December, 2017 ANNUAL PROGRESS REPORT PROJECT PROFILE About the Project Geographic coverage of the project Project Title: Renewable Energy for Rural National level coverage (Yes/No): Yes Livelihood NuMber of Regions covered: NA NuMber of Districts Covered: NA Award ID: 76958 NuMber of Municipalities Covered: NA NuMber of VDCs Covered: NA Web link: www.aepc.gov.np Strategic Results UNDP Strategic Plan OutcoMe: Growth & developMent are inclusive and sustainable, incorporating productive capacities that create eMployMent and livelihoods for the poor and excluded UNDP Strategic Plan Output: Inclusive and sustainable solutions adopted to achieve increased energy efficiency and universal Modern energy access (especially off-grid sources of renewable energy) UNDAF OutcoMe 2: Vulnerable groups have iMproved access to econoMic opportunities and adequate social protection UNDAF/CPAP Output 2.4: Vulnerable groups have increased access to sustainable productive assets and environMental services UNDP Output 2.4.1. AEPC's capacity enhanced for scaling up energy services in the rural areas Project Duration Implementing Partner(s) Implementation (day/month/year) Modality Start Date: 21 July 2014 1. Ministry of Population and National Environment, Government of Nepal ImpleMentation 2. Alternative Energy ProMotion Modality (NIM) End Date: 30 June 2019 Centre (AEPC) Project Budget (USD) UNDP Contribution: USD 2,000,000 GovernMent Contribution: USD 30,312,500 Other Contributions: USD 24,249,600 Donor Contributions: Donor 1: USD 3,000,000 (GEF) Donor 2: USD 378,000 (Norwegian) Donor 3: USD 99,269 (Korean) Unfunded: USD 244,930 Total Project Budget: USD 35,312,500 (NPR 3,813,750,000) Total Project Expenditure till 2017: USD 1,296,529 Budget 2017: USD 1,321,520 Expenditure 2017 (GEF & UNDP only): USD 1,276,596 Budget Utilization % (2017) 97% Name: Satish Gautam Name: Ram Prasad Dhital Project Manager Executive- Project Board Date: Date: December, 2017 ANNUAL PROGRESS REPORT TABLE OF CONTENT CONTENT PAGE NO Abbreviation 3 List oF Tables 4 1. EXECUTIVE SUMMARY 5 2. BACKGROUND AND RATIONALE 6 3. PROJECT SUMMARY AND OBJECTIVES 6 4. PROGRAMMATIC REVISIONS 8 5. NARRATIVES ON KEY RESULTS ACHIEVED IN 2016 8 5.1 Progress toward the UNDAF/ CPAP Outcomes 13 5.2 Progress on Project Outputs 25 6. BUDGET AND EXPENDITURE 44 7. CROSS CUTTING ISSUES 45 7.1 Targeting and Voice/Participation of target groups 45 7.2 Gender equality, WoMen’s eMpowerMent and Social Inclusion 45 7.3 National Capacity DevelopMent 46 7.4 Sustainability 46 7.5 South- South and Triangular cooperation 47 7.6 Partnership 47 7.7 ProMotion of civic engageMent 48 7.8 Expanding Opportunities for Youth 48 7.9 Innovation 48 7.10 Knowledge ManageMent and Products 49 8. LESSON LEARNED 49 9. IMPLEMENTATION ISSUES AND CHALLENGES 50 10. PRIORITIES FOR 2018 51 11. A SPECIFIC STORY 52 12. ISSUES AND RISK LOGS 53 13. PROGRESS AGAINST ANNUAL WORKPLAN 57 14. ANNEX 66 • Annex 1: List of Micro Hydro Installed in 2017 • Annex 2: List of ISPV in 2017 under Relief and Rehabilitation • Annex 3: List of Installed Solar PV in 2017 • Annex 4: List of Photo Voltaic Pumping System Installed in 2017 • Annex 5: Photo Gallery 2 | Page December, 2017 ANNUAL PROGRESS REPORT ABBREVIATION AEPC : Alternative Energy ProMotion Centre BFI : Banking and Financial Institutions BoA : Business Opportunities AssessMent CAA : Country Action Agenda CREF : Central Renewable Energy Fund CoP : Conference of Parties DDC : District DevelopMent CoMMittee DEECCS : District Energy EnvironMent CliMate Change Section DEMP : District Eletrification Master Plan DFS : Detailed Feasibility Study NRREP : National Renewable Rural Energy PrograMMe SHS : Solar Home SysteM SPV : Special Purpose Vehicle PPP : Public Private Partnership UNDP : United Nations DevelopMent PrograMMe GEF : Global EnvironMental Facility GESI : Gender Equality and Social Inclusion GIS : Geographic InforMation SysteM ICS : Improved Cooking Stoves IGA : IncoMe Generating Activities ISPV : Institutional Solar Photo Voltaic IP : Investment Prospectus kW : Kilowatt MEP : Municipal Energy Plan MHP : Micro Hydro Power MSME : Micro, Small & Medium Enterprises MQAU : Monitoring and Quality Assurance Unit MW Megawatt NEA : National Electricity Authority NPC : National Planning CoMMission PEUC : Productive Energy Use CoMponent PPA : Power Purchase AgreeMent POV : Power Output Verification PV : Photo Voltaic RERL : Renewable Energy for Rural Livelihood RET : Renewable Energy Technology SASEC : South Asia Sub-regional EconoMic Cooperation SDG : Sustainable DevelopMent Goal SEforALL : Sustainable Energy for ALL SPV : Special Purpose Vehicle UNDAF : United Nations DevelopMent Assistance Framework UNESCAP : United Nations EconoMic and Social CoMMission for Asia and the Pacific VDC : Village Development CoMMittee WB : The World Bank 3 | Page December, 2017 ANNUAL PROGRESS REPORT LIST OF TABLES TABLE NO. TITLE PAGE NO Table 1: OutcoMe and Output StateMents 11 Table 2: Progress towards the UNDAF/CPAP OutcoMes 13 Table 3: List of Mini Hydro Projects under construction 18 Table 4: List of Mini Hydro Projects online 18 Table 5: List of Solar PV SysteMs 20 Table 6: RE SysteMs supported by AEPC and RERL under relief and rehabilitation 21 Table 7: Progress on Output Indicators 25 Table 8: Output wise annual budget and corresponding expenditure 44 Table 9: Sources of funds Budget and Utilization of the project period 44 Table 10: M&E Expenditure: In 2016, Project spend on M&E activities 45 Table 11: Risk Log Matrix 53 Table 12: Issue Log Matrix 56 Table 11: Progress Against Annual Work Plan 2017 57 4 | Page December, 2017 ANNUAL PROGRESS REPORT 1. EXECUTIVE SUMMARY Renewable Energy for Rural Livelihood (RERL) is supporting Alternative Energy ProMotion Center (AEPC) to reMove barriers for scaling up renewable energy systeMs such as Mini hydro, large Micro hydro and large solar photovoltaic systeMs (PV). RERL was developed as an integral part of AEPC’s umbrella prograMMe, the National Rural Renewable Energy PrograMMe (NRREP), with the aiM to address gaps in NRREP relevant to proMoting Mini-hydro and large-scale solar PV projects. RERL through its well-designed interventions has been successful in forMulating policy instruments, developing deMonstration projects, introducing innovative ways of engaging private sector and fostering public private partnership. The cumulative iMpact of these activities have resulted in electricity access to 17,590 households, rehabilitation of 5,995 Micro hydropower plants daMaged during the 2015 earthquake, and support to AEPC for the installation of 11,695 Micro hydropower plants. In the changed federal context, RERL provided critical support to define the role and responsibilities of local governMent, which are clearly defined in the recently proMulgated Local GovernMent Operations Act 2017. Building on the Act, RERL is currently working with 2 Municipalities to prepare their integrated Municipal Energy Plans (MEP), helping theM identify their energy priorities to be consequently planned and budgeted in periodic plans. In addition, RERL has extensively helped AEPC to re-align its roles, responsibilities and mandates in the changed federal context. RERL has supported AEPC and Nepal Electricity Authority (NEA) to develop and adopt technical standards for grid connection of Micro Hydro Power (MHP) and solar PV systeMs. Based on agreed technical standards, NEA has signed Power Purchase AgreeMents (PPA) of two Micro hydropower plants for grid connection. In the saMe context, with RERL’s technical assistance, the 23kW SyaurebhuMi MHP in Nuwakot successfully synchronized with the national electricity grid, the first grid interconnection of a MHP of less than 100kW and an unprecedented example of Micro hydropower plants contributing to rural electrification and boosting rural incoMe generating capacities. Similarly, the grid interconnection of Leguwa Khola MHP in Dhankuta is on-going. RERL also provided technical and financial assistance to Surya Power CoMpany to connect its 1000kW solar PV systeM to the grid. FurtherMore, RERL also prepared guidelines and Modalities involving private coMpanies in Mini hydro development through Public Private Partnership. In order to deMonstrate financial and technical viability of larger RE systeMs, RERL supported AEPC and the ADB-supported South Asia Sub-regional EconoMic Cooperation (SASEC) project to proMote large Micro hydro, Mini hydro, Micro hydro interconnected Mini grid and large solar systeMs. In 2017, RERL and SASEC initiated the construction of 2 Mini hydropower projects with a total capacity of 0.4 MW that will benefit more than 4,500 rural households. RERL provided technical and financial assistance to install a solar PV back-up systeM at the Snake Bite TreatMent Centers in Nepal ArMy Barracks at Letang (Morang), Itahari (Sunsari) and Chariali (Jhapa). The 1.5 kW individual systeMs provide electricity to ensure undisrupted power supply for refrigerators storing life-saving snake venoM vaccines that need to be stored between 2˚ and 8˚C, along with power fans, lights and nebulizers. RERL is also assisting AEPC for coMMercial operation of MHP in different parts of the country. In Dolakha and Baglung districts, RERL is assisting comMunities to forM cooperatives for sustainable operation and manageMent of their rehabilitated MHPs. Likewise, the 83 kW Darna MHP in Achham district is also being supported for coMMercial operation. The innovative idea is to orient the coMMunities to take their MHP as a profit-making asset and to improve