This paper was presented at a discussion program titled "Financing Climate Resilient Development in Nepal:opportunities and Challenges on accessing climate finance" on 7th of March 2017. It was organised by Prakriti Resources Centre (PRC) and Nepal Development Research Institute (NDRI) with the support of Climate and Development Knowledge Network (CDKN).
5. Solar
Solar irradiance:
4.7 kwh/m2/day
Sunshine days:
300
Total potential:
2100MW (2% of land)
Installed On-grid:
~680kW
Installed Off-grid:
~40MW
Solar Applications:
Solar cooker/ dryer
Solar water heater
Solar street light
8. Policies
Endorsed Global initiatives by Nepal: SE4ALL; SDGs (No 7)
NEA (Ministry of Energy): State Utility
On-grid hydro: 35 year PPA; Tax breaks
On-grid solar and wind: in-pipeline (no clear policy yet)
AEPC (Ministry of Population and Environment): Subsidy
driven
Biomass- Improved cooking system
solar home system- Urban/Solar/Institutional
Rural off-grid community electrification system
Micro-hydro
Wind-solar hybrid system
Biogas- Residential/Community/Large scale/Commercial biogas
Waste to Energy
Investment Board of Nepal
Single window approach for FDI on big energy projects
9. Financing in Clean Energy-
Government
Approach: Subsidy, Grant and Technical Assistance
National Rural & Renewable Energy Programme
(AEPC)
Single programme modality, from 2012-2017
Budget: $170.1 million, including $40 million of TA
Included energy sources: solar, biogas, biomass
Renewable Energy for Rural Livelihood (AEPC)
2014-2019, supported by UNDP & GEF, Budget: $5
million
To develop 10 MW from mini and micro hydropower
plants, 2.5 MW of solar PV systems and establishment of
mini grids connecting Micro-Hydro Plants of 300 kW
10. Financing in Clean Energy-
Government
Scaling Up Renewable Energy Program
(AEPC)
Extended Biogas Project, 2014-2019
World Bank funded, Budget: $ 7.1 million
Target: support large scale off-grid biogas projects
for thermal application and electricity generation
Grid Solar and Energy Efficiency Project (NEA)
World Bank funded, 2014-2020, $138 million
Grid-connected Solar PV Farms Development; and
Distribution System Planning and Loss Reduction
NEA working on 25MW on-gird solar EPC tender
11. Financing in Clean Energy-
Government
South Asia Sub-regional Economic
Cooperation project: Power System
Expansion (NEA/AEPC)
Funded by ADB; 2014-2022
~$440 million as Loan, Grant and Technical
Assistance
On-grid: executed by NEA; Off-grid: executed by
AEPC
Off-grid plan: 4.3MW of mini hydro and up to 500
KW of mini-grid based solar or solar/wind hybrid
systems; $5 million loan, $10 million grant
12. Financing in Clean Energy-
Government
Ministry of Federal Affairs and Local
Development
Public Participation Based Solar Street Light
Programme, i.e. ministry, local bodies and users’
committees bear 60, 25 and 15 % respectively
45,308 solar street lights within 2073/74 ; ~$10
million
13. Financing in Clean Energy- Non-
govt
NGOs: Grant driven
Rural applications- solar water pump, biogas,
improved cooking stoves
WWF Hariyo Ban Program, Winrock, CRT/N, etc
Private Sector
Business model: most of them are Vendors and
EPCs
Emerging model: Energy Service Company
(ESCOs)
14. Opportunities
>30% population have no access to grid, i.e. 90
lakhs*100watt = 900MW off-grid opportunity
On-grid: Peak demand is up to 1400MW, while
installed capacity is less than 900MW =500MW
Growing demand for electricity: 10% annual
growth
Nepal wants to become Developing Country by
2022 (Bangladesh’s per capita electricity
consumption is 258kwh), i.e. more electricity
needed
Modernised Agriculture: solar water pump,
15. Bottle necks
On-grid
Unclear policy for renewables, other than hydro
Off-grid
Mostly subsidy driven- EPC model
Size limit up to 100kW system (2073)
Unclear policy for ESCO business
Rural population have low electricity consumption
Access to finance
Unclear law for innovative financing instruments-
crowdfunding
Project financing at promoters’ risks
Bureaucratic hurdles in channelling FDI
16. Way Forward
More pilot projects esp for on-grid
Conducive renewable energy policies
Net metering, Feed-in-Tarrif
Attractive financial schemes and tax breaks
Accelerated Depreciation Tax
Production Tax Credits
Push for local manufacturing
Conducive policies for FDI