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Economy

Nepal turns to renewables amid electricity crisis

Solar panels on the roof of the offices of the Alternative Energy Promotion Centre in Lalitpur district, south of Kathmandu (Photo by Deepak Adhikari)

KATHMANDU -- When fuel supplies to landlocked Nepal were blocked at the Indian border during protests over a new constitution in September, Kathmandu sought help from China. Keen on assisting its small but strategically important southwestern neighbor, Beijing responded by donating 1.3 million liters of fuel.

     It was a genial gesture by a friendly neighbor. However, the gift has not resolved the underlying  problem. No further petroleum imports have flowed from China, leaving Nepal chronically short of fuel. Under pressure from irate urban residents who rely on petroleum products for their daily lives, leaders of the energy-starved country are now looking within its borders to tackle the fuel crisis.

Vehicles queue up near a gas station run by the Nepalese Army in Kathmandu. Nepal has been rationing fuel since late September following the blockade on its border crossings with India. (Photo by Deepak Adhikari)

     In addition to 1.02 million kiloliters a year of petroleum for vehicles, Nepal relies on such imports to generate much of its electricity. In 2014, the latest year for which data is available, state-run Nepal Electricity Authority supplied 4,631.51 gigawatt hours of electricity, while demand for the year was estimated at 5,909.96 GWh.

     For that year, Nepal's output from its hydropower plants was 3,559.28 GWh, and the country imported 1,072.23 GWh of electricity from India. Most of the balance was generated by plants fuelled by petroleum products, although no precise figures are available. In 2015, 1,000 GWh of electricity was generated by plants fuelled by petroleum.

     Peak electricity demand is estimated by the electricity authority at 1,300 megawatts, but capacity is currently much lower because a lack of water caused by the dry season has cut hydroelectric generating capacity to 400 MW from 760 MW. As a result of these problems, Nepal is suffering rolling power cuts for up to 14 hours a day.

     K.P. Sharma Oli, who became prime minister in October amid a bout of political turmoil that followed the disputed promulgation of a new constitution, has promised to end the power outages by zeroing in on two major natural resources that remain largely untapped -- sunshine and wind. Oli also plans to ramp up the use of biogas, which is derived from raw materials such as agricultural and food waste and can be used for power generation.

     In his first nationally televised address to the nation on Nov. 25, Oli promised that his government would focus on "self-sufficiency" through the development of clean and renewable energy sources. "Within a year, 200 MW of solar energy will be produced and fed into the national grid. Work will immediately start to produce biogas and energy at places like Army, Nepal Police and Armed Police barracks, schools, hostels, and prisons," Oli said.

     One and half months later, the Alternative Energy Promotion Centre, a state body that promotes renewable energy, struck a deal with the three security forces to build 500 biogas plants across the country. In December, Oli instructed the Investment Board of Nepal to harness wind power to meet the country's energy needs. Largely mountainous Nepal could install wind power generating capacity of more than 3,000 MW, according to a 2008 study by the United Nations Environment Programme.

     "Until a few years back, we focused on rural, off-grid communities. Our mandate was to electrify households which were not connected by the central power grid," said Ram Prasad Dhital, executive director of the AEPC. "Interest in solar increased after the government launched the Urban Solar Energy Program in summer last year to attract consumers in urban areas," he said, adding that the government has earmarked 200 million Nepali rupees ($1.92 million) for the project.

     The AEPC offers a range of subsidies -- 5,000 rupees for the installation of 100-200 watt solar panel systems for residential premises and up to 15,000 rupees for solar home systems of 500 W or more for both residential and commercial premises. Bank loans at subsidized interest rates are also on offer for both household and commercial users.  "Since the blockade a few months back, demand has grown. I think solar energy is poised for major growth in Nepal," Dhital said.

     Spurred by the subsidy regime, and faced with crippling power shortages, homeowners in Kathmandu are beginning to turn to solar home systems. Rooftop installations have spread rapidly, with shining new solar panels lining the roofs of new multistory buildings.

Significant contribution

"In the past, consumers used to reach out to us only during the winter months. But this season, we have received an extraordinarily high number of enquiries [about solar home systems]," said Kishor Rimal, manager of Gham Power, one of 118 solar distributors approved by the AEPC. "In the past two weeks alone, we generated 2 million rupees in revenue. Our clients included IT firms, insurance companies, hotels and small organizations."

A 600 watt mobile solar system on display at the Alternative Energy Promotion Centre in Lalitpur district (Photo by Deepak Adhikari)

     Experts say that adopting renewable energy could make a significant contribution to reducing Nepal's dependence on imported petroleum products from India. Between July 2014 and July 2015, Nepal imported $1.01 billion worth of gasoline, diesel, kerosene and cooking gas from India, according to Nepal's central bank.

     Had Nepal harnessed hydroelectricity from its vast network of Himalayan rivers, the country could have substituted 43% of these imports, said Amrit Nakarmi, a professor at the Centre for Energy Studies of the Institute of Engineering in Kathmandu. "We could save [nearly] 50 billion Nepali rupees going abroad every year. We could substitute for LPG [liquid petroleum gas] completely, which is 26% of the petroleum imports. Similarly, we could substitute for the use of diesel for the generation of electricity, which is around 17% of imports of petroleum products," Nakarmi said.

     Biogas, small hydroelectric plants and improved cooking stoves are other systems that the AEPC has invested in to promote renewables. Over 300,000 biogas plants, each costing 55,000-85,000 rupees, have been installed in the country's southern plains and middle hills. The AEPC has supported the installation of roughly 800,000 improved clean stoves to reduce health hazards from open hearths and to promote energy efficiency.

     Some energy experts view the subsidy regime as a short-term solution. "I think subsidies should be phased out and be replaced with a credit system," said Niraj Subedi, an energy specialist at German development bank KfW in Nepal. "The goal of the subsidy is to motivate people. A household gets a subsidy only once so it's not sustainable," said Subedi.

     He said there were few takers for solar home systems until late 2014. "The blockade has opened our eyes. There are so many advantages of electric cooking. For example, if you have an induction heater, you can cook without heating your utensils, it's clean and you don't have to queue up at the gas dealers."

     Subedi added: "Solar home systems have already become market driven. There's awareness about it and there's a robust supply system in place. Both solar and wind energy technologies are viable for Nepal. But it will take time for wind power to scale up to meet demand from consumers."

     Nakarmi said the high cost of renewables posed a big challenge. "The first challenge is the high cost of these plants. Subsidy is required for the development of mini and micro hydro and biogas [facilities]. They cannot be promoted without subsidy," he said, adding that solar home systems were promising "due to declining costs," but small-scale wind-powered plants were problematic because of Nepal's mountainous topography.

     Despite the growing interest in renewable energy, big hydropower projects remain the biggest opportunity, with an estimated potential peak generating capacity of 83,000 MW. "For Nepal, the mainstream energy is hydropower, but other renewable energy technologies can be complementary," said Nakarmi.

     Dhital disagreed. "It will take at least five years to develop a hydropower plant. But if you invest in a solar home system, all you have to do is change the battery once within five years and you will get uninterrupted power supply for several years," he said.

     "To capitalize on wind power, we have installed 11 meteorology stations across the mountainous region. We have also launched pilot projects in several districts. With donors' assistance, we are scaling it up. The blockade exposed our vulnerabilities. We don't have oil fields or gas reserves. For now, renewable energy is the only option."

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