for suitability of the solar home systems for such locations, such systems essentially provide lighting only, and it is a concern in terms of energy equality as those remote population are strategically deprived of other uses of electricity like power applications. And we are back to square one, if we adopt solar based micro grids since there may not be enough productive load to make expensive solar grids feasible. While many rural parts of Nepal are increasingly connected to the national grid, particularly with the development of large hydro at various places, which follows eventual grid extension to the location. However, it is apparent that, vast areas in the hills and the mountains, especially in western Nepal still have potential for smaller micro hydro based systems, see Figure 3.2. Another example could be the new subsidy policy ending the support for mud ICS since the international development partners stopped support for mud stoves in favour of the metallic ones. While the metallic systems are more improved and efficient, and the logical next step for the relatively educated and financially better off population, experts argue that improved mud stoves are still suitable for less aware and financially challenged population as mud ICS are cheaper and acceptable culturally compared to the metallic ones.
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Figure 3.2: An outline of the national grid coverage and potential intersection between the grid (colour patches) and the micro - hydro systems (dots) indicated by dotted circles. Source – World Bank [72]. The third issue with the current planning and implementation procedure is the apparent lack of coordination between development agencies and the government, and between the development agencies themselves. Development agencies and INGOs prepare their own national projects (not one particular project like a micro hydro, rather a broad, national strategic scheme) around certain technologies and/or locations, and execute it through the AEPC or concerned ministries after an agreement with the government. In the process, they recruit national and international consultants and experts to oversee or implement certain elements of the project in coordination with the national agencies. In recent years, there has been an increased role of national institutions (like the AEPC) on how these projects may be implemented, particularly with the introduction of umbrella scheme for all renewables – the NRREP programme. However, the sustainable energy projects largely remain fragmented, with different parties pushing different technologies and schemes at various locations, without necessarily ascertaining if these projects confer with the local and the national development priorities. A holistic national plan, with single institution channelling all the resources based on the local need and development priorities could potentially lead to increased success rate and better
P a g e | 48
utilization of resources. Also, there is a need for increased interaction amongst the development partner themselves. In order to benefit from increased expertise, and quicker dissemination of projects, development projects are streamlined into different sectors like education, infrastructure, health and sanitation, drinking water etc. This works well in urban, semi urban and even rural areas with good/existing provision of one or more of these essential amenities. However, for extremely remote locations, and backward communities without access of any of these essential services, some services are more urgent than the other, like drinking water availability before clean cooking fuel, or toilets alo g ith hospitals. F ag e ted de elop e t effo t ould lead to i est e t i
elati el
less u ge t se i es, hi h ould ell e the access to electricity or clean cooking fuel. These issues could be addressed through linkages and partnerships amongst inter-dependent projects, which will be explained in Sections 3.2.2, and 3.2.3.
3.2.2. Partnerships and Linkages Considering that many development partners run separate projects addressing some of these development issues, interlinking relevant development projects by the same organization or pooling resources
amongst
organizations
for
comprehensive
projects
targeting
certain
geographic/administrative location could lead to a synergy between projects relating to energy and other essential services, thus achieving more holistic and sustainable solutions. Development of partnerships between multiple stakeholders and linkages between closely related development goals has been recognized by the UN as goal number 17 in its post 2015 development agenda [104]. The framework document prepared by the SE4ALL initiative [132] e og izes that p og ess to a ds sustainable energy for all is often obstructed by multiple, interlocking barriers a d to o e o e these a ie s
ultiple,
utuall reinforcing actions – appropriate to local circumstances and resource
a aila ilit is necessary, for which the stakeholde s a e u ged to fo
pa t e ships at local, national,
regional and global level. In earlier Sections 2.3, and 3.2.1, we discussed how different institutions, governmental and international development partners, are involved in several projects concerning the provision of sustainable energy access. A number of barriers, from technological to socio – economic, and cultural, summarized in Table 3.2, have been stalling the progress of these projects. Nevertheless, some international development agencies have been working on projects, which if brought together with energy access project, could potentially create synergy and address some of the challenges. For instance, Sakchyam – Access to finance for the poor Programme, launched by DFID – UK is providing access to financial institution to poor and underprivileged people in the least developed regions in
P a g e | 49
Nepal, reaching to over 210,000 beneficiaries, and supporting 8000 Micro, Small, and Medium Enterprises (MSMEs) [133]. Likewise, Unnati project launched by DANIDA is promoting poverty alleviation through agricultural development based on value chain involving dairy, orthodox tea, and ginger in seven hilly and mountainous districts in Eastern Nepal [134]. Practical Action, on the other hand, is developing energy projects around local resources and potential enterprises, in what they call Pa ti ipato Market system Development – PMSD App oa h , he e they initiate potential local e te p ises alo g ith e e g s ste s so that the e is full use of the s ste s h d o po e pla ts or solar irrigation pumps, fo e a ple a d o astage of e e g [135]. Hence, there have been efforts from multiple agencies to tackle some of the fundamental barriers to energy access as well as other development projects. However, these remain scattered and need upscaling through nationwide plans. These and other innovative projects with potential for synergy with energy access projects will be discussed in Chapter 4, with a proposed framework for designing and implementing energy access projects in Nepal.
3.2.3. Enabling Public and Private Sectors Enabling or capacity building of the public and the private sector is another important avenue of cooperation between national entities and international development partners. Suzuki has argued that depending on the socio – economic and technical status of countries, and available sustainable energy technologies, the international development agencies could take different roles for the promotion of sustainable energy access [107]. Technology transfer, research and development, enhancement of enabling environment are some of the key roles that international partners could play. In Nepal, the international development partners have been assisting in the capacity development of public institutions like the AEPC and the NEA. The Wo ld Ba k is e e uti g Po e Se to Refo
a d Sustai a le H d opo e De elop e t Project while having executed similar
Po e Se to Effi ie
p oje t i the past [58]. Likewise, the ADB has been involved in several
projects involving strengthening and reforming the NEA, enhancing power transmission and distribution efficiency, etc. [136]. By imposing strong monitoring and evaluation requirements, gender and equity components, etc. all major development partners are directing the national agencies like the AEPC to formulate projects that are more inclusive, and with a focus on M&E, record keeping and knowledge management. The DANIDA have been assisting in the capacity development of the AEPC for donor harmonization, increasing accountability in project implementation, adopting results based management, providing technical assistance, etc. [113].
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However, international development agencies could play further significant role, particularly in the development of private sector. Limited engagement of private sector, subsidy – dependent renewable energy market, etc. are some of the greatest barriers to the promotion of sustainable energy in Nepal. Also, with inadequate research and development, potential technologies like wind energy, biomass gasification for thermal or power generation, etc. remain largely ignored. Development agencies, particularly bilateral donors from Europe could help capacity building of the private sector, academics and the public institutions in exploring and harnessing such technologies. There have been some initiatives in this regard, but more needs to be done if we were to achieve SE4ALL targets by 2030. For instance, the World Bank, along with DTU Denmark, and 3E Belgium, is helping the AEPC/Wind Power Nepal (Private Company/Contractor) prepare a wind map of Nepal [137], [138]. Likewise, as explained in earlier Section 3.2.2, Sakchyam programme of DFID – UK is helping national banks and micro finance institutes to provide branchless banking a d Ta let Ba ki g se i es to e ote lo atio s he e ope ati g osts a d logisti s a e p ohi itive to set-up a permanent branch [133]. These are only indicative examples of the broad roles international agencies could play in enhancing technical expertise, and financial capacity of private sector, and in technology transfer. However, it is important to ensure that there is maximum possible engagement of domestic public and private sector in these projects, from design until operating stages, and that they get ample opportunities to learn at every stage of development, instead of only handing over the systems.
3.3. Private Businesses and Financial Institutions The private sector forms an important strategic element, besides the public institutions and the international donor communities, in the provision of sustainable energy access. In general, the private sector can make three key contributions in the sustainable energy projects. First, they can invest in the development of energy systems like micro – hydro, or solar mini grids, biogas plants, or manufacture ICS, etc. These investments are vital for reducing the dependency of energy projects in on go e
e tal o i te atio al do o s fu d. E e
ith a sizeable contribution from the
government and the international agencies, the local communities are often unable to contribute the remainder of capital costs, which could then be contributed by private businesses, usually through loans from national financial institutions. Secondly, they are essential for the design, construction and delivery of systems or plants concerning sustainable energy projects. Involvement of domestic private sector is vital for making the systems affordable, and for contributing to the national economy by providing jobs and by developing the technology. Finally, the private sector can also play a key role in research, development, innovation and in the promotion of technology or raising public awareness. Research and development remain largely neglected by the government institutions. However, the
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private sector may independently drive the innovation for increasing system performances, efficiency, output, etc. as it is in their interest to design systems with reduced costs and increased output. In the context of sustainable energy in Nepal, there are broadly three categories of relevant institutions forming the private sector.
3.3.1. Sustainable Energy Technology Providers It is fair to say that there has been a considerable rise in the number of private companies designing and developing sustainable energy systems in Nepal over the past decade. While there may be many more companies, the AEPC pre – qualifies several private firms,
ho a e eligi le fo
consulting, designing, or developing prospective projects under the AEPC s su sid s he e, based on the fi
s te h i al e pe tise a d fi a ial status. The projects designed or built by other suppliers or
fi
o t ualif fo the su sidies. The number of qualified companies for design or delivery of
s
different technologies are discussed in section 2.3.3. Apart from a few exceptions, the role of technology providing businesses has been limited to building subsidized systems and handing over to the local communities. Little research or innovation is involved in the process. The AEPC subsidy policy has strict requirements for the specification of systems to qualify for a subsidy, and there is no provision to support private businesses in the development or test of new systems, or setting up a pilot plant involving an innovative technology. Thus, it is necessary for the subsidy policy to incorporate provisions to support at least some portion of the R&D costs. Also, experts point out that, because of inadequate foresight and support from the government, the bio – briquette industry, which has huge resource potential and could form clean and attractive fuel for modern ICS, remains largely ignored. In the renewable energy sector, most of the private businesses adopt risk free path of installing subsidized, proven systems with no innovation whatsoever. However, some companies are beginning to develop innovative technological solutions as well as viable business models around renewables and bioenergy. For instance, Himalayan Naturals, a company based in Kathmandu valley, has developed bio – briquette value chain benefitting the local communities, enterprises and the community forest user groups creating over 300 jobs while supplying clean cooking fuel to almost 50,000 rural population [139]. SunFarmer Nepal has innovated a business model around community run agricultural cooperatives for deploying solar water pumping systems for irrigation [140]. Likewise, GhamPower Nepal has developed its own business model for financing and operating the first of its kind solar micro – grid in Nepal [141]. These examples indicate the immense potential for exploiting sustainable energy to improve the livelihood of rural people
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with innovative technologies, and smart business models. However, they also suggest the apparent necessity of support from the national institutions and international development partners if these models were to be replicated throughout the nation.
3.3.2. Financial Institutions Banks and Financial Institutions have a key role to play in the deployment of sustainable energy services in Nepal. Broadly speaking, the role of financial institutions in this sector can be twofold. First, it is necessary for them to invest in private enterprises and technology developers/suppliers for such enterprises (like GhamPower, or SunFarmer discussed in Section 3.3.1) to thrive. It is essential that private businesses develop scalable technologies and thriving business models to make the energy access projects sustainable, and less dependent on subsidies. Secondly, the access to financial institutions amongst the general population, and those living in the rural areas also determines the capacity of households to invest in the sustainable energy technologies, from their savings or though credits. Thus, financial institutions are one of the key players in both p o idi g a d e ei i g e d of energy access spectrum. In Nepal, the financial institutions are routinely criticized for failing to invest adequately in the productive sectors like renewable energy, or hydro power, etc. The central bank of Nepal – Nepal Rastra Bank recently revised the fiscal policy requiring financial institutions to mandatorily invest between 10% for finance companies, and 20% for commercial banks; which was not appreciated by the banks who invest significantly in automobile loans, and real – estate. Further, the commercial banks are mandated to lend at least 15% of productive sector investment on energy and agriculture sectors. While much of the investment in energy sector goes to hydro power, banks argue that these se to s a e ot
apa le of a so i g fu the i est e t [142]. Thus, the investment in other
renewables remains largely ignored, and requires increased attention from both, regulators and the financial institutions themselves. On the other hand, it is also important to make the sustainable e e g p oje ts o e a ka le
add essi g issues like low load factor, inadequate productive use,
poor financial status of households being served, etc. Financial inclusion, i.e. access to financial services is another important barrier in the adoption of sustainable energy services [27], [30], [69], [70], [91], [111]. There has been noticeable improvement in the status of financial inclusion over the past few years, from only 48% of population having bank accounts in 2007 [143] to approximately 61% of adult population having access to fo
al financial services in 2016 [144]. However, almost 40% of adult population still do not have
access to proper financial services, and are either exploited by unregulated, informal credits, or
P a g e | 53
remain financially excluded. Studies have found that there is a great untapped demand for savings account amongst the rural households, if access to financial services was available [145]. On the other hand, financial literacy plays key role in influencing behaviour and attitude of potential small borrowers [146] i.e. increased awareness could lead to increased uptake as well as repay of credits. Understandably, the transaction costs for financial institutions to operate branches at remote locations are high, and the risks of defaulting also remains high. Thus, it is argued that promoting financial literacy, using innovative technologies like mobile banking and tablet banking, redesigning a ks
usi ess st ateg i teg ati g usiness opportunities and corporate social responsibility, etc.
could potentially improve financial inclusion, an essential step for energy equity as well [147]. Also, it is important for the national government to design and implement a national strategy for financial inclusion along with other initiatives for the rural development.
3.3.3. Rural Micro and Small Enterprises Rural micro and small enterprises are vital for the financial sustainability of rural energy projects. Rural energy projects like micro hydro, renewable mini grids, etc. require very high investment, and they often serve the poor and underprivileged population who struggle for the regular payment of the electricity bills. These lead to a low utilization of energy, apart from the peak hours in the mornings and the evenings, resulting in a low overall load factor. High initial investment, coupled with underutilization of the systems, and the challenges in obtaining regular payments make rural electrification project unattractive investment opportunities for the banks. Rural enterprises like dairy, paper or noodle factory, carpentry, agro – p o essi g, et . a t as alua le a ho loads a d ensure essential cash flow for operation and maintenance of the systems [69], [70], [101], [111]. On the other hand, the rural enterprises are also essential for increasing the capacity of the rural households for the uptake of energy and for improving their ability to pay for those services. Micro and small enterprises play a key role in poverty alleviation, and in improving the livelihood of rural households. These improvements in livelihood lead to better education, and awareness on health and hygiene, increased value of time (which would instead be used for collecting fuelwood, for instance), and in the provision of other basic facilities like water pumps, toilets, etc. which could complement the potential use of energy services like biogas. Thus, poverty alleviation and improved livelihood lead to an increase in both, the adoption and the uptake of sustainable energy systems. In Nepal, with the support from the Australian government and the UNDP, the government has been running Micro Enterprise Development Programme (MEDEP) since 1998. So far, the program is said to have created at least 66,000 micro entrepreneurs, and at least 70,000 sustainable
P a g e | 54 jobs. The 4th phase of the program, MEDEP – IV is currently being executed between 2013 – 2018 [148]. Programs like MEDEP can significantly improve the income and thus the living standards of the people, as the MEDEP report estimates that the average per – capita income of entrepreneurs have increased by over 340%, from NPR 17,605 to 78,133 [149]. However, surveys have found that a vast number, up to 40% of total micro enterprises in the country are still unregistered and thus, beyond the reach of the financial and institutional support from the government and projects like the MEDEP [150]. The development of micro and small enterprises encounters many problems. First, there is a severe lack of harmonization and coordination amongst the promoting and implementing agencies. By nature, enterprise development concerns a number of ministries and departments, like finance, industries, agriculture, forestry, energy, poverty alleviation, labour development, etc. Inefficient government institutions, and frequently changing political leadership add to the coordination challenges. As with energy, the lack of access to the financial services is also an important barrier, along with the inadequate supply of skilled labour force, poor infrastructure, and inadequate supply of energy. It is therefore important to realize that the issues like energy access, enterprise development, availability of skilled manpower, and the establishment of financial services, etc. often aggregate and form a complicated, interlocked socio – economic – technological problem, which calls for holistic planning and a comprehensive project to address all these issues together.
3.4. Local Communities and Organizations Nepal is one of the Least Developed Countries in the world where over a quarter of the population live in e t e e po e t [9]. Less than 10% of the population are educated beyond school level, while only 65 % of the total population are literate [151]. Due to lack of education and opportunities, a vast number of people migrate from the rural areas to the cities inside Nepal, and to India, and abroad. In 2014/15 alone almost half a million people left Nepal to work abroad, mostly in Malaysia, Qatar, and Saudi Arabia [152]. This is more than double the numbers in 2008/09, and does not include over 35,000 Nepalese working in Korea under government – to – government agreement [153], and an estimated 2 million Nepalese working in India (due to open border with India), where a permit is not necessary [154]. It is estimated that over 1600 people leave for foreign employment every day, and the remittance from these people contributes almost a third of the national GDP [155]. However, this comes at a great cost as these labours are often forced to work under inhumane conditions, causing death of one labour out of every 500 [156], and creating social issues in the communities back home, where only women, children, and aged population are left behind [157].
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Thus, in one hand, the financial status of many households in the rural communities is improving, and they are increasingly capable of adopting sustainable energy services, if available. On the other hand, the lack of adequate and capable human resource has been affecting the development and operation of many energy access projects. Stakeholders at the AEPC, the World Bank, and other institutions who were interviewed, all account migration and inadequate human resource as one of primary challenges. It may be worth noting that the operator of Ghandruk Micro Hydro, interviewed during field visit, and his friend, the co – operator, had both worked abroad for almost a decade before coming back and working there. Newer projects are increasingly adopting strategies to train and employ women, which is at times tricky, as the construction and operation of these projects demand working conditions that are socially challenging for women, like working at a relatively isolated site, during dark hours, need of high physical strength, etc. Also, the lack of adequate awareness amongst the population has been a barrier to the adoption of sustainable energy services like clean cooking stoves, which does not facilitate certain cultural practices associated with traditional mud stoves. There is an utmost necessity for the government and the stakeholders to further promote awareness programs regarding the benefits of the modern energy services, clean cooking fuels, and on the negative consequences of traditional fuels on health and wellbeing. Likewise, social divide, and caste system has also been a major barrier against cooperation amongst the community members for initiation, implementation, or operation of projects. On top of that, local political parties often manipulate the uneducated population to protest against any incoming projects, not necessarily for the right reasons only [158], [159]. However, the local communities usually cooperate for the development of micro hydro, or other community based renewable energy systems. On the other hand, there is immense opportunity to mobilise existing Community Based Organizations (CBOs) like Co
u it Fo est Use s Group (CFUG), a d o e s g oup. A CFUG is an
auto o ous a d o po ate od , that
ai tai s a d
a ages the local forests, and is entitled to
olle t, sell, a d dist i ute fo est p odu ts . The de e t alizatio of ownership and management of forest has been a hugely successful concept, and has been a driver for various other socio – economic reforms within the community, like leadership development, women empowerment, establishment of democratic culture and practices, development of micro enterprises, poverty alleviation, and social equity, etc. [160]. It is estimated that over 2 million rural households in Nepal are involved in or benefitted by CFUGs in direct or indirect ways, whereas over 62,000 women are directly involved in the executive committees of the CFUGs [161]. Despite the immense potential for mobilizing the CFUGs for other development efforts, particularly in the set -up and operation of sustainable energy projects, there has been little effort and attention given in this area. An INGO named Winrock International ran a project between 2007 and 2011, targeting the dissemination of biogas plants to
P a g e | 56 the relatively poor households through the CFUG s suppo t a d
edit fa ilities. While a detailed
publication on the success/failure, and challenges met by the project was not available, the project lai s to ha e i stalled o e
,
p o – poo
iogas pla ts e efitti g o e
Likewise, there is a potential to mobilise thousa ds of lo al
,
people [162].
o e s g oups that a e i ol ed i
various socio – economic activities, from leading development projects initiated by INGOs to running micro enterprises, or managing cooperatives. These organizations are widely appreciated to have brought positive changes in the local communities, particularly in issues concerning hygiene, improving maternal and new- o
s health, u
i g o
u it
ate suppl s ste s, aisi g
awareness, etc. [163], [164]. Thus, such women s groups can form important strategic tools in raising the awareness, and lobbying for clean cooking fuels, among other sustainable energy systems. While the women have little say on the matters involving huge investments for adoption of new systems like biogas, or clean stoves; they are the most affected individuals by the negative consequences of indoor air pollution. Use of t aditio al fuel ood fu the i
eases o e s fi a ial depe de
on
men as they spend much longer time collecting wood, cooking meals, or cleaning dishes, instead of doing other potentially income generating or informative activities. Hence, the
o e s g oup
present unique opportunities to break some of the societal, and promotional barriers in the dissemination of sustainable energy services in rural communities.
3.5. Summary of Barriers and Opportunities A summary of all the barriers and the potential opportunities that arise at different layers of sustainable energy access projects discussed in Chapter 3 is presented in Table 3.2. Barriers
Source/Organization Potential of Barrier Opportunities
•
•
Institutional
• • • • •
Lack of holistic and coherent governmental policies. Top – Down, centralized approach of planning with little community engagement and consideration of socio – cultural factors. Inadequate coordination amongst international agencies and with the government. Weak management, lack of transparency and accountability in public institutions. Little attention to quality control, monitoring and evaluation, and knowledge management. Little attention to factors like infrastructure, awareness, etc. which form pre-requisites for successful adoption.
• •
Government Ministries concerned Departments AEPC International Development Partners
• and
•
Recently, some governmental and donor led projects are integrating poverty alleviation with agriculture and enterprise development, could link energy access. The federal system of governance could help decentralization of decision making in energy project design.
P a g e | 57 •
Financial
•
• •
Technological
•
• • •
•
Social
• • •
•
The renewable Energy market is unsustainable and heavily subsidy dependent. Lack of access to financial services in rural parts, high interest rate on credits as banks are reluctant to open branches and/or invest in poor/renewable energy technologies and businesses. Projects serving rural areas, few households, and low productive end use are not financially viable – u a ka le . Ease of setting up and doing business is not encouraging for domestic and foreign investment due to long run socio – political, regulatory instability.
•
Lack of dedicated institutions and framework for research and development to adopt new technologies, refine existing ones or to increase absorption of available technology/options. Limited provision of standardization and quality control, leading to substandard products and limited after – sales services. Inadequate provision of training and orientation for skill development, leading to scarcity of the skilled human resource. Lack of adequate and high-quality data for policy makers and for businesses for informed policy making or for designing systems.
•
Poor education and awareness amongst rural population i.e. unaware of potential benefits of modern energy services irrespective of financial status. Extreme poverty, social and gender inequality – unable to afford even if made aware of the harm/benefits. Some cultural practices may conflict and lead to rejection of technologies or demand modified solutions. Communities may be reluctant to take ownership of projects post commissioning, or even protest setting up one, sometimes, due to negative political manipulation. Migration from villages into urban areas and international labour market leaving inadequate human resource.
•
• •
•
• •
•
Central Bank (Regulator) Public and Private financial institutions Private businesses and suppliers of sustainable energy technologies and services Micro financing institutions
•
Concerned Ministries and Departments AEPC Universities and Research Institutions like NAST
•
Local communities and leaders Local Community Based Organizations like forest user groups, NGOs, othe s g oup, women group, etc.
•
•
•
•
New regulatory policies and federal governance are improving financial inclusion through banks and micro financing institutions. Integrating energy projects with poverty alleviation and local micro enterprise development can improve project viability.
Potential for enterprise led the research as some private technology providers are developing innovative solutions and business models. More attention is being put to maintaining data and making it available in recent times.
Community based organizations have immense potential for promoting education and awareness, supporting the dissemination of energy services by financing, or other logistic support . Integrating poverty alleviation and job creation with energy projects can potentially reduce exodus of labour.
Table 3.2: A Summary of the key barriers and the opportunities in the provision of sustainable energy access for all in Nepal.
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4. A Revised Framework for Sustainable Energy Access Planning
Building on the barriers and the opportunities discussed in Chapter 3, this chapter explores how revision in the existing approach of sustainable energy access planning could potentially address some of those barriers and propel energy access projects towards wider dissemination. This chapter synthesizes new paradigms i sustai a le e e g pla
i g ith stakeholde s i puts, and prevailing
barriers and opportunities in Nepal to recommend those revisions.
Central Government/AEPC Development Partners NRREP National Programme
Components of NRREP
Private Companies / Service Providers
Banks and Financing Institutions
Regional Service Centres and Partner Organizations
Users Figure 4.1: An outline of the existing framework for the planning and implementation of energy access projects in Nepal. Coloured rectangles are intended to identify the different layers of stakeholders involved in the process [63], [75].
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As elaborated in Chapter 3, and outlined in Figure 4.1, the current sustainable energy planning and implementation framework is largely top – down, more influenced by donor institutions policies rather than national priorities, has little involvement and cooperation of the private sector and the financial institutions, and even lesser engagement of the local communities in planning and decision making. Due to the absence of locally elected institutions in Nepal for almost 2 decades, the current framework has a non-existent role for the local bodies like Village Development Committees (VDCs). Now that Nepal is conducting local body elections, and adopting a federal system of governance with power decentralization, there is an opportunity to revise the current framework for a more inclusive and holistic approach, incorporating a greater role of the local authorities, communities and the private sector. Therefore, this study calls for a revisions in the existing planning and implementation framework, which will be explained in Sections 4.1 and 4.2.
4.1. A Participative and Holistic Planning Process A 2015 document by the ADB [165] has presented a new sustainable energy planning framework, which outlines 7 steps of planning: through the assessment of energy poverty, energy demand, available resources, the cost of energy services, the benefits, sustainability, and the affordability. While there is no universally agreeable approach for sustainable energy or other development planning, this framework has been adopted as a reference in this study as this framework focuses on energy demand as well as resource availability, with cost assessment for various levels of energy supply beyond the bare minimum, while maintaining sustainability of both, the resources and the technologies/systems. Likewise, application of Sector Wise Approach (SWAp) for mainstreaming sustainable energy also holds great potential. SWAp is a relatively new development philosophy where the international donors collectively contribute aid to the national basket fund for the sector (started in health sector), to execute national projects initiated and led by the national governments, instead of providing project specific aids. Health experts, academicians, and institutions like the World Health Organization, the World Bank, etc. have acknowledged the increased effectiveness of this approach in overall development of health sector compared to the traditional approach that led to fragmented progress [166]–[168]. The SWAp approach is increasingly adopted in other development sectors like agriculture [169], and energy [10], [170]. In Nepal, there have been some initiatives in this regard through the creation of the national basket fund for rural energy, but further improvements are
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necessary in the areas like coordination amongst the development partners and the government, capacity building of public institutions, creation of integrated and holistic national policy, etc., which are considered vital to the success of the SWAp approach. Also, a vast number of academic and non – academic literature have extensively called for increased role and leadership of the government and public/private institutions in the development process, without essentially arguing for SWAp approach [27], [63], [75], [90], [108], [113]. Thus, synthesizing these concepts, a revised framework for a more collaborative and holistic planning process is proposed, and outlined in Figure 4.2. This approach is characterized by a participative planning process, where all the stakeholders have their say in the planning and design stages, while the central government plays a pivotal role in formulating the overall national strategy, in conjunction with other long term national development path a s. The p o ess i ol es st ea s of e ti al i puts f o
o
u ities a d lo al autho ities,
international development partners, and the private sector, including businesses and financial institutions. The central government and the focal institutions like the Energy Ministry and the Natio al Pla
i g Co
issio the e gage i
late al o sultatio
ith othe
i ist ies a d pu li
institutions involving finance, agriculture, or rural development ministries; the AEPC, and the NEA. The inputs from the stakeholders and other governmental institutions would be considered for the development of an Integrated Energy and Rural Development Policy, in alignment with the long term development goals. The Integrated Energy and Rural Development Policy could have an Urban Energy/Grid Electricity component, and a Rural Energy and Development Component. This process incorporates the key steps outlined by the energy access planning framework presented by the ADB [165]. It is o th oti g that the ADB s f a e o k is o l used as a efe e e for showing that the revised framework proposed by this study can incorporate this or other scientific approaches in the planning process. Also, every framework essentially involves these key assessments in one form or the other. •
Assessment of Energy Poverty - While the defi itio of e e g po e t itself is debatable, this study proposes creation and adoption of own national energy poverty baseline, and surveying every community for the occurrence and the intensity of energy poverty.
•
Assessment of Energy Demand – To be conducted in every community, for the poor as well as non – poor households to estimate the total required generation capacity (including the demand for local enterprises or commercial use). These assessments are to be carried out by local bodies using community based organizations or local/regional NGOs.
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Communities/ CBO
Survey – Energy Poverty & Demand
Development Partners
Priority Sectors
Private Business / Service Providers
Banks & Financial Institutions
Resource Assessment
Regulations & Investment Commitments
Inputs from experience / pilot studies (to be supported by donors/government)
Inputs from financial inclusion projects (supported by donors/government)
Regulatory Requirements Local Authority (Related Development Sectors) Funding Commitment Priorities / Expected Projects/Policy
AEPC Other Ministries / Departments
Central Government & National Planning Commission NEA Integrated Energy and Rural Development Policy
Rural Energy and Development
National Basket Fund
Urban Energy and Grid Electricity Component
Other Relevant Programs ~ Poverty Alleviation / Education/ Sanitation
Figure 4.2: An outline of the revised framework for a more collaborative sustainable energy planning and implementation process.
P a g e | 62 •
Energy Resource Assessment – For renewables based off-grid electricity generation, and alternative energy technologies like biogas, or bio – briquettes; the locally available resource assessment to be done by private consultants/service providers for local body, which would assess this information and forward it to the central government.
•
Cost and Benefit Assessment – Assessment of cost for provisioning sustainable energy, and its benefit on different sectors to be done at both the local and the central level. Depending on the technical, financial and other resources available, local bodies would forward their assessment with expected policies and support systems to the Centre. Whereas, the central government would assess such inputs from throughout the nation for the cost benefit analysis while formulating national plans.
•
Sustainability and Affordability Assessment – To be done for local projects and national policies at both local and central level, for techno – economic, socio–environmental, and institutional sustainability. Likewise, affordability for local communities and necessary support systems like subsidies, grants, loans, or other unused resources at the local/central level, etc. should be devised. While much of these steps are under the jurisdiction of local bodies and central government,
the international development communities and the private sector also have important roles to play in the process. These assess e ts gi e a lea idea of u e t s e a io, a d the de a d, oth i energy terms, and in financial, or policy/regulatory terms. The international development communities then could help to bridge the gap in resources and expertise of the government and the private institutions in the planning and implementation process. In this framework, the donor o
u ities
ould p o ide th ee ital i puts to the go e
e t du i g fo
ulatio of atio al
energy policy: the sector of preference (for instance micro hydro, biogas, or productive end use, or financing, etc.), the expected regulatory and policy requirements (for instance technology standardization, fiscal policy, etc.), and the long term financial commitments towards the national basket fund, through which all the programs would be executed. On the other hand, the private businesses or technology providers would conduct technical works like resource assessment, design, development and deployment of systems, and would provide inputs, and lessons from their own projects, and the pilot projects funded by the government or the development partners. Likewise, the financial institutions like banks or micro finances would similarly provide inputs from their own experiences, and provide a commitment for investment in the sustainable energy projects as per the regulations.
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Whereas, for the implementation of the sustainable energy projects, the local authority would be playing a pivotal role in selecting projects, distributing subsidies, and in monitoring the progress. The local authorities would consult with the interested development partners or INGO based on their sector of preference, before forming an integrated and inter-connected development plan involving related projects. An implementing organization, an NGO or private technology providers/consultants would then implement the project through a community organization or a user group, which would be overseen and monitored by local bodies in coordination with concerned INGO or development partners. The AEPC could play a vital role in in overseeing the progress and in quality control, working closely in an advisory role for the local bodies. To ensure that the underprivileged groups have seamless access to finance for adopting these services, the implementing organization – the NGO or the private technology provider, will make an arrangement with the banks or local micro finances prior to project implementation, as outlined in Figure 4.3.
Local Authority - like VDCs
Interested INGO/Donors
Education and Awareness Projects
Water and Sanitation Projects
Energy Access Projects
Implementing Organization: NGO or Technology/Service Provider Company promoting the project or selected by VDC/donor organization
Agriculture and Enterprise Projects
Banks / Micro Finance Institutions
Community Organizations or User Groups
Users Figure 4.3: Steps and stakeholders involved in the implementation of sustainable energy projects based on the revised framework. This approach is focused around in building linkages between interdependent development projects (list of projects indicative only, not exhaustive) in the same locality.
P a g e | 64 The multi – stakeholder consultations, and the participatory planning and implementation framework offer following benefits over the current approach: •
Precise estimation of energy poverty and energy demand results in setting ambitious but achievable targets, instead of setting targets based on an available fund that can support new installations through subsidies.
•
National strategy accounts for both demand and supply side of new installations, i.e. extent of energy poverty, funding mechanisms, resource availability; and the implementation arrangements, the capacity of service providers, etc., thus targets are more likely to be achieved.
•
This process incorporates SWAp framework enabling national government and local authorities to take the leadership in the planning and implementing projects enabling more coordinated development.
•
There is increased engagement of communities, the private sector and the financial institutions since the planning and design stages, thus would lead to increased cooperation and acceptance from all stakeholders, i.e. facilitates Pro – Poor Public Private Partnerships (5P).
•
This approach facilitates the nexus framework of development, like Food – Water – Energy nexus, as all the local development initiatives concerning different sectors are overseen and coordinated by local authorities, thus allowing greater linkages and harmonization amongst projects.
4.2. Revised Implementation Strategy This study argues for increased community engagement, and more importantly, increased involvement of locally elected institutions in the planning, development, deployment, and operation of sustainable energy projects, particularly in rural and backward communities. Unlike traditional approach for energy planning, the proposed relation between the local community/local authority and the central institutions is dynamic, instead of unidirectional top down approach. First, local bodies play a role in assessment of demand/requirements of local communities, which is then supplied to project promoters or central government during policy making and project planning stages, and then they also oversee the implementation and build linkages amongst all interdependent projects to create synergy. However, it is also important to recognize that in a country where even the central institutions and ministries are regularly criticized for inefficiency, lack of transparency and accountability, assigning significant role in the planning and implementation of projects to local institutions would require significant capacity building, monitoring, and other support to the local institutions. The transition from the ongoing top – down approach to a more participative approach
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would almost certainly lead to a degree of chaos and confusion in the initial stages, until enough experience is gained. Thus, to facilitate a smooth transition from the traditional approach, and for effective implementation of projects under the proposed framework, this study outlines 3 guiding principles which act as the pillars of the participative framework. These principles are explained in the coming subsections 4.2.1 through 4.2.3.
4.2.1. Building Linkages and Integrating Interdependent Projects The traditional approach to the sustainable energy access problem has been based fundamentally on overtly technical solutions, with little regard to other socio – cultural and environmental factors. However, the energy access problem is greatly influenced by several societal, geographic, and environmental factors, and to truly address the twin issues of adoption and uptake of sustainable energy, the proposed solution must include and address the elements beyond the techno – economic viability of energy technologies. A number of case studies have been presented to demonstrate the importance of factors other than energy systems / technologies, and the effect they had in success or failure of the projects in Table 4.1. SN
Case
Country / Region
Implication
1
Tourism induced energy consumption pattern – lodges in remote Manang/Jomsom predominantly use more firewood and less kerosene than those in the Annapurna circuit (Ghandruk).
Nepal:
• Despite similar productive end uses, factors like geographic location, infrastructures, regulatory policies, etc. greatly influence the uptake of energy, and these factors should be weighed in during the planning for increased adoption and uptake of modern energy services.
Annapurna Conservation Area
- [103] and Field Visit
2
Biomass Gasifier based Off – Grid Rural Electrification Pilot Project initiated by SNV Netherlands. - Unpublished Report [33], and personal consultation/interview
Nepal: Nawalparasi District
• Recommends promotion of ICS to replace fuelwood used for cooking to avoid overuse of existing forest resources. However, no evidence of these factors been considered during planning stages was found. • A holistic planning could have combined biomass gasification project with ICS/biogas project which would complement each other.
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3
Community Biogas plants in south western Nepal: Developed by Nepalese NGO with AEPC subsidy and international grant to improve sanitation (toilets connected) and energy access amongst the poor and backward communities. Despite forming operating committee, and trainings to the locals, the operation is inefficient due to inadequate feed resource(dung), irregular feeding, socio – economic and cultural issues, and lack of awareness.
Nepal: Banke and Bardiya District
Nepal: Urban community biogas plant in Butwal Metorpolitan City: Built inside a colony inhabited by related/close families, well-educated and financially sound. Smooth operation throughout the year, albeit with inadequate supply during winter, when LPG is used for substitution. Plans to build other plants in future.
Butwal Metropolitan City
• Both cases exhibit the potential of biogas in providing an integrated solution to multiple problems of energy access, health and sanitation, and organic waste management ( the second plant also fed with kitchen waste). A holistic project planning could leverage the multiple benefits in techno – economic, and social sustainability by facilitating these linkages in the project. • They also indicate the degree to which social structures (like caste system), education, awareness, and financial status affect the implementation of the seemingly viable project. Further emphasis on education, mobilizing relatively young/literate segment of local population; and more importantly, other efforts for poverty alleviation, like easy credits for buying cattle, or enhancing agricultural output with water pump, etc. could improve the economic, and hence the social status of the community, and also provide increased feed for the biogas plants.
- [171], Field Visit and Interviews 4
The Blessi gs of the Co o s – Community Biogas Project in Pura Village: 2 large biogas plants, each 4.1 m diameter and 4.2 m depth, established in 1978 for cooking needs. Inadequate gas supply led to conflict. Eventually, in 1987 the system was modified to generate electricity with 7 hp/5.2 kW dual fuel (diesel/biogas) system to drive a water pump and run electric lights in the evening, which resulted successful operation, and dramatic improvement in the quality of life of the local people. -
5
India: Karnataka State
[172], [173]
• This case demonstrates the importance of enabling local partnerships, and community engagements in a project. Failure to do so initially led to a system (cooking fuel), which despite est i te tio s, did t o k due to inadequate resource, and because it was not peoples p i a eed. Modif i g it to suppl clean water and lights at hed peoples demand and available resource. Engagement of local community and the VDC helped to recognize and facilitate these changes. • It also shows that at many remote/poor communities, energy may not be the most critical issue for the people, initiation of other basic development programs on health, education, water supply, etc. is pre-requisite for the initiation and success of energy projects.
Rural Electrification Programmes since the 1950s: China Vs India China adopted bottom – up approach with the engagement of local communities in decision making forming Village/Town Enterprises, using local offgrid solutions where possible, and high focus on the rural economy through investment in agriculture, infrastructure, market creation, etc. India adopted top-down, heavily subsidized, state utility run program for village electrification and irrigation pump energization; which drastically improved the agriculture production in some states, but with several issues in
China
India
• Despite differences in the methods for the provision of rural electricity, both countries employed an integrated approach of livelihood/rural economic development and energy services. While China focused on local resources, agriculture, enterprises and infrastructure development, the Indian initiative of irrigation pump promotion led to the G ee Re olutio i the si ties, a d ade India a net exporter of food grains eventually from an importer. • It is necessary to integrate livelihood and rural development programs together with energy access program. Also, the degree of adoption eventually depends on the participation of the local communities in the planning and
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supply quality/uptake of rural electricity in most parts of the country. -
i ple e tatio stages. It fo s the suffi ie t o ditio fo the successful adoption and longterm sustainability of projects.
[94], [174], [175]
Table 4.1: Case studies demonstrating the effects of integrating (or lack of) energy access projects with other rural development or livelihood improvement projects in the overall success and failure. These cases clearly demonstrate that the projects designed with adequate engagement with the local communities, addressing their demands/requirements, are more successful in achieving the long term sustainability whereas, the projects failing to recognize and address the local contexts like poverty, education, geography, availability of other basic amenities, etc. may not be sustainable in the long term. Thus, the proposed framework suggests that all development projects targeting rural households, from education to drinking water and energy, be overseen by local bodies (see Figure 4.3), and that the local bodies align the interdependent projects, whether initiated by themselves/central government, or the NGO/INGOs, and implement them together as a comprehensive project. For instance, a solar PV powered irrigation system for agriculture or drinking water could also benefit a biogas plant, while the biogas plant would instead benefit other projects promoting agriculture based enterprises by providing organic fertilizer. All of these would benefit from increased levels of education, awareness, women empowerment, and access to the financial institutions. Thus, implementing these projects through local bodies would help create a synergy effect, which could potentially address some of the greatest barriers in the sustainable energy access projects, as well as in poverty alleviation and rural development by breaking the vicious circle between extreme poverty and energy access/uptake (see Figure 2.4).
4.2.2. Building Businesses and Partnerships at National and Local Level Developing the linkages between interdependent projects, as explained in Section 4.2.1 is not possible by the effort and initiative of local bodies alone. While it obviously requires changes in the existing policies for the implementation of development projects, more importantly, it also requires a very capable and vibrant private sector, and the willingness of the international development partners and the INGOs. Private sector may represent both, the national level businesses and technology providers, and the local micro enterprises that form a key element of sustainable energy project either by input – output interactions (for instance, biogas and agro – enterprise/cattle farm, or carpentry and off grid electricity, etc.), or simply by improving the income of the local people and creating demand for the energy services. While the private sector, particularly, the national level businesses, should be investing to build their technological expertise and financial
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capacities, the government and the international development partners should support this process by forming suitable policies to support lean innovation, pilot studies, and by enabling industry – academia partnership. Likewise, it is equally important for the international donor communities and the INGOs to be willing to coordinate amongst themselves, and, if necessary, to implement joint projects to tackle different aspects of complex problems like energy access or poverty alleviation. A few case studies involving the formation of meaningful partnerships (or, the lack of same) and a vibrant private sector that greatly influenced the success (or failure) of those projects are outlined in Table 4.2.
SN
Case
Country / Region
1
Tourism induced Micro Hydro in Ghandruk – Poor households struggle to pay for the bare minimum charges for electricity, while lodges demand more supply
Nepal:
- Field visit and interviews
2
Biomass Gasifier based Off – Grid Rural Electrification Pilot Project initiated by SNV Netherlands
• While developing projects around larger anchor loads for sustainability of the projects, integrating poverty alleviation component could Annapurna promote equitable access and uptake of energy Conservation Area by poor households. • Creation/promotion of other micro enterprises/agriculture development initiatives for the poor (while developing energy projects) could improve livelihood and thus energy uptake for all households, including the poorest ones. Nepal: Nawalparasi District
- Unpublished Report [33], and personal consultation/interview
3
Nepal s first solar – wind hybrid rural electrification pilot project: ADB Pilot projects like these (Cases – 2, 3) are widely appreciated by literature and stakeholders for providing valuable technical, economical, socio – cultural, market related, and policy lessons. - [49], [100], [176]
Implication
Nepal: Nawalparasi District
• Project planning did not incorporate local enterprise development before commissioning; the local community has little technoeconomic/other help to establish enterprises after consultants/donors return from the community. • Overseen by SNV using an international supplier, could have been a learning opportunity for Nepalese companies. Diffusion of knowledge/lessons to the local communities/companies is important for enabling private sector. • The system with 10 kW wind and 3.16 kWp solar PV capacity demonstrated the viability of hybrid systems. • However, it is unclear if a Nepalese or foreign vendor was involved, and lessons/experience from the project remains unavailable. Some academic literature argues that the development partners are often uninterested/reluctant towards sharing lessons/experience with the local companies and communities [95].
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4
Lighting a Billion Lives (LaBL): initiative used local enterprises /CBOs to operate solar charging shops, and rent out standardized, high quality solar lanterns. Overseen by regional partner organizations (NGOs) and initiated by the government/public institutions. Widely considered to be successful, benefitting over 4 million people, particularly those at the remote locations and the poor who would otherwise have little chances of having access to similar services.
India
- [177], [178]
5
Ongoing Projects on Agro – Enterprises and Poverty Alleviation: UNNATI programme (Danida) promites tea, dairy, and ginger based enterprises.
7 Districts in North East Nepal
Agribusiness Innovation Centre of the World bank facilitates technological, financial, market development support for agribusinesses involving tea, coffee, meat, ginger, honey, etc.
All Nepal
KISAN project by the USAID enhance agro production and connect farmers to the market
20 Districts in South West Nepal
6
[134], [179], [180]
• The p og a has st o g p o-poo app oa h, as the technology is easily adoptable, and affordable. And the equity investment from community enables shared ownership and decision making on issues like the daily rent charge. • The go e e t a d do o s e ai at a o le el, hile pa t e o ga izatio fo eso level and local CBOs and entrepreneurs form i o le el pa t e ships, hi h e su es sustainability (local ownership/involvement). • The program has strong linkage with other initiatives on financial inclusion, poverty alleviation, etc. Would provide initiation, support, and training for enterprise creation, like tailor shop.
• Poverty alleviation and agro – enterprises development has 2 fold benefits: improved financial status enables more people to adopt sustainable energy systems, and the enterprises using energy/electricity form valuable anchor loads for the financial sustainability of projects. • However, despite all these promoting organizations being involved in energy access projects, little evidence is found to indicate that energy access component has been integrated into the planning/implementation poverty alleviation/enterprise development projects. UNNATI project recognises the potential linkages, but no details on ways to leverage those linkages could be found. • Agriculture and energy systems (biogas/ bio briquette) can greatly o ple e t ea h othe s operation if planned accordingly [181], [182].
Financial Inclusion Projects: Sakchyam Programme of DFID – UK is providing access to financial services and promoting MSMEs in rural communities by assisting national banks, and local financial institutions. Winrock International worked with a private commercial bank to increase renewable energy investment and provide credit facilities to build or adopt renewable energy services in rural communities - [133], [183]
8 Districts of (far) • These programs demonstrate methods to tackle one of the biggest barriers in energy access: Western Nepal financial inclusion / access to credits. • However, the energy access programs developed so far do not integrate a financial inclusion component it the framework. Although there are arrangements to provide subsidies 20 Districts in through banks, ensuring that people have access Eastern / Central / to the banks/financial institutions, and that Western Nepal getting credit to invest in sustainable energy systems is easy and affordable for the poor, still constitute the major challenges. Upscaling programs like these throughout the country could be the way forward.
Table 4.2: Case studies demonstrating the effect of promoting enterprises at the local and national level and building partnerships between enterprises and other stakeholders in the overall success and failure of energy access projects.
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These cases demonstrate the importance of building vibrant rural enterprises, and capable national level private sector, including banks and financial institutions. With meaningful partnerships between the local communities and enterprises, the national level technology/service providers, and the financial institutions, a Pro Poor Public Private Partnership (5P) can be built, which can help achieve inclusive energy access, while also harnessing research and development through the private sector and the academia.
4.2.3. Open Data and Innovation Like any other field of academia or professional domain, the significance of having robust data, for formulating the energy policies and strategies, for designing energy solutions, or for evaluating the success or failure of projects, cannot be overstated. While it is important for the state to collect and maintain quality data on different aspects of the nation, this study argues that these data, excluding those compromising the national interests, should be made free and openly accessible to the academia, private businesses, and to general public. As discussed in Chapter 3, there is absence of a dedicated institution for research and development in the energy sector in Nepal, and the involvement of few public institutions in energy research has been far from satisfactory. On the other hand, besides some initiatives, the private sector does not have the technical, financial and other resources for conducting research on their own. Apart from other resources, unavailability of data is also one of the significant barriers in the research and development. Thus, Ope Data , o
i ed ith ope – sou e o puti g tools, e a les usi esses, stude ts, a ade ia, o a o e
interested, to engage in research, which could be an excellent opportunity for countries like Nepal where state institutions are deprived of resources to conduct dedicated research. Open innovation, on the other hand, is a paradigm that promotes sharing of knowledge and technological innovation to anyone and everyone interested, to be accessed or modified freely, to improve it, or use it for a different purpose. It facilitates seamless transfer and sharing of expertise amongst individuals or institutions. With strategic policies and support mechanisms, making data open, and enabling open innovation by engaging the industry and the academia could be a potential low cost and effective solution to address the stagnant technological development and energy research in Nepal. A few case studies where open data, open source tools, or open innovation have been useful in sustainable energy planning and research are outlined in Table 4.3.
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SN
1.
Case Use of Remote Sensing Data and open source webGIS tools to site, size and evaluate the potential of micro hydro installations in Nepal.
Country / Region
Nepal
Implication • Highlights the potential of open source data and tools for research and innovation, to potentially address some of the biggest challenges like interaction of grid/off-grid systems, • Useful for policy makers and the private sector.
- [184]
2.
Simulation and Validation of effectiveness of double greenhouse assisted passive heating system for biogas digester – achieving an increase of average process temperature by 13oC during cold months, thus ensuring a viable round year performance
China Shaanxi Province
• Study based on weather data for the given location, and open source tools like EPBSS/OpenStudio /SketchUp • Potential for Nepalese companies/academicians to conduct research and pilot studies adopting similar concepts at low costs, with support from government or donor organizations. • Current subsidy/support mechanisms would not support such innovative (potentially more expensive) technologies and solutions.
- [185]
3.
A number of low cost, and easily adaptable methods for addressing the low temperature performance issue, and for the diversification of feed material in biogas have been suggested by the literature, which could play a significant role in the widespread adoption of biogas.
India, China
• Nepalese academics and private companies, with the support of government/donors, could implement pilot projects and make the results/designs open for others to follow, for free (if fully funded) or at a nominal price (if the company contributes its own resources.
- [186]–[190]
4.
Site selection and estimation of distributed electricity generation potential via biogas from commercial cattle farms in Buenos Aires using GIS spatial and statistical analysis. - [191]
5.
Site selection and estimation of the potential of grid connected and off grid solar PV and concentrated systems in West Africa using GIS and Multiple Criteria Decision Making methods. Use of GIS tools with geographic, demographic and technological data to estimate the optimal mix of grid and off – grid renewable systems.
Argentina
• It demonstrates how private businesses can similarly estimate potential and design innovative solutions (for electricity generation or simply cooking fuel) with open source tools and open access data on geography, demography, grid network map, etc. ( Resource Estimation and Design/Supply side of technology) • Nepalese government is increasing support for cattle rearing and encouraging large farms. Harmonizing policies to facilitate farms to adopt such technologies would potentially benefit rural electrification measures (Demand creation).
West Africa: • Tools like these, with wind/solar/biomass resource data, 15 could help in the formulation of a national strategy on Countries rural electrification combining both grid extension and utilization of local renewable resources through distributed generation systems. • Provided that the government facilitates and there is the availability of data on resources, electricity grid map, geographic and demographic data, research like these Ethiopia could be undertaken by academic-industry collaboration, on behalf of the government. This would eventually benefit all the parties (government/academia/private sector) involved.
- [192], [193]
Table 4.3: Case studies demonstrating the potential applications and opportunities by adopting policies to facilitate open data and enterprise/academia led open innovation.
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It can be argued that the government should make generation and maintenance of quality data, on energy, environment, resources, demographics, etc., a top priority. Also, it is important to record and maintain data related to ongoing energy projects, and the progresses made. Making these data open, on one hand, triggers low cost, resource non - intensive lea
i
o atio , a d fa ilitates
research, but it also helps to address the issues of transparency and accountability to a great extent. The progress of ongoing projects, the quality and standard of services provided, the cost, etc., if made available to the public and the researchers, would encourage public and media engagement when expected standards are not met, and help improve the quality and the speed of work. This study recommends that the public institutions like the AEPC should be involved in maintaining energy data and managing research and development by engaging with private sector and academia, through pilot projects or other research. Support mechanisms should be created to facilitate industry or academics. Based on the extent of support, the outcome of the research could be made public / open access (if fully funded by government/donors), or licensed for a nominal fee (if the company invests as well). Open data and open innovation often create contentious debate, and thus the government should formulate thorough policies on the kind of data, and extent/methods with which data can be shared, licensing policies, and on industry – academia partnerships. International communities could play a significant role in this process, by enabling the private sector and the academia through technical, financial, logistic or other support, and by supporting the government in maintaining infrastructure and in forming the regulatory framework for implementing open data and open innovation in practice.
4.3. Revised Roles of Stakeholders Provision of sustainable energy access is a complex development process. The intricate interactions between different societal elements beyond the technological systems; as well the necessity of close coordination amongst development efforts in different frontiers, further add to the challenges. This study has proposed a theoretical framework that could enable increased engagement of the local communities and the authorities in the planning process, to ensure that the potential solutions address the precise requirements and the priorities of the communities. To achieve this, and to facilitate harmonization across policies, coordination amongst stakeholders, and trigger technological innovation, this study proposes revisions in the existing roles and responsibilities undertaken by the key stakeholders. This is summarized in Table 4.4.
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Stakeholder Public Institutions • Ministries / National Planning Commission
Current Role
Proposed Role
•
•
•
•
Local Bodies (Locally elected institutions and community based organizations)
•
Forming ministry specific policies with little focus on building linkages between the interdependent sectors. Forming long tern development strategy and policy support for the government. Non-existent. District offices have institutions to facilitate implementation/monitoring of the AEPC s projects but play little role in policy planning/design stages.
•
• • •
•
Alternative Energy Promotion Centre
•
Focal institution for alternative / renewable energy promotion, plays a key role in subsidies distribution and policy formulation.
•
• • •
•
Nepal Electricity Authority
•
Generating, transmitting and distributing electricity throughout the nation, extending grid for rural electrification.
•
Support in formulating policies/ regulatory, monitoring and evaluation frameworks, capacity building of public institutions. Implementing self-initiated projects through public institutions, INGOs or NGOs.
•
Implement projects initiated by large bilateral or multilateral donors, or initiate their own projects with funds from international charities.
•
•
Formulate holistic plans, facilitating linkages and cross-sector exchange of technology, expertise and resources throughout the government, from central institutions to the local bodies. Mobilise donor initiated development projects within these national plans, and prepare a regulatory framework to enable local bodies to coordinate the donor initiated projects in their region. Assess the current scenario and development priorities and report to state / central government. Oversee, coordinate and contribute to all development projects (government/donor initiated) in their region. Work with the AEPC and other stakeholders for monitoring and quality control of projects. (Help) Formulate alternative energy strategy and subsidy policy, identifying potential linkages and coordinating with state / non – state actors to leverage those linkages. Standardization of technology, monitoring/evaluation process, and quality control of all projects, throughout the nation. Data generation and maintenance, knowledge management, and facilitating open data Build partnerships with industry, academia and support research and development, foster open innovation. Develop and publish long term strategy for rural electrification to avoid potential redundancy with off – grid systems. Formulate clear and enabling policies to facilitate distributed generation and grid scale renewables.
International Development Partners •
Bilateral and Multilateral Donors and Development Organizations
•
•
•
INGOs
•
• •
•
Coordinate amongst themselves and the government to implement sector wide approach in the energy access projects. Implement projects in coordination with the local bodies, integrating/jointly with other development projects, if necessary. Support government in formulating policies, and maintaining infrastructure and partnerships to foster open data and open innovation. They have implemented some of the most innovative and sustainable solutions, business/operation models and value chains. With a broad spectrum of experiences from Nepal and abroad, they can facilitate development and capacity building of private sector, and local bodies to undertake increased responsibility. Work with the AEPC to create enabling policies and support systems to foster and manage innovation
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Private Sector
• National Level • technology/service providers develop / supply subsidized alternative energy systems, while some companies are now building innovative business • models by promoting their own projects (selling services like irrigation, instead of technology like solar pump). • Many NGOs are involved in the • implementation of AEPC s o i te atio al do o s p oje t.
from the private sector, and its partnerships with the academic and public institutions. Engage in the innovation of both technology and finance/business models, capitalizing open data, and build pilot projects through partnerships with the academia and with support from the government and international organizations. License out innovative technology or business models that work (free if fully funded by government/donors) at a nominal fee to regional or lo al e te p ises, fo i g a f a hise like s ste (needs clear government regulations and support). Train and engage local community based organizations as important partners, and formulate partnerships with local micro finance / national banks (needs enabling regulations).
Table 4.4: A summary of revisions recommended in the role of key stakeholders against their current role.
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5. Discussion and Conclusions
5.1. Limitations of the Study The fundamental idea behind this research is to explore the bi – directional relationship between energy and development to propose a revised sustainable energy planning and implementation framework that incorporates other elements of societal and human development like education, income, culture, etc. Through the analysis of the existing barriers and the opportunities in the provision of sustainable energy access in Nepal, and the case studies demonstrating the limitations, success, and failure of relevant projects in Nepal and abroad, this study outlines the interdependency between sustainable energy access and sustainable development. However, considering the broad and complex nature of the problem and limited time and resources available for this research, there are several limitations in this study, which require further research in both qualitative and quantitative frontiers. •
Limitation of Research Boundary: One of the principal element of interdependency between sustainable energy access and sustainable development is energy equity. By definition, sustainable development has to be inclusive, whereas the traditional methods of energy pla
i g a d i ple e tatio ha e had o l li ited su ess i
ea hi g the
otto
of the
p a id se tio . Therefore, this study focuses on inclusive access to sustainable energy services, and thus, the research boundary only includes renewable and alternative energy services, and excludes fossil fuels like petroleum, LPG, etc. Likewise, this study acknowledges that grid extension for rural electrification is the cheapest and most attractive solution for the customers, including the poor households. However, rural electrification through grid extension is often not the best solution for energy planners due to the economic, environmental, and logistic constraints, especially in a mountainous country with scattered settlements. While promoting grid extension where feasible, this study however focuses only on off – grid and distributed generation systems for rural electrification. Also, energy efficiency, and other
P a g e | 76
aspects of demand side management which constitute important elements of sustainable energy access discourse, are beyond the scope of this study.
•
Limitation of Data and Academic Resource: As highlighted in Chapters 3 and 4, there is a meagre amount of quality data available to the public. Unclear institutional policies on what data and information can be shared to the public, and the general hesitation amongst officials to share information limited the quality and quantity of accessible data, which eventually limits the greater understanding of the issues and the intricacies. Much of the data, facts, and figures used for the study were derived from online sources, largely from (development/aid) institutions who may not be the neutral agencies to generate and represent those figures due to the nature of their involvement. Also, there is only a handful of academic and peer – reviewed publications, particularly on other aspects of sustainable energy access in Nepal, apart from micro – hydro, which have been extensively studied. Many arguments made in this research, like poo households a a do i g al ead i stalled o a aila le/a essi le e e g se i es a d reverting to traditional fuel due to social and financial constraints, which are well understood and shared by the stakeholders, could be better demonstrated with the access of reliable and relevant data. While the field visits in Nepal, and the interviews with the stakeholders did provide valuable insights and qualitative information, time constraint limited the number and the extent of those visits and interviews, which were one of most reliable source of primary data and information.
•
Limitation in Qualitative and Quantitative Analysis: The scope of this research is limited to qualitative analysis of the barriers and opportunities in the planning and implementation of sustainable energy access projects in Nepal. Based on the analysis, this research outlines a theoretical planning and implementation framework which would redefine the roles and the responsibilities of key stakeholders involved in the process. However, the proposed theoretical framework requires rigorous test and verification through mathematical or analytical models. Also, further research is required in multi – disciplinary domains combining engineering, development studies, economics, and governance, etc. to fully understand the interactions between stakeholders and devise a framework that addresses the problem by facilitating and exploiting these interactions. The complexity of the problem, and the scope of multi – disciplinary research it demands is such that, this study is limited in both breadth and depth, and could be developed into a PhD research.
P a g e | 77 •
Practical Limitations: The review of the literature, relevant experiences from other countries, field visits and the interviews with the stakeholders, all indicated towards a generally agreeable set of barriers in the provision of sustainable energy access in Nepal and beyond. However, when it comes to proposing solutions, experts and stakeholders, despite agreeing on broad the es like de elopi g u al e t ep e eu ship o
edit fa ilities , a e la gel di ided o ho
to specifically achieve those solutions. Thus, it is unlikely that the framework proposed by this study will be welcome equally by all stakeholders, and rightly so. While acknowledging the fact that this study requires further academic research, it is also important to highlight the practical limitations. First, participatory planning process, engaging the stakeholders from the local communities, the private sector, and the international development partners with the government may never find an agreeable solution or approach. Especially in a country like Nepal where political, social, and class divide remains deep rooted, it is particularly challenging to formulate a mutually agreeable solution. Secondly, unless fiduciary issues are addressed with strong regulations to ensure transparency and accountability, it may be equally difficult to convince the international communities to provide greater authority and jurisdiction to the government institutions on international aids. Calling for increased coordination amongst development projects, and coordination with the local and the national government could cause delays in the implementation of projects, which is unlikely to be appreciated by project promoters. Meanwhile, a lot of work needs to be done to create capable local institutions, technically and economically competent private sector, and to build academia – industry partnership, etc., which form the pre – requisite elements for the implementation of the proposed framework.
5.2. Conclusions and Recommendations Despite some limitations, this research has explored the linkages between energy and other elements of societal development, and has proposed a participatory energy planning and implementation framework that facilitates synapsis of interdependent project. While academic literature has extensively recorded and promoted energy access as a precursor of societal and economic development, the idea that initiating basic development initiatives is equally important for the adoption and uptake of sustainable energy services amongst the poorest and the most backward communities represents a new paradigm in sustainable energy planning. Test of this idea through the existing barriers and opportunities, and the case studies from Nepal and beyond has revealed how the greatest barriers for meaningful and inclusive energy access can be directly or indirectly attributed to absolute poverty, and lack of education, awareness, and opportunities. For the population above the absolute poverty line, the physical access of sustainable energy services may
P a g e | 78
trigger a series of actions and create new opportunities to foster social and economic growth, as academic literature has extensively documented. However, for the absolutely poor and u de p i ileged populatio at the
otto
of the p a id , a more coordinated development effort
is a pre – requisite to create the capacity to consume (demand of energy), and to pay for the energy services (lesser priority than food, water, etc., for instance). •
Revisiting Priorities: In the era of inclusive and sustainable development, it is about time that the government and the international communities revisit their priorities, and allocate more resource and attention to the provision of clean cooking fuel. The fact that global population ithout lea
ooki g fuel al ost
% of Nepal s total populatio
is
o e tha dou le the
population without electricity access is no coincidence. These people are living in extreme poverty, in some of the most remote areas; and for the energy access solutions to be meaningful, they should go beyond the provision of a technological hardware that most likely, is not even the top development priority requirement for the locals. Thus, energy access solutions should re-orient focus from exclusively techno – economic feasibility to incorporate the local socio – cultural, geographic and environmental realities. Meaningful engagement with the local communities, and the locally elected institutions during planning and implementation of the energy access projects provides opportunities to learn and address these intricacies, often by synergy of multiple interdependent projects involving same locality.
•
Revisiting the aid system: The government should form clear guidelines on the sectors and the process by which international communities and INGOs can provide aid and implement energy access projects, discouraging fragmented initiatives, with very high operational and administrative costs, at different corners of the country that bring little meaningful change. Instead, the regulations should encourage the national institutions - public and the private sector, to undertake projects, while seeking support and increased engagement of the international communities on other pre – requisites like formulation of novel policies for the integration of renewables (For instance: Feed In Tariff systems), data generation and maintenance infrastructure, regulations to foster open data and open innovation, research and resource support for the universities, tools and trainings, etc. To summarize, the implementation part of the sustainable energy project should be gradually undertaken exclusively by the domestic public and private sector, while the international communities can play key role in enabling those institutions and supporting the formulation of enabling policy and regulatory frameworks, etc. where the international communities arguably have better experience and expertise.
P a g e | 79
•
Leveraging Linkages and Partnerships: Over the past two decades, the AEPC and the international development partners have achieved commendable progress in the provision of sustainable energy in Nepal despite institutional limitations, civil and political conflicts, inadequate resources, and many other challenges, thus benefitting millions of people during the process. However, the progress in the access, adoption and uptake of energy services by the poor and the underprivileged rural communities has been far from satisfactory. Apart from marginally higher subsidies, there are no other support systems in place to break the vicious circle of energy access – poverty. Initiatives from some INGOs targeting such communities only have had mixed success, and remains largely fragmented. In this context, the government, the AEPC, and the international communities need to revisit their planning and implementation framework to prioritize cross – sectoral linkages and partnerships, facilitating sharing and exchange of project objectives, expertise, information, and resources. For instance, multiple institutions (government / private sector / international communities) could be addressing multiple aspects/issues like access of finance, agriculture and enterprise development, infrastructure development, health and sanitation promotion, etc. could be coupled with rural electrification, or biogas/ICS promotion, all targeting same location/community, at the same time. The next step for all the stakeholders could be formulating a framework to identify and facilitate such linkages and partnerships. Power decentralization and increased role of local bodies could be a potential starting point.
•
Leveraging decentralization: Nepal is in the verge of significant changes in the bureaucratic and administrative system. Adoption of federal governance, and handover of significant authority and resources to the locally elected institutions in the villages and the communities provides a significant decision making and resource investment capacity at the local level. This facilitates a rapid progress in sustainable energy and other development initiatives, provided that there are strong regulatory and check – and – balance measures to ensure an efficient use of those resources. It is important that the government invest adequate resource and attention towards building the capacity of these local institutions to formulate and implement meaningful policies and development projects, while also ensuring that the mechanisms for prize and punishment are in place to avoid abuse of authority. Local institutions should take the leadership of all local development projects including energy access. Meanwhile, the national and international project promoters should respect and facilitate the coordinative role of the local institutions.
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To conclude, Nepal is at a crossroad in terms of sustainable energy access planning. While the usi ess as usual app oa h
ill see i gl a hie e slo
ut
o siste t progress, however, such
approach is unlikely to achieve universal access to clean and sustainable energy by 2030, or even 2050, a scenario that could be difficult to comprehend. On the other hand, revisiting the national policies to prioritize equitable and inclusive access to clean cooking fuel and electricity while leveraging cross – sectoral linkages and new partnerships in the implementation could provide opportunities to cater the bottom of the pyramid section and achieve the SE4ALL targets. More research is necessary to further analyse and test the propositions made in this study. However, the necessity of redefining the current approach and working relationships is realized unanimously by the stakeholders as well as the academia.
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6. Answers to Research Questions
R.Q. 1: What are the existing framework and the roles of different stakeholders for planning and implementation of sustainable energy projects in Nepal? The current framework for the planning and implementation of sustainable energy projects in Nepal is largely top – down. Broadly, there are four stakeholders: the government (predominantly the AEPC) which formulates energy policies and manages subsidies distribution; the international development communities who largely fund and oversee the national initiatives for sustainable energy access; the private sector who develop or supply subsidized sustainable energy products; and the communities or households who operate, own or use energy services. R.Q. 2: What are the barriers and the limitations of the existing framework, and dynamics of the relationship between the stakeholders? There is a broad spectrum of barriers, and a few opportunities in the current framework of sustainable energy planning and implementation. There are several socio – economic, cultural, technological,
policy
and
institutional
barriers.
On
the
other
hand,
the
ongoing
administrative/governance changes, relative peace, and gradual improvement in education, awareness, and income of Nepalese have opened doors of opportunities too. However, the current framework is unlikely to tap into these opportunities, due to lack of participative and holistic planning, heavy focus on technology and economy, and inadequate attention to local contexts and realities. The relationship among the stakeholders is largely unidirectional, resembling provider – receiver dynamics. There is a dire need for a more interactive relationship, and participatory decisionmaking process to better understand and address the local contextual intricacies, which would eventually lead to projects and policies that precisely match the local demands or requirements. R.Q. 3: How can we improve the existing framework or Energy Access Planning approach based on our own and relevant experience from other countries? This research recommends that the sustainable energy planning paradigm should incorporate energy equity at the centre of the process, and acknowledge the interdependency
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between meaningful access of sustainable energy and sustainable development in extremely poor, remote and backward communities. This research outlines harmonization of energy and rural development policies, building capable private sector while fostering partnerships across the energy planning and implementation process, and creating an enabling environment to foster open data and open innovation as the potential starting points.
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Acknowledgements
I would like to thank Dr. Ewen Macpherson, my supervisor for this thesis, who has been extremely patient, supportive and understanding throughout the process. I would also like to thank the School of Engineering, University of Edinburgh for the support provided for conducting the field visits in Nepal. Additionally, this thesis could not have been completed without the support of the experts from the AEPC, SNV Netherlands, World Bank, Clean and Green Nepal, and all other individuals representing the community biogas plant in Butwal, and the micro – hydro project in Ghandruk, who agreed to do the interviews and provided valuable insights for this research. I would also link to thank the Che e i g S hola ships, the UK go e
e t s glo al s hola ship
programme, funded by the Foreign and Commonwealth Office (FCO) and partner organisations, for the opportunity to pursue my masters here at the University of Edinburgh. Finally, I would like to thank my family, and my friends here, and back home, who have been a perpetual source of inspiration and motivation in this journey.
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Appendix Appendix A: List of Interviewee 1. Alternative Energy Promotion Centre (Government/Public Institution) • • • •
Mr Anupam Bhusal – Biogas Expert Mr Nanda Kumar Ojha – Biomass Energy Expert Mr Satish Gautam – Focal Person, NRREP Mr Suresh Shrestha – Micro hydro Expert
2. Bivahnagar Community Biogas Plant – Butwal •
Ms Deepa Sitaula – Manager
3. Clean and Green Nepal (NGO) •
Mr Prakash Lamichhane – Head
4. Ghampower Nepal Pvt. Ltd. (Private Renewable Energy company) •
Mr Anjal Niraula – General Manager
5. Ghandruk Micro – Hydro Project • •
Owners – Hotel T ekke s I Mr Tul Bahadur Pun – Operator
6. SNV Netherlands – Nepal (Bilateral Donor) •
Mr Subash Dhakal – Renewable Energy Expert
7. Wind Power Nepal Pvt. Ltd. (Private Renewable Energy company) •
Mr Kushal Gurung – Chief Executive Officer
8. World Bank – Nepal •
Mr Rabin Shrestha – Renewable Energy Expert
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Appendix B: Health and Safety / Travel Risk Assessment Form
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