Making Renewable Energy Mainstream Supply to Rural Nepal

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Ram Prasad DhitalExecutive Director

Making Renewable Energy Mainstream Supply to Rural Nepal

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OUTLINE• Nepal’s Energy Sector Overview

• AEPC’s Efforts and different RE Programs

• Key Enablers

• Issues and Challenges

• Way Forward

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ENERGY SECTOR INSTITUTIONALOVERVIEW

HYD

RO

Renewable

PetroleumRenewable

Coordination

Source: NPC 2013

MOFALD

DDC/DEECCS

Council of Ministries

MoPE

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Traditional: Fuel wood, Agro- residue, Animal Residue

Commercial: Petroleum, Coal, Electricity

Renewable: Solar, MH, Bio-gas, Wind etc.

Sources: Economic Survey 2016(MoF), APR 2013(NEA), UNDP 2013

Traditional88%

Commercial

12%Renewable

0%

FY 2004/2005

DEVELOPMENTINENERGYMIX

55%42%

3%

FY 2015/16 (8 months)Traditional Commercial Renewable

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PROSPECTS /Opportunities of RE DevelopmentNational Context� Favorable Geo Physical Situation� Favorable Policy Environment

� Energy promotion has been an integral part of national development agenda since 1985

� RE Policy, Subsidy Policy and SDM

� Dedicated institution and established network

� Priority Sector of Government (CCLS4ALL by 2017)

� Vibrant Private Sector� High dependence on traditional

fuel� High dependence on imported

petroleum products� 100 billion NRs was spent for

petro imports (Prof. Nakarmi 2014)

International Context� Priority Sector of Development Partners� Sustainable Energy for All” UN program

and IEA’s proposal to invest $ 46 billion per year in RE to have access to clean energy to all by 2030

� LDCs’ are being focused for CDM/Carbon revenue specially POA type of CDM programs

� Target of Global Alliance on Clean Cook stove

� Focus of bio-lateral aid (Energy+Norway, Energizing Dev-Germany, Climate Change/Energy Access Danida

� US$ 100 billion target of climate investment fund (CIF)

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Introduction of AEPC� AEPC - established in November 3, 1996� National Executing Agency – Renewable energyprogrammes and projects.

� Government Institution under Ministry ofPopulation and Environment - semi autonomousstatus.

� Mandate: policy and plan formulation, resourcemobilisation, technical support, M & E, qualityassurance and coordination in promotion of RETs.

� Objective: Improving people’s livelihoods andprotecting environment through RET promotion

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Procedures/ Guidelines

Subsidy

AEPCAPPROACHFORPROGRAM IMPLEMENTATIONPublic Private

PartnershipDemand sidePublic sector

Supply sidePrivate sector

capacity building

Technical & financial assistance

Coordination

Quality assurance

Manufacturing

Supply & installation

After sales services

Internal quality control

Users/ Beneficiary

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KeyAchievements� More than 16% of

population have access to electricity through RETs & more than 34% of the total population have benefited from RETs

� Micro/Mini Hydro: >34 MW

� Solar Home Systems: 700,000

� Biogas: 350,000� Improved Cook Stoves:

1,300,000� IWM: 10,000

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ExistingandFuturePoliciesonRESector• Rural Energy Policy, 2006• Renewable Energy Subsidy Policy, 2016

Ø RE Subsidy Delivery Mechanism, 2013Ø Establishment & operation of Central RE Fund• Additional Financial Support to Micro Hydro Policy, 2013• Financial Act, 2016 – Exemption of VAT & Custom Duty in RE

equipments/materials

• AEPC Act (in the process)

• RE Act including FIT (in the process)

• 20 Yrs RE Perspective Plan (in the process)9

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Key Highlights of Renewable Energy Subsidy Policy 2016

•Highlight the objective of SE4ALL in policy document itself

•Subsidy Contribution has been decreased (Subsidy 40%, User Contribution 30%, Soft Loan 30% or financial closure of the project within maximum of 6 months)

•Output based subsidy (kWh energy generated)

•Private Sectors are also eligible for subsidy and focus on energy as service

•Special Support for earthquake victims

•Provision of Soft loan and Interest subsidy on urban areas

•Few new concepts: BATs, additional support for GESI and marginalized people

•Focus on bigger systems

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National Programme for Rural and Renewable Energy

ü National Rural & Renewable Energy Programme(NRREP)ü Government Ledü Single ProgrammeModalityü Starting Date: 16 July 2012ü Duration: 5 yearsü Budget: USD 170 Million (exclusive of Community

Contributions)

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FewSuccessProgramsandKeyFeatures

• Sector Wide Approach

• Single Program Modality

• Energy Service Provider (ESCO Model)

• Community Based model and strengthening local governnace

• Private Sector Development Approach

ESAP (1999-2012)

REDP (1996-2011)

NRREP (2012-2017)

EU (REP) (2004-2012)

5 P (2012-2017):Private Sector InvestmentEnergy as a service rather product

BSP (1991-2012):Private sector drivenSoft loan for farmers

Clean Cooking Solutions for All by 2017 (CCS4ALL): An Ambitious Call (3 million additional ICS)

Made on 20 Jan 2013Before Announcement After Announcement

•No. of ICS installation within 2000-2012: 0.65 million •Average Installation rate: 50,000 ICS/ Year

•No. of ICS installation within 2013- mid 2015: 0.5 million Average Installation rate: 0.2 million ICS/ YearICS Installation in FY 2014/15: 0.3 million

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

1979-1980

1980-1981

1981-1982

1982-1983

1983-1984

1984-1985

1985-1986

1986-1987

1987-1988

1988-1989

1989-1990

1990-1991

1991-1992

1992-1993

1993-1994

1994-1995

1995-1996

1996-1997

1997-1998

1998-1999

2000-2001

2001-2002

2002-2003

2003-2004

2004-2005

2005-2006

2006-2007

2007-2008

2008-2009

2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

2014-2015

2015-2016

2016-2017

57

114

5,918

12,538

19,753

27,002

34,338

41,883

48,981

56,446

63,977

65,423

76,138

80,985

84,570

89,127

93,684

99,687

106,673

106,783

113,327

130,296

164,190

212,651

272,018

313,221

337,052

376,945

437,876

526,313

615,216

744,664

876,815

1,017,686

1,327,967

2,538,984

3,750,000

ICSInstallationTrendinNepal(Cumulative&YearlyInstallation)

Challenges:Inorder toreachtheambitioustarget,yearlyinstallationshouldbe>1.2million installations

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Biogas: Very good Private Sector NetworkFocused ModelLinkages: Slurry, As A By-Product: High Quality Organic FertilizerAmbitious Target: 100,000 per year

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Cluster level

VDC level

District level

Regional level

Central level AEPC/NRREP/BESC

RSC

DSC

Business Groups

Stove Master

Users Users Users Users Users Users

Stove Master Stove Master

DDC/EECCS

DecentralizedDeliveryModel:MudICS

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KeyEnablersforDecentralizedEnergySolutions� Dedicated Institution� GoN Priority � Continuous Donors Support� Private Sector and their

Network� Decentralized Service

Delivery Approach� Robust Subsidy Policy and

Delivery Mechanism� Dedicated institution for

Quality Control (RETS)

� Project to Program Based Approach

� Central Renewable Energy Fund

� Independent Monitoring Systems (through third party)

� ASS service linked with monitoring results

� Linked with Productive End use of Energy

� CDM Opportunities

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� Access to RETs in the remote areas in terms of availability & affordability

� Access to financing of RETs including credit financing in very remote areas (interest of BI ?)

� Grid connection/Regional Grid/Mini Grid of the Mini/Micro Hydropower and other RETs

� Commercialization of the RETs

� Adaptive research & technology transfer

� Promotion of the productive economic end uses of the RETs

� Changing Behavior of the consumers (for cooking solutions)

Challenges

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WayForward� Financing: Easy Financing (Fully Operationalization of

CREF)� Technical: Establishment of centre of excellences on

RETS (micro hydro, biogas)� Institutional/Organizational: Establishment of capacity

development facilities on RETs in Nepal � Coordination: Strengthen Energy interlinkages� Upscaling Opportunities: Up Scaling RETs in Nepal

� Technology� Investment

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Making Renewable Energy Mainstream Supply to Rural Nepal

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Thank You