FINAL REPORT ON "Study and Analysis of Optimal Distributed Generation for Access to Grid Electricity for All in Five Years with Participation from Local-level Government" Submitted To: National Planning Commission Singhadurbar, Kathmandu Submitted By: NEA Engineering Company Limited Trade Tower, Thapathali, Kathmandu February 2018 TABLE OF CONTENTS 1 EXECUTIVE SUMMARY ..................................................................................... 11 1.1 Introduction ..................................................................................................................... 11 1.2 Findings ............................................................................................................................ 14 1.2.1 Hydropower ............................................................................................................... 14 1.2.2 Solar ........................................................................................................................... 16 1.2.3 Grid Extension ........................................................................................................... 19 1.2.4 Financial Analysis of DG Projects: ........................................................................... 24 1.2.5 Recommendations and Conclusion: ........................................................................... 34 2 INTRODUCTION ................................................................................................... 44 2.1 Project Overview ............................................................................................................. 44 2.1.1 Project Information .................................................................................................... 44 2.2 The Global Context ......................................................................................................... 44 2.3 Identification of the Challenges ..................................................................................... 47 2.4 Exploration of Feasible Solutions .................................................................................. 48 2.5 Rationale and Principles ................................................................................................. 49 2.5.1 Access to the Grid Electricity for All (AGE4ALL) ................................................... 49 2.5.2 Distributed Generation (DG) as a Bidirectional Solution .......................................... 50 2.5.3 DG and Grid Extension ............................................................................................. 50 2.5.4 SUDIGGAA & Benefits ............................................................................................ 51 2.5.5 Equitable Viability Gap Funding and Limitation on Project Size ............................. 51 3 OBJECTIVES AND SCOPE OF WORK ............................................................. 53 3.1 Objectives ......................................................................................................................... 53 3.2 Scope of Work ................................................................................................................. 53 3.3 Deliverables ...................................................................................................................... 53 3.4 Limitations of the Study ................................................................................................. 54 4 METHODOLOGY .................................................................................................. 55 4.1 Summary of Overall Methodology ................................................................................ 55 4.2 Technology Wise Methodology ...................................................................................... 56 4.2.1 Grid Network Extension ............................................................................................ 56 4.2.2 Hydropower Projects ................................................................................................. 56 4.2.3 Solar PV Projects ....................................................................................................... 58 4.2.4 Biomass (or Solar PV hybrid) Projects ...................................................................... 60 4.2.5 Wind Power Projects ................................................................................................. 61 4.3 District Field Visit and Consultation ............................................................................. 62 4.4 Financial Analysis ........................................................................................................... 65 4.5 Economic Analysis .......................................................................................................... 65 4.6 Workshop ......................................................................................................................... 66 5 MODELLING &ASSUMPTIONS ........................................................................ 67 5.1 Hydropower ..................................................................................................................... 67 NEA Engineering Co. Ltd. 1 January 2018 5.1.1 Approach for Cost Estimation ................................................................................... 67 5.1.2 Hydropower Studio Model ........................................................................................ 68 5.1.3 Web Based Platform for Hydropower and Energy Development ............................. 69 5.1.4 Limitations ................................................................................................................. 69 5.2 Solar PV ........................................................................................................................... 70 5.2.1 Assumptions .............................................................................................................. 70 5.2.2 Approach for Cost Estimation ................................................................................... 70 5.2.3 Limitations ................................................................................................................. 72 5.3 Biomass ............................................................................................................................ 73 5.3.1 Limitations ................................................................................................................. 73 5.3.2 Approach for Cost Estimation ................................................................................... 73 5.4 WIND ............................................................................................................................... 74 5.4.1 Assumptions and Limitations .................................................................................... 74 5.4.2 Approach for cost estimation ..................................................................................... 74 5.5 Cost of Grid Extension WITH and WITHOUT DG .................................................... 74 5.5.1 Assumption and Limitations: ..................................................................................... 74 5.5.2 Cost Estimation .......................................................................................................... 75 5.5.3 Analysis Approach: ................................................................................................... 75 5.6 Financial Modeling.......................................................................................................... 79 5.6.1 Approach.................................................................................................................... 79 5.6.2 Assumptions .............................................................................................................. 79 5.6.3 Limitations ................................................................................................................. 80 5.7 Economic Modeling ......................................................................................................... 80 5.7.1 Approach.................................................................................................................... 80 5.7.2 Assumptions .............................................................................................................. 81 5.7.3 Limitations ................................................................................................................. 82 6 FINDINGS & DISCUSSION .................................................................................. 84 6.1 Hydropower ..................................................................................................................... 84 6.1.2 Financial Analysis of Hydropower at different Costs................................................ 89 6.1.3 Sensitivity Analysis of Hydropower with Reduction in Discharge ........................... 91 6.2 Solar PV ........................................................................................................................... 92 6.2.1 Region wise Financial Analysis ................................................................................. 92 6.2.2 Sensitivity Analysis of Region A............................................................................... 94 6.2.3 Selected Solar PV Sites ............................................................................................. 97 6.3 Biomass ...........................................................................................................................