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Universalizing Clean Energy in Nepal Universalizing Clean Energy in Nepal A Plan for Sustainable Distributed Generation and Grid Access to All by 2022 GOVERNMENT OF NEPAL NEA ENGINEERING NATIONAL PLANNING COMMISSION COMPANY KATHMANDU Universalizing Clean Energy in Nepal A Plan for Sustainable Distributed Generation and Grid Access to All by 2022 GOVERNMENT OF NEPAL NEA ENGINEERING NATIONAL PLANNING COMMISSION COMPANY KATHMANDU Universalizing Clean Energy in Nepal: Sustainable Distributed Generation and Grid Access to All (SUDIGGAA) by 2022 February 2018 Copyright © 2018 Published by Government of Nepal National Planning Commission Singha Durbar, Kathmandu www.npc.gov.np Printed in Nepal Photo Credit: Government of Nepal, ADB, Babu Raja Maharjan, Debu Dahal and Sawrov Poudel Designed and Processed by Spandan Design Communication, Kupondole, Lalitpur Printed in Nepal KATHMANDU NATIONAL PLANNING NEPAL COMMISSION Preface Despite holding a mammoth potential for offers a practical guide for relevant stake- generating clean hydropower, every three holders to undertake the ambitious task of in ten rural Nepalese continue to live in supplying electricity to each municipality darkness. They lack access to the nation- with their own generation. It presents a fi- al grid, and the generation of electricity is nancially viable distributed generator for centralized which is barely keeping up with each of the 753 municipalities and optimal rising demand as the country urbanizes expansion of national grid to each munic- fast. The national target, aligned with the ipality. Sustainable Development Goals, is to strive for universal access to modern sources of I take this opportunity to thank all officials, clean energy well within 2030. particularly at NPC and NEA for their con- tributions in pulling off this impressive feat This study represents a bold policy foray, in record time. I have no doubt that when jointly undertaken by the National Plan- the dream of near universal access to en- ning Commission and the Nepal Electric- ergy is realized over the next decade, this ity Authority’s Engineering Company. It initiative by NPC would have proved pre- presents insights for policymakers and sciently instrumental. Swarnim Waglé, PhD Vice-Chair KATHMANDU NATIONAL PLANNING NEPAL COMMISSION Foreword The topography of Nepal has always posed electricity to all Nepalis within a realistic a challenge in ensuring access to electricity timetable. in all parts of the country. Electricity today is an essential component of daily life; it is We now need to develop plans and strate- indispensable to augmenting productivity gies to realize this ambitious vision. This is in any vocation, from subsistence agricul- one such plan. This action study of Optimal ture to sophisticated manufacturing and Distributed Generation and Grid Access by services. Realizing this, we have made 2022 provides a workable solution to pro- solemn national and international com- vide access to grid electricity, with the ac- mitments to expand the reach of modern tive participation of local governments. Arbind Kumar Mishra, PhD Member NEA ENGINEERING COMPANY THAPATHALI, KATHMANDU Foreword We thank the collective leadership of the to each of these municipalities is a solution National Planning Commission for en- that we believed is the most viable and im- dorsing this novel proposal. It is a matter plementable one to remove darkness from of honor and privilege for a new company the remote villages of Nepal in five years. like NEAEC to carry out this study and de- We will always remain grateful to the apex sign work for the apex planning body of the planning body of Nepal to have had faith in country. We hope the Government of Nepal our conceptual proposal and adopted it and will consider the merits of these findings, even further led the whole research effort. and move swiftly towards implementation. We are confident that a faithful realization The two-pronged strategy of constructing of the possibilities exhibited in this study distributed generation at local levels of will form a durable basis for Nepal’s long governance and extending national grid term prosperity. Hitendra Dev Shakya Managing Director NEA Engineering Company UNIVERSALIZING CLEAN ENERGY IN NEPAL: VI A PLAN FOR SUSTAINABLE DISTRIBUTED GENERATION AND GRID ACCESS TO ALL BY 2022 Acknowledgements This study is prepared by the National Plan- focal points. We would also like to thank Dr. ning Commission (NPC) under the leader- Biswo Poudel for his constructive feedback ship of the Vice-Chair Dr. Swarnim Waglé, related to economic analysis. We thank all with the support of all Members of the Com- the offcials from participating ministries for mission. Dr. Arbind Kumar Mishra, Mem- their contributions to this study. From the ber of NPC, guided and coordinated the NEA Engineering Company, Hitendra Dev study, aided by a core team of staff at NPC Shakya took on this challenging task at the including Radha Krishna Pradhan, Tulasi request of NPC. A list of his team and con- Prasad Gautam, Deepak Dhakal, Shiva Ran- tributors to this report is included in Annex 1. jan Poudyal, Binda Sitaula and line ministry To all of them, NPC expresses its gratitude. UNIVERSALIZING CLEAN ENERGY IN NEPAL: A PLAN FOR SUSTAINABLE DISTRIBUTED VII GENERATION AND GRID ACCESS TO ALL BY 2022 Table of Contents Preface III Foreword IV Foreword V Acknowledgement VI 1 INTRODUCTION 1 1.1 The Global Context 1 1.2 The National Context 2 1.3 Identification of the Challenges 4 1.4 Exploration of Solutions 4 2 FINDINGS 9 2.1 Hydropower 9 2.2 Solar 10 2.3 Biomass & Wind 13 2.4 Grid Extension 13 2.5 Financial Analysis of Generation Projects 14 3 CONCLUSION AND RECOMMENDATIONS 23 3.1 Economic Analysis 23 3.2 Implementation Modality 25 4 DISTRIBUTED GENERATION IN EACH VM/TM 33 REFERENCES 52 ANNEX 1: CONTRIBUTORS TO SUDIGGAA 53 ANNEX 2: GLIMPSES OF THE EVENT 54 ANNEX 3: SELECTED DISTRIBUTED GENERATION IN EACH VM/TM WITH EXISTING AND PROPOSED SUBSTATIONS AND LINES 56 VII UNIVERSALIZING CLEAN ENERGY IN NEPAL: VIII A PLAN FOR SUSTAINABLE DISTRIBUTED GENERATION AND GRID ACCESS TO ALL BY 2022 UNIVERSALIZING CLEAN ENERGY IN NEPAL: A PLAN FOR SUSTAINABLE DISTRIBUTED 1 GENERATION AND GRID ACCESS TO ALL BY 2022 Chapter 1 Introduction The National Planning Commission (NPC) curb the use of fossil fuel to combat climate Access to commissioned the NEA Engineering Com- change; on the other hand, more than one electricity reduces pany (NEAEC) to conduct the “Study and billion people in low- or middle-income human drudgery, Analysis of Optimal Distributed Gener- countries of South Asia and Africa have no enhances comfort ation for Access to Grid Electricity for All access to modern electricity services. Access and enables in Five Years with Participation from Lo- to electricity reduces human drudgery, en- safer and cleaner cal-level Government.” The NPC, headed hances comfort and enables safer and clean- environment. by the Prime Minister of Nepal, is the apex er environment. It boosts productivity and advisory body of the Government of Nepal economic activity, creates jobs, and facili- It boosts for formulating a national vision, periodic tates the delivery of education, health and productivity and plans and policies for development. The government services. As services provided economic activity, NPC assesses resource needs, identifies by energy are critical ingredients of socio- creates jobs, sources of funding, and allocates budget for economic development, there is an urgent and facilitates socio-economic development, while serv- need to enable modern electricity services the delivery of ing as the central agency for monitoring for everyone. education, health and evaluating development plans, policies and government and programs. Recognizing the benefits of modern energy, services. the United Nations (UN) led Sustainable The NEA Engineering Company Ltd. was Energy for All (SE4ALL) initiative seeks established to provide complete engineer- to ensure universal access to modern en- ing services and solutions to hydropower ergy services and the Sustainable Devel- and other infrastructure industry. Nepal opment Goal 7 (SDG7) aims to ensure ac- Electricity Authority (NEA) holds the ma- cess to affordable, reliable, sustainable and jority ownership (51%) and the remaining modern energy for everyone by 2030. The 49% of shares are held by the Vidhyut Ut- Government of Nepal (GoN) has adopted padan Company Limited (17%), Rastriya a Multi-Tier Framework (MTF) for house- Prasharan Grid Company Limited (17%), hold electricity access (shown in Table 1 ) and the Hydroelectricity Investment and to measure and track SE4ALL and SDG7 Development Company Ltd. (15%). energy access goals and targets. The perils of destabilizing the climate 1.1 The Global Context through the unabated use of fossil fuel in At the global level, the problems in the en- electricity generation have elucidated that ergy and environment field are diverse. On Renewable Energy Technologies (RETs) the one hand, affluent nations with high must play the leading role to achieve “uni- energy-intensity are accelerating efforts to versal access to electricity” (currently de- 1 UNIVERSALIZING CLEAN ENERGY IN NEPAL: 2 A PLAN FOR SUSTAINABLE DISTRIBUTED GENERATION AND GRID ACCESS TO ALL BY 2022 fined as at least Tier 3 electricity access level ing agricultural productivity, health care, of the MTF) by 2030. However, for coun- education and opportunities for entrepre- tries like Nepal with limited resources, the neurship. The poor and rural households prospect of enabling
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