A Report on

An Overview of Renewable Energy Scenario and its share

to the total energy demand in Nepal.
By Indra Kumar Maharjan
indramaharjan@gmail.com

Executive Summary

Nepal is known for its difficult terrain and immense hydro potential. The country‟s
population is about 26 million of which 84% live in rural areas. They are distributed
along hilly and difficult terrains comprising of more than 4000 villages. This makes
the distribution of the generated electrical energy more challenging and
uneconomical. Only 40% of the population is said to be electrified and 33% of them
are supplied through national grid and 7% gets their electrical power from
alternative energy. Electricity consumption in Nepal is among the lowest among
Asian countries both in terms of per capita and per unit of GNP. Energy is the
crucial input into the development process. The current energy system is not
sustainable in particular because of the more consumption of biomass and fossil
fuels. The huge demand for energy to facilitate socioeconomic development is
largely fulfilled with biomass fuels.

The current energy consumption scenario shows that large portion of the energy
consumption is supplied by traditional fossil fuels. Due to which there is extra
burden on the forests and threat to environmental stability of the country.
Development of national grid to rural areas seems not possible till date. In this
situation, the only alternative is renewable energy technologies (RETs) like solar,
micro hydro, bio gas and wind. Though RETs contribute only 0.26% in the year
2004/05 of the total consumption it is projected to increase to 0.56 % in the year
2005/06.

The various organisations involved in this sector have also triggered in the
development of this sector with the government formulation an act.

The total energy consumption of the country is increasing rapidly each year. In the
year 1995/96, the total energy consumed was 9.25 GW which has increased to
12.03 GW in the year 2005/06 by 32 % in these 10 years.

In rural areas the energy is required mostly for cooking purposes and a significant
portion (65%) of the total energy consumed in rural areas is used for cooking. So
these needs are basically fulfilled by the use of woods, coal, crop residues, animal
residues, livestock manure, animal wastes and biogas etc which can be seen
clearly as the consumption of energy through traditional sources is 86.7% of the
total energy consumption in the year 2005/06. The dependence upon traditional
energy sources is decreasing each year with the energy produced by RETs is
replacing these sources.

Energy consumption in the FY 2004/2005has increased by 1.4 percent to 8616

Tons of Oil Equivalents (TOE) as compared to previous year and expected to
increase by 3.34 percent to 8904 TOE in the FY 2005/2006. Similarly energy
consumption in the FY 2003/2004has increased by 2.3 percent to 8491 Tons of Oil
Equivalents (TOE) as compared to previous year 2002/2003 with 8294 Tons of Oil
Equivalents (TOE). When we divide source of energy in to two parts - traditional
and commercial- of the total energy consumption in the FY 2004/2005, traditional
energy occupies 87.7 percent while the portion of commercial energy was 11.76
percent. In the FY 2005/2006, consumption of traditional energy is expected to
remain at 86.7 percent while the portion of commercial energy will remain at 12.7
percent, which shows Nepalese economy still heavily relying on traditional source
of energy.

Of the total traditional energy consumption in the FY 2004/2005, share of fuel

wood was 89.0 percent, agriculture and cattle residue was 4.3 percent and 6.5
percent respectively, while in the FY 2005/2006 it is expected that the consumption
of fuel wood will remain at 89.0 percent while that of agriculture and animal residue
will be 4.34 percent and 6.7 percent respectively. Similarly, of the total commercial
energy consumption in the FY 2004/2005, the share of Petroleum was 69.5
percent, Coal 14.9 percent and electricity 15 percent, while in the FY 2005/2006
the share of Petroleum is expected to remain at 63.8 percent, Coal 21.3 percent,
and electricity 14.8 percent.

The above table shows that the energy consumption trend of renewables is very
low as compared to other energy sources. Though the contribution of renewables
to the total energy demand seems very low, the consumption pattern has
increased to 0.53% in the year 2004/05 compared to 0.11% in the year 1995/96.
The consumption is estimated to increase to 0.56% of the total energy
consumption in year 2005/06.

The most significant increasing trend was seen in the consumption of electricity
which was 89 MW in the year 1995/96 to GW in 2004/05. The contribution of
electricity in total energy consumption in the year 1995/96 was 1% which increased
to 1.82% in 2004/05. This consumption is expected to increase to 227 MW in year
2005/06.

Of the total renewable energy consumption in the FY 2004/2005, share of biogas

was 97.3 percent, microhydro was 2.5 percent and solar was 0.1 percent
respectively, while in the FY 2005/2006 it is expected that the consumption of
biogas will remain at 97.3 percent while that of microhydro and solar 2.48 percent
and 0.14 percent respectively.

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The major factor for hindering the increasing pace of renewables is the ongoing
conflict in the country due to which the foreign investment has nearly come to halt.

Among the renewable energy sources also, biogas has larger share than other
energy sources like microhydro and solar PV‟s in the total energy consumption.
Most of the renewable energy generated is consumed by residential consumers
and it must be remembered that 90.28% of the total energy is consumed by
residential sector. The share of the renewables was 0.11% in 1995/96 and it
increased to 0.53% in year 2005. Similarly biogas consumption in the year 1995/96
was 298 GJ increased to 1903 GJ in the year 2004/05. Energy consumed through
microhydro in the year 1995/96 was 21 GJ which increased to 50 GJ in 2004/05. In
the same year, 2.0 GJ of energy was consumed through solar energy sources.

The sectoral energy consumption pattern has changed only marginally in 2004/05
as compared to previous years. Of the total energy consumption in the FY
2004/05, share of residential sector was 90.28 percent, industrial sector 3.47
percent, commercial sector 1.4 percent, transportation sector 3.8 percent and
agriculture sector 0.8 percent whereas in the FY 2000/2001, share of residential
sector was 88.9 percent, industrial sector 4.8 percent, commercial sector 1.2
percent, transportation sector 4 percent and agriculture sector 0.9 percent.

In the FY 2005/06, this energy consumption pattern is expected to remain with

residential sector comprising of was 89.26 percent, industrial sector 4.5 percent,
commercial sector 1.5 percent, transportation sector 3.7 percent and agriculture
sector 0.8 percent.

It can be observed that share of residential sector in the total energy consumption
is decreasing in a steady rate while other sectors have a increasing trend. With the
establishment of industries, industrial sector has maintained the third position in
the total energy consumption.

The total energy consumption in the FY 2004/05 was 11.64 GW. Out of this
substantial portion was in residential sector in which traditional energy occupies
95.8 percent and that of petroleum 2.7 percent. Of the total energy consumption in
the FY 2004/05, share of traditional alternative energy was 0.6 percent.

Till now, renewable energy sources are not used by other sectors. So it can be
concluded that the sole consumer of renewable energy sources is residential
sector. As we know residential sector accounts for 90% of total energy
consumption, renewable energy sources can be used the traditional energy
sources. In the year 2004/05 this sector consumed about 331 million GJ of energy.
Biomass resources are the major fuels in this sector

Renewable sources like biogas and electricity from micro hydro and solar home
systems are slowly substituting the conventional fuels which are mainly used for

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cooking and lighting. The commercial sources of fuel used in urban areas are
nominal. The population growth rates as well as economic situation of the
households are reflected in the pattern of residential energy consumption. The
overall growth pattern in the residential sector is about 1.2 % each year.

About 3.5% of the total energy consumption is accounted by industrial sector and
this rate has been increasing each year. In the year 2004/05, 12.7 millions GJ of
energy has been consumed by this sector. This sector relies mostly on fuelwoods
and agricultural residues. The main end uses in this sector are process heating,
motive power, water boiling and lighting. This sector does not consume renewable
energy sources.

Consumers like school, hotels, restaurants, government and non-governmental

institutions etc. are categorized as commercial sector. The energy consumption in
this sector in the year 2004/05 is 5.3 millions GJ with an increase of 8% each year.
Fuelwoods, LPG, kerosene and electricity are the main sources used by this
sector.

Transport sector and agricultural sector also has an increasing energy

consumption trend. Transport sector is heavily dependent on imported fossil fuels.
Diesel contributes 65.7% followed by petrol with 18.9%. Aviation Turbine Fuel
contributes 15% where as the share of electricity and coal is negligible. These all
facts indicate that the energy demand in the country is rising at a speedy rate and
to cater the demand of energy new strategy are to be formulated and implemented.

A total number of 1588 MHPPs (Pico-hydro included) have been installed in

different parts of country from 1962 to mid July 2005, generating 8827.5 kW of
electrical energy. Till 2005, 11905 households (about 130kW) have installed Solar
PV Home System in 67 districts. Solar program of Energy Sector Assistance
Program (ESAP) has succeeded in installing 58,131 systems with installed
capacity of about 2 MW peak. Beside this there has been also 293 Solar Dryer
used for the purpose of cooking or drying foods in 21 districts. Solar Dryer is used
for drying up fruits or any agro products. There are 150,000 Improved Cooking
Stove (ICS) installed in 32 mid hill districts benefiting 54731 households till July
2005.

Till year 2005, 96129 people of 17478 households in 56 districts has benefited
from biogas support program. There are about ten biogas companies and 152,373
biogas plants have been installed till July 2005. Considering the high temperature
requirement for biogas generation and minimum number of livestock per
household, about 640,000 biogas plants are the potential. Small credit fund has
also installed 829 plants in 19 districts.

The involvement of different private institutions along with donor agencies and
government agencies has assisted in the rapid development of RETs. With the
government introducing the renewable policy 2000, with provision of subsidy upto

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75% acted as a catalyst for the success. Organisations like Alternative Energy
Promotion Centre (AEPC), Rural Energy Development Project (REDP) and Energy
Sector Assistance Program (ESAP) with support of donor agencies like DANIDA,
UNDP are playing a vital role in this sector.

The awareness among the people about the energy sources they have been using
is overwhelming and they are switching the energy sources as far as possible.
Beside this many private companies have been established providing services in
installation, maintenance and trainings in RETs. The production of local manpower
in this sector has proved to be an additional advantage.

In conclusion, it can be said that the future of RETs is promising in the coming
years. Nepal cannot remain isolated with the changing global energy consumption
pattern which shows a good prospect of RETs in replacing other types of energy
sources.

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 Table of Contents

S no. Description Page

no.

1.0 Introduction 1
1.1 Background 1
1.2 Demographic Settings 1
1.3 Energy and Economy 2
2.0 Energy Resource Base 3
2.1 Traditional Energy Sources 3
2.1.1 Fuel Wood 3
2.1.2 Charcoal Supply 4
2.1.3 Agricultural Residue 4
2.1.4 Animal Waste 4
2.2 Commercial energy 4
2.2.1 Hydropower 4
2.2.2 Petroleum, Natural Gas and Coal 5
2.3 Alternate Energy Resources 6
2.3.1 Solar 6
2.3.2 Wind 7
2.3.3 Biogas 8
2.3.4 Micro Hydro Power Plant 8
3.0 Energy Consumption Scenario 9
3.1 Consumption Pattern 9
3.2 Total Energy Demand of the Country 10
3.3 Energy Consumption History of Renewables 14
3.3.1 Resource wise Energy Consumption of Renewables 15
3.3.2 Sector Wise Energy Consumption Scenario 16
3.4 Growth and Future Potential of the Renewable Energy 19
Consumption
4.0 Institutions involved for the support of Renewable Energy 21
4.1 Policies and Organization 21

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 4.1.1 Institutions involved in Renewable Energy Sector 22
4.1.2 Private Sector Institutions 23
4.1.2.1 Independent Power Producers 23
4.1.2.2 Utilities 24
4.1.2.3 Distributing Institutions 25
4.1.2.4 Private Companies (specialized in supplies/trainings and 26
education)
4.2 Energy Policies of Government of Nepal (GoN) 26
5.0 Conclusion 30
6.0 References 31

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 List of Tables

S. no. Description Page no.

3.1 Historical Trend of Energy Consumption by Fuel Type 9

3.2 Energy Consumption Pattern from year 1995/96 to 2005/06 12

3.3 Energy Consumption Pattern of Renewables 15

3.4 Sector Wise Energy Consumption Scenario 16

3.5 Resource Wise/ Sector Wise Energy Consumption Scenario in 17

year 2004/05

List of Figure

S. no. Description Page no.

3.1 Sectoral Energy Consumption by Fuel Type, 2004/05 18

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Page | 9
 1. Introduction

1.1 Background

Nepal is known for its difficult terrain and its immense hydropower potential. But
the use of these renewable resources is limited by the difficult landscape and
terrain. The country‟s population is about 23 million of which 86% live in rural
areas. They are distributed along hilly and difficult terrains comprising of more than
4000 villages (CBS, 2002). This makes the distribution of the generated electrical
energy more challenging and uneconomical. Only 40% of the population is said to
be electrified and 33% of them are supplied through national grid and 7% gets their
electrical power from alternative energy (NEA, 2006). Electricity consumption in
Nepal is among the lowest among Asian countries both in terms of per capita and
per unit of GNP (WECS, 2006). Energy is the crucial input into the development
process. The current energy system is not sustainable in particular because of the
more consumption of biomass and fossil fuels. The huge demand for energy to
facilitate socioeconomic development is largely fulfilled with biomass fuels.

Energy in Nepal is obtained largely from biomass resources, from imported fossil
fuel resources, hydropower and renewable energy resources (WECS, 2006). With
the greater and renewed approach and policy of the government with formulation
of Energy Perspective Plan (1991-2017) and Renewable Energy Perspective Plan
(2000-2020) emphasis on the development and importance of isolated generation
in small scale as micro hydro power plants and solar PV systems in order to cater
the surging demand for energy in remote villages. A very critical and challenging
issue faced by Nepal is to generate and supply cost effective, environmentally
sound energy services to its rural inhabitants.

1.2 Demographic Setting

Nepal is one of smallest countries in terms of land surface area. It has land area of
only 147,181 sq km. Likewise, it has an average width of about 200 km (north-
south) and an average length of about 800 km (east-west) but it has high altitudinal
variation from south to north. The lowest place is only about 161 m above sea level
(masl) and the highest is the Mount Everest at 8,848 (masl) at the eastern part of
Nepal. Nepal is a land-locked country and its difficult mountainous terrain has
created a strong barrier for the infrastructure development.

Nepal can be divided into 5 major physiographic zones, viz. Terai (< 300 masl),
Siwalik (300- 1000 masl), mid-mountain (1000-3000 masl), high-mountain (3000-
5000 masl) and high Himal (>5000 masl). About 23% of the area of Nepal is High
Himal, which is covered by snow and ice all the time of the year. Terai is the main
sources of agriculture production required for feeding the whole population over
Nepal but it occupies only about 19% of the total area. The climate of Nepal varies
according to the physiographic regions. Nepal has tropical and sub-tropical
climates in the Terai and Siwaliks whereas temperate, sub-alpine, alpine and arctic

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climates in the mid-mountains, high mountains and high Himals respectively (CBS,
2002a. p14).

Currently, there are about 23 million people living in Nepal, out of which about 86%
live in rural areas (CBS, 2002b). The population growth is still quite high despite
the enormous efforts for family planning. Currently, the population is growing by
about 2.24% per year. Overall economic development by providing basic
infrastructure services to the growing population has become one of the major
challenges for current Nepal. Of the total population only 40% have access to
electricity.

Administratively, Nepal is divided in five developmental regions, fourteen zones

and seventy-five districts. Each district is further subdivided into Municipalities and
developments. At present there are 3992 Village Development Committees (VDCs)
and 58 Municipalities in the country.

1.3 Energy and Economy

Energy is the basic necessity for survival. It is necessary for development activities
to promote education, health care, transportation, and infrastructure for attaining a
reasonable standard of living, and is also a critical factor economic development
and employment. Till today Nepal has no other sources of energy beside the
immense water resources. It has been recognized that Nepal‟s main natural
resources is its abundant hydropower potential. The distinct topography of Nepal
with its high hills and more than 6,000 rivers and innumerable rivulets criss-
crossing the country provides many opportunities for the development of this field.
Nepal is estimated to have theoretical hydro potential of 83,000 MW of which
42,000 MW is economically feasible. (Warnock, J.G., (1989), pp 26-32.)

Energy plays a significant role in the economical development and technological

advancement of societies and plays a crucial role in human welfare. The supply of
energy is often a major constraining factor in the development of a country‟s
economy. Many developing countries spent a large proportion of their development
budgets on energy, and, while the developed nations debate the sustainability of
the fossil fuel sources, for many developing countries the sustainability of these
energy sources is more immediately a question of funds with which to buy them.
This is the case in Nepal.

The living of the people of the country is determined by the economy of the
country. Energy is one of the driving factors of the economy. Basically three factors
contribute to the economic growth namely capital, labour and energy. These three
components determine the country‟s Gross Domestic Product (GDP). Hence to
drive a country‟s economy energy supply and availability is a crucial factor. Nepal
also relies heavily on energy for implementing various developmental activities. But
the supply of the energy has not been sufficient in the current years which have a
direct impact on the economic growth of the country.

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A supply of energy in a suitable form is considered to be one of the main inputs
required to raise the standards of living of the people in mountain areas and to
minimize damage to ecosystem. Per capita consumption of-energy has to increase
significantly in order to develop the systems and infrastructure necessary for
improvement of living conditions and increase in incomes. At home also, more
energy consumed in a suitable form would improve the quality of life drudgery as
well as health hazards.

To cater the growing energy demand and trigger the economic development,
Nepal is in the need of huge energy supply and to achieve it different approach
should be taken in order to change the tradition consumption pattern. Supply of the
energy to the rural place should be implemented with an integrated approach of
promoting the renewable energy sources and isolated generation and distribution.

2. Energy Resource Base

Energy sources have been categorized under three broad types: (i) traditional (ii)
commercial and (iii) alternate energy sources. Traditional energy sources include
biomass fuels particularly, agriculture residue and animal dung used in a traditional
way – direct combustion. Commercial sources of energy are fossil fuels (coal and
petroleum fuels) and electricity. Alternative or renewable energy sources include
micro hydro, solar power, wind power, biogas, briquettes etc.

The three major indigenous energy bases in the country are biomass, hydropower
and solar power. There is also some possibility of sporadic deposits of natural
gases and coal reserves still to be exploited. Biomass sector has been dominating
the energy supply and consumption since many years and will continue to
dominate as exploitation of other sources of energy is still minimal.

2.1 Traditional Energy Sources

Nepal relies heavily on traditional sources of energy such as the agricultural

residues and animal waste. The main sources of these are from the forest and
shrub land. These are mostly used for cooking and heating purposes in the
domestic sector.

2.1.1 Fuel wood

Most of the rural and residential sectors of the country which contribute hugely in
total energy system use fuel wood as major source of energy. These are obtained
from forest area, shrub land, grassland, non cultivated inclusions, cultivated land
and others. The sustainable fuel wood supply from accessible and reachable area

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of Nepal in the year 1978/79 was about 6.8 million tons as compared to 6.4 million
tons in year 2003/04 (WECS, 1988).

The supply of fuel wood has been depleting each year which has resulted in the
misbalance between supply and demand. Higher consumption than sustainable
energy found in Nepal is also contributing in this.

2.1.2 Charcoal Supply

Charcoal also is a form of wood fuel which is directly derived from the burning of
wood components. Charcoal is consumed by local restaurant, goldsmiths, metal
crafters and clay producers. Beside these industries also consumes charcoal. In
some cases residential sectors uses it for space heating. However charcoal supply
practices in Nepal are very limited and illegal.

2.1.3 Agricultural Residue

Agricultural residues coming directly from the agricultural crops is third largest
indigenous biomass source of energy. Supply potential of agricultural residues is
estimated at 19.5 million toms for the year 2003/04. This amount is equivalent to
244 million GJ in terms of energy that becomes about 67% of the total energy
consumption in the same year (MOAC, 2004).

2.1.4 Animal Waste

Animal dung is a second largest source of indigenous energy but it also occupies
second largest position in consumption terms. The total dung for fuel available in
the year 2004/05 is 509 million tons. About 24% of the total energy requirement of
the country can be met by animal dung if used for energy purpose only.

2.2 Commercial Energy

Petroleum fuels (kerosene, LPG, motor spirit, diesel, aviation fuel and fuel oil), coal
and electricity are considered as commercial energy sources.

2.2.1 Hydropower

Nepal has immense hydropower potential. This potential is used in two forms:
mechanical and electrical. The mechanical application through traditional water
wheels has been used since long time back.

Hydropower is exploited about 1.5% of the potential. The electricity production

efforts in Nepal focus only on the construction of large hydroelectric power plants
to harness some of Nepal‟s gigantic hydroelectric resources. Nepal has an
estimated 83,000 MW of hydroelectric potential, of which only 397.89 MW has

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been currently exploited (NEA, 2006). These hydroelectric plants are built to
provide electricity to urban areas, or to sell power to India.

Environmental problems with the dams such as inundation, siltation, negative

impacts to river water quality, harm to riparian ecosystems, controversies over
India‟s position as a price-determining buyer of Nepalese electricity, and the fact
that these large projects rely on expensive foreign contracting firms have raised
opposition against large-scale hydroelectric projects in Nepal (Pokhrel, Murali D.).

Medium -scale hydropower remains the likely choice for meeting Nepal‟s urban
electricity demand, which is growing at an annual rate of 14% to 15%. For remote
areas, the Nepal Electricity Authority (NEA) frequently uses diesel power stations.
Currently the NEA has an estimated 55.66 MW of diesel power stations in regular
use. These are noisy, smelly, expensive, and further increase reliance on fossil
fuel imports.

The total installed electricity generation is about 613.5 MW out of which

hydroelectric generation capacity is around 557 MW. The national grid is supplied
with 603 MW and the remaining are an isolated system comprising 40 small/mini
hydro plants, about 2000 micro hydro and 1200 peltric sets serving remote areas
of the country. (CADEC, 2004)

Demands are changing and consumption of electricity has risen significantly over
the past twenty years. The commissioning of Kulekhani 1 and other large hydro
stations in the early 1980‟s enabled rapid expansion of supply and a dramatic
growth in consumption. Hydroelectricity- generation capacity in Nepal has raised
approximately two hundred fold over last thirty years. Total peak demand is
expected to increase from 369 MW to 1548 MW during 2005-19 without
considering any future export to India. (NEA. (2002), pp-40)

But the challenge of providing energy to the rural areas seems impossible using
these overburdened power sources. Because of the difficult terrain, large distances
and low population densities, many rural residents in Nepal cannot expect
electricity in the next coming 30 years.

Traditionally, developing on rural areas especially the more remote mountain areas
has lagged behind out of the preferred urban centers, whereas substantial
investment were made to develop adequate infrastructure in the main urban
centers, including the setting-up of special facilities. The rural areas did not even
have basic facilities such as drinking water sanitation, roads, schools, or health
centers. Economic and employment opportunities such as industries local
processing of rural products and transportation infrastructure were practically non-
existent in the past.

2.2.2 Petroleum, Natural Gas and Coal

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All the petroleum products consumed in Nepal are imported from India and other
countries. Till now no proven reserves of petroleum suitable for commercial
exploitation have been found in Nepal. In the year 2004/05 Nepal imported about
280 thousand tons from India. Kathmandu alone consumes about 40% of the
imported (WECS, 2006).

2.3 Alternate Energy Resources

Most of the population lives in the rural areas where economic bases for large
scale investments for harnessing hydro potentials and erecting a transmission and
distribution lines seems not possible in near future. In this case, alternative or
renewable energy technologies (RET) like solar, microhydro, wind and biogas
plays a vital role in fulfilling the energy needs of these people. Likewise it also
assists in raising socioeconomic standard of rural people by creating many
opportunities.

The extension of distribution lines is even made worse since the lines in the rural
areas have poor reliability, high line losses (27% reported as a countrywide
average by Nepal Electricity Authority (NEA)), and have a very high cost (typically
$10,000 to $30,000 per kilometer. Line extensions are often awarded as political
favors, leading to inefficient service area growth. Metering individual customers is
prohibitively costly in rural areas, and customers are charged a flat rate (or not
billed at all), leaving no incentive to conserve electricity which leads to the
discontinuation of rural electrification by NEA. As a result rural electrification is
likely to proceed at a very slow pace in the coming decades which will eventually
lead to the dependence on fossil fuels (CRE, 2005).

An estimated 50% of Nepal‟s forests have been cut down in the past 30 years,
deteriorating the fragile ecology. Rural energy consumption contributes about 87%
of total consumption and residential cooking (using wood or dung) accounts for
65% of rural energy consumption (PREGA, 2004).

2.3.1 Solar

Nepal, being located in favorable latitude, receives ample solar radiation of 3.6-6.2
kWh/m2/day, and the sun shines for about 300 days a year. There is a viability of
this technology in many parts of the country. Unlike hydroelectricity or wind, solar
electricity is fairly evenly distributed spatially and temporally, so every area in
Nepal has adequate sunlight in all seasons for a solar electric system. One
significant advantage of solar electricity is that it is convenient and cost effective to
install solar electric systems on the scale of a single household. Looking this
prospect different non governmental organizations (NGO) have been involved in
installation of solar electric systems for various community development projects in
conjunction with the NEA installed three large centralized village-scale PV station
of 30-50 kW capacity in Simikot in Humla, Gamgadi in Mugu, and Tatopani in

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Sindhupalchowk (CADEC, 2005). These systems performed poorly due to poor
component design, and "overly elaborate and expensive centralized design and
lack of proper maintenance support".

The uses of solar energy is for drying crops, clothes, fuelwood, crop residues etc.
traditionally. With the technological developments in this area it is being used for
water heating purposes in urban and tourist areas.

After the provision of subsidy by the Government of Nepal (GoN), the use of solar
photovoltaic (PV) has been increasing significantly. With the involvement of
different organizations in this sector, the numbers of solar PV installed has risen
dramatically from 0.3kWp in the year of 1992 to 3328.42 kWp in the year 2005.
(AEPC, CADEC, 2004 and Piya, 2006)

Solar electric systems in over 11905 Nepali homes (130kW) within 67 districts
provide power for household and business lighting, and to power small DC
appliances (AEPC 2006). Solar electricity also powers water pumps that provide
Nepali villages in the Terai plains with drinking water in remote districts. Solar
electricity is extremely reliable because there are no moving parts in the systems.
Because of its reliability, solar electricity is used to power critical applications such
as vaccine refrigerators and surgery theaters in rural clinics. According to one
estimate, over 6000 units of 50 W module PV systems are in use in different parts
of the country by the Nepal Telecommunication Corporation powering remote
telephone repeaters.

2.3.2 Wind

While wind power is well developed in many countries (China, USA, European
countries), in Nepal it is still at an experimental stage. A 30 kW wind power plant
was sponsored by the Danish Government and installed by the Nepal Electricity
Authority in Kagbeni, Mustang, but was heavily damaged by high wind after only a
few months of operation. The main obstacles for wind power in Nepal are lack of
wind data available for most areas of the country, and the absence of technical
expertise in the country for implementing wind projects. Nevertheless, the
possibility of cost-effective wind or wind/solar PV hybrid systems is promising given
anecdotal evidence of constant high wind speeds in a number of areas, and
current small wind turbine technology available from the international marketplace.
In the long run, the possibility exists to manufacture wind turbines here in Nepal,
much in the same way that micro-hydroelectric turbines are manufactured here by
a number of industries.

The wind potential of Nepal is mainly concentrated in a few valleys such as

Mustang, Palpa, and Khumbu. A wind potential of about 200MW has been
identified in Jomsom – Chusang corridor.

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2.3.3 Biogas

Biogas is the mixture of gas produced by methanogenic bacteria while acting upon
biodegradable materials in an anaerobic condition. Biogas technology was first
introduced in 1955 but widely disseminated only in 1977, after the establishment of
Biogas Company. To date, there are about 60 private biogas companies and 15
biogas appliances manufacturing workshops in the country. A total of 140,519
biogas plants have been installed till July 2005. Considering the high temperature
requirement for biogas generation and minimum number of livestock per
household, about 1.9 million biogas plants are the potential of which 57% in terai
and 43% in hill and mountains (CRE/AEPC 2004).

Biogas Sector Partnership- Nepal (BSP-N) has been actively involved in the
development of this technology. Till year 2005, 96129 people of 17478 households
in 56 districts has benefited from this program. Small credit fund has also installed
829 plants in 19 districts.

2.3.4 Micro-Hydro Power Plant (MHPP)

Hydropower plants of capacity upto 100 kW are referred to as Micro-hydropower

(MH) plants in Nepal. Plants of up to this capacity have been fully de-licensed by
Government of Nepal. This technology was introduced in Nepal in early 60s. There
are 1541 micro-hydro plants capable of generating 8.5 MW of power already
installed in Nepal. These figures include Mill-Only Schemes or MPPUs, Peltric Sets
and all other type of plants (CADEC, 2005).

There is a considerable capability in project survey / design and manufacturing /

installation of Micro-hydro related parts and micro-hydro projects in Nepal. Now
there are a number of MH manufacturing and installation companies, consultancy
firms and NGOs working in MH sector in Nepal. Hundred and seventy detailed
studies in 36 districts are carried out showing a possible output of 3758.41 kW
capacities.

Micro hydroelectric power plants are a common choice for village electrification in
Nepal because of their low cost, comparatively low-tech manufacturing
requirements, and economies of scale. There are an estimated 900 micro-
hydroelectric installations scattered throughout 59 of Nepal‟s 75 districts, with a
total capacity of around 5 MW. Of these, 350 are traditional water wheels or
"ghattas" with an added alternator for electrical output in the range of 1 to 3 kW.

Micro-hydroelectric installations are site-specific, requiring suitable creeks. They

are also more susceptible to freezing than PV electric systems operations, and can
be destroyed by monsoon floods. But when installed and operated properly, they
can deliver power in quantities suitable for small rural industries such as agro-
processing and bread baking, whereas this is not always feasible for PV
installations due to the high cost of PV.

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There are number of companies involved in the installation of micro-hydro plants
using local knowledge and Nepalese-manufactured turbines and controllers. These
projects usually takes place with community participation in order to build the
capacity to develop a managerial system, maintain the installation, collect fees
from villagers and address conflicts that arise. This is very difficult task due to the
political and caste division in many villages. For community hydroelectric projects,
common property issues arise; social mechanisms must be put in place and
enforced to ensure that system users do not take more than their fair share of
electricity, and that community members contribute equitably to system upkeep.
Furthermore, conflicts over water rights are sometimes an issue, since the
hydroelectric turbines may require the diversion of irrigation water supplies.

3. Energy Consumption Scenario

3.1 Consumption Pattern

Traditional non commercial forms of energy have largely dominated the overall
energy consumption of Nepal but the trend is decreasing. The share of traditional
forms of energy to the energy consumption is estimated to about 86.7% in 2005/06
as compared to 91.9% in 1995. The remaining 12.7% of energy consumed is
through commercial source (within which electricity is in the higher side in
substituting other fuels) and 0.5% through renewables which has increased than
0.1% in 1995 as shown in the table below. This trend clearly illustrates that
renewable sources are being used by the people to satisfy the increasing energy
demand (WECS, 2006)

Historical Trend of Energy Consumption by Fuel Type

(In 000 GJ)

Fueltype 1995 2005 2006* Share % Share % Share %

in 1995 in 2005 in 2006*

Traditional 258212 322105 329094 91.94 87.70 86.7

Commercial 24784 43195 48290 11.76 11.76 12.7
Renewables 319 1955 2134 0.11 0.26 0.56
TOTAL 283315 367255 379518
Table: 3.1 Historical Trend of Energy Consumption by Fuel Type (In 000 GJ)
Source: Energy Synopsis Report 2006, WECS (* provisional figures)

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3.2 Total Energy Demand of the Country

Energy is the basic necessity for survival. Energy is one of the most essential
factors for economic development. The per capita electricity consumption is
considered as yardstick of economic development. Nepal is a developing country
and the pace of development is determined by the efficient use of energy. In other
words the demands of energy, the consumption of energy, are the indicators of the
economic growth of the country as it is directly linked with other factors of
economic development.

The main source of energy in Nepal is biomass fuels. But the shortage of biomass
fuels has forced urban households and industries to switch from biomass fuels to
imported fossil fuels and other commercial forms of energy. The main features of
the energy sector are the imbalance between energy resource endowment and its
current use. There is an excessive dependence on dwindling forests to meet
energy needs, while hydropower, which has vast potential, has remained virtually
unharnessed.

The main feature of the energy sector is the imbalance between energy resources
endowment and its current use. There is an excessive dependence on dwindling
forests to meet energy demands, while hydropower, which has vast potential, has
remained virtually unharnessed. Water is the most important natural resources of
the country. Our country is endowed with enormous economically exploitable and
viable hydro potential assessed to be about 44000 MW. However, only 1% of the
hydroelectric potential has been harnessed so far and 1% is under various stages
of development. Thus, 98% of the potential remains without any plan for
exploitation. (NEA. (2002), pp-29)

The energy consumption trend in Nepal is found to be one of the lowest in its'
region. The largest consumption is in households i.e. 91%. Per capita energy
consumption is also very low in Nepal ranking second last in the South Asian
region i.e. only 0.3 Toe in the year 1998. The average per capita energy
consumption in the South Asian region is about 0.37Toe, and 1.7 Toe is the
world‟s average in the same year. The per capita consumption of Nepal in last two
decades is almost constant, where as in case of other neighboring countries like
India, Sri-Lanka and Pakistan; they are growing. Per capita energy consumption is
one of the indicators of the development (WECS. (1999), pp-6). The total energy
consumption in Nepal was 8205 million toe in 2002, which translates to per capita
annual energy consumption of about 15 GJ, ranks among the lowest of the world
(MOF, 2003).

Electricity supply is limited to 40% of the total population. The total energy
consumption in the year 1998/99 in Nepal is 7.6 million tons of oil equivalents (toe)
and the annual average growth of energy consumption in the last 10 years has

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been about 4.6%. However growth of commercial energy consumption has been
high at about 8.4% per annum for the same period (WECS, 1999). Despite of low
energy consumption level, the sustainability of the energy sector is a big challenge
with the high population growth rate, excessive dependence on the forest
resources, and inefficient use of these resources.

Nepal largely depends upon forests and agricultural residues for energy
generation. Indiscriminate use of which could lead to environmental degradation
affecting farmland and livelihood of human kind. Present trend of energy
consumption needs to be changed to ensure the sustainable development process
of nation in long run. In this context alternative energy resources can play a major
role. A number of schemes carried out mobilizing alternative energy sources and
techniques have shown successful outcome. The widely applied alternative energy
technologies are Micro hydropower, solar energy and Biomass energy conversion
technology.

At present hydropower comprises of about 14% of the total commercial energy

consumption in the country. (WECS, 2006) and the role of small and micro-hydro
schemes is significant in extending the electrical energy consumption to the rural
areas. Due to various factors the extension of transmission lines to the remote
villages where most of the population lives is very costly. So in these cases RETs
are playing a crucial role.

In Nepal, small water turbines are a traditional technology. Even today, there are
estimated to be 25,000 water powered Pani ghattas operating in remote districts.
Micro-hydro has the potential to provide both mechanical and electrical power for
rural development in the remote hillsides of the country, where extension of
national grid is not feasible.

The scope and prospects of the RETs system in Nepal is very high. The national
grid, which runs along the densely populated terai with its higher level of economic
activities, cannot be a solution for northern rural hilly areas at present. These areas
have very few economic activities and are sparsely populated. This makes grid-fed
electricity for these areas economically unfeasible. In these circumstances RETs
have performed satisfactorily in Nepal and have gained international reputation.

RETs like Micro-hydro schemes involve local people and companies in the
generation and distribution of electrical energy. And the price of electricity is
determined on the local basis. With the approach of electricity in these remote
places other development activities related with the electricity are also attainable.
So MHP schemes are playing the dual role i.e. selling electricity by expanding the
energy market to the remote places and contributing in the development of the
sector.

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 At present the whole world is switching to the alternative energy sector for fulfilling
the energy demand. With the diminishing stock of natural oil and gases, coal the
best alternative is renewable energy and Nepal has huge resources of water and
major portion is still to be explored. So with the effective planning and development
of this sector can change the future of nation. So the policy-making organization of
government and private sectors should work together in developing this sector and
achieve maximum benefit from it.

Realizing this fact, the involvement of private organizations like REDP, CADEC
and many others along with government organizations like AEPC, RADC are also
paying a crucial role in developing Micro-hydro schemes. Beside this donor agency
like DANIDA, GTZ, WB, ADB are also lending their financial and technical
assistance in this sector. With the implementation of subsidy policy the scenario is
more positive than before. And this is attracting local people to take initiations in
developing and commissioning of MH schemes.

At present the availability of easy financial support, manpower and technical

equipments within the nation the market for RETs schemes proves its significance
with establishment of approach of electricity to rural people.

The overview of the energy consumption pattern is shown in the table below.

Consumption Pattern of Energy by Fuel Type

(in GW)

1995- 1996- 1997- 1998- 1999- 2000- 2001- 2002- 2003- 2004- 2005-
Fuel Type 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006*

Traditional 8.360 8.471 8.653 8.839 9.029 9.223 9.579 9.786 9.997 10.214 10.436

Commercial 0.880 0.934 1.038 1.105 1.426 1.374 1.391 1.372 1.423 1.370 1.531

Renewable 0.014 0.018 0.022 0.027 0.032 0.039 0.045 0.053 0.056 0.062 0.068

Grand total 9.254 9.422 9.714 9.971 10.487 10.636 11.015 11.211 11.476 11.646 12.034
Table: 3.2 Energy Consumption Pattern from year 1995/96 to 2005/06
Source: Energy Synopsis Report 2006, WECS (* provisional figures)

The total energy consumption of the country is increasing rapidly each year. In the
year 1995/96, the total energy consumed was 9.25 GW which has increased to
12.03 GW in the year 2005/06 by 32 % in these 10 years.

Page | 21
The total energy demand of the country is expressed as in the terms of suppressed
demand. Since the energy supply is not sufficient to fulfill the total energy required
by the entire population, the demand is seen as equivalent to the energy that is
consumed or supplied.

In rural areas the energy is required mostly for cooking purposes and a significant
portion (65%) of the total energy consumed in rural areas is used for cooking. So
these needs are basically fulfilled by the use of woods, coal, crop residues, animal
residues, livestock manure, animal wastes and biogas etc which can be seen
clearly as the consumption of energy through traditional sources is 86.7% of the
total energy consumption in the year 2005/06. The dependence upon traditional
energy sources is decreasing each year with the energy produced by RETs is
replacing these sources.

This increase in the demand for electrical energy cannot be fulfilled by the
outstripping supply and chronic shortages, shortfalls in generating capacity; low
plant load factors due to the aging generators and poor maintenance of
equipments at existing plants and losses of power due to poor quality transmission
lines and theft.

All these facts have led to the necessity of the development of mini- hydro and
micro-hydro power plants in the rural areas of Nepal. In order to address these
issues government of Nepal has formulated a policy in favor of the private
entrepreneurs and investors to encourage the investment in building and operate
these plants or sources of power. It is also providing subsidy in installation of these
plants. The result is overwhelming and the participation of the community is
outstanding.

Energy consumption in the FY 2004/2005has increased by 1.4 percent to 8616

Tons of Oil Equivalents (TOE) as compared to previous year and expected to
increase by 3.34 percent to 8904 TOE in the FY 2005/2006. Similarly energy
consumption in the FY 2003/2004has increased by 2.3 percent to 8491 Tons of Oil
Equivalents (TOE) as compared to previous year 2002/2003 with 8294 Tons of Oil
Equivalents (TOE). When we divide source of energy in to two parts - traditional
and commercial- of the total energy consumption in the FY 2004/2005, traditional
energy occupies 87.7 percent while the portion of commercial energy was 11.76
percent. In the FY 2005/2006, consumption of traditional energy is expected to
remain at 86.7 percent while the portion of commercial energy will remain at 12.7
percent, which shows Nepalese economy still heavily relying on traditional source
of energy.

Of the total traditional energy consumption in the FY 2004/2005, share of fuel

wood was 89.0 percent, agriculture and cattle residue was 4.3 percent and 6.5
percent respectively, while in the FY 2005/2006 it is expected that the consumption
of fuel wood will remain at 89.0 percent while that of agriculture and animal residue
will be 4.34 percent and 6.7 percent respectively. Similarly, of the total commercial

Page | 22
energy consumption in the FY 2004/2005, the share of Petroleum was 69.5
percent, Coal 14.9 percent and electricity 15 percent, while in the FY 2005/2006
the share of Petroleum is expected to remain at 63.8 percent, Coal 21.3 percent,
and electricity 14.8 percent.

So we are facing a very volatile energy scenario, the demand is increasing at its
most but the supply are facing more constraints and beside hydroelectricity we
have no other means of producing electricity.

3.3 Energy Consumption History of Renewables

The capture of energy from existing flows of energy, from on-going natural
process, such as sunshine, wind, flowing water, biological processes, and
geothermal heat flows is termed as renewable energy.

Most renewable energy other than geothermal and tidal power, ultimately come
from the Sun. Some forms are stored solar energy such as rainfall and wind power
which is considered short-term solar-energy storage, whereas the energy in
biomass is accumulated over a period of months, as in straw, or through many
years as in wood. Capturing renewable energy by plants, animals and humans
does not permanently deplete the resource. Fossil fuels, while theoretically
renewable on a very long time-scale, are exploited at rates that may deplete these
resources in the near future.

Renewable energy resources may be used directly, or used to create other more
convenient forms of energy. Examples of direct use are solar ovens, geothermal
heating, and water- and windmills. Examples of indirect use which require energy
harvesting are electricity generation through wind turbines or photovoltaic cells, or
production of fuels such as ethanol from biomass.

Renewable energy electricity systems, using solar energy (photovoltaic - PV) or

falling water (micro-hydroelectricity) have proven effective in providing modest but
very useful amounts of electricity to villagers in rural Nepal. Electricity from these
sources provides light for students to study, and villagers to engage in income
generating activities such as painting thangkas (religious paintings), sewing
clothing, or operating shops and clinics. Lighting extends villager‟s social lives, and
electricity powers TVs and radios that bring news of the outside world (Winrock,
2006).

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 Consumption Pattern of Renewable Energy
(in GW)

Fuel Type 1995- 1996- 1997- 1998- 1999- 2000- 2001- 2002- 2003- 2004- 2005-
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006*

Electricity 0.097 0.104 0.112 0.120 0.134 0.146 0.150 0.171 0.189 0.212 0.227

Biogas 0.013 0.017 0.022 0.026 0.031 0.037 0.044 0.051 0.056 0.060 0.066

Microhydro 0.001 0.001 0.001 0.001 0.001 0.001 0.001 0.001 0.001 0.002 0.002

Solar 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

Grand total 9.254 9.422 9.714 9.971 10.487 10.636 11.015 11.209 11.47 11.646 12.034
Table: 3.3 Energy Consumption Pattern of renewables from year 1995/96 to 2005/06
Source: Energy Synopsis Report 2006, WECS (* provisional figures)

The above table shows that the energy consumption trend of renewables is very
low as compared to other energy sources. Though the contribution of renewables
to the total energy demand seems very low, the consumption pattern has
increased to 0.53% in the year 2004/05 compared to 0.11% in the year 1995/96.
The consumption is estimated to increase to 0.56% of the total energy
consumption in year 2005/06.

The most significant increasing trend was seen in the consumption of electricity
which was 89 MW in the year 1995/96 to GW in 2004/05. The contribution of
electricity in total energy consumption in the year 1995/96 was 1% which increased
to 1.82% in 2004/05. This consumption is expected to increase to 227 MW in year
2005/06.

3.3.1 Resource wise energy consumption of renewables

Of the total renewable energy consumption in the FY 2004/2005, share of biogas

was 97.3 percent, microhydro was 2.5 percent and solar was 0.1 percent
respectively, while in the FY 2005/2006 it is expected that the consumption of
biogas will remain at 97.3 percent while that of microhydro and solar 2.48 percent
and 0.14 percent respectively.

The major factor for hindering the increasing pace of renewables is the ongoing
conflict in the country due to which the foreign investment has nearly come to halt.

Page | 24
 Among the renewable energy sources also, biogas has larger share than other
energy sources like microhydro and solar PV‟s in the total energy consumption.
Most of the renewable energy generated is consumed by residential consumers
and it must be remembered that 90.28% of the total energy is consumed by
residential sector. The share of the renewables was 0.11% in 1995/96 and it
increased to 0.53% in year 2005. Similarly biogas consumption in the year 1995/96
was 298 GJ increased to 1903 GJ in the year 2004/05. Energy consumed through
microhydro in the year 1995/96 was 21 GJ which increased to 50 GJ in 2004/05. In
the same year, 2.0 GJ of energy was consumed through solar energy sources.

3.3.2 Sector wise energy consumption scenario

The energy consuming sectors has been defined as per the economic sector of the
country namely residential, industrial, and commercial, transport and agricultural
sector. The energy consuming entities like street light, temples, etc fall into others
sector. The sectoral energy consumption pattern has changed only marginally in
2004/05 as compared to previous years as shown in the table below.

Sector Wise Energy Consumption Scenario

(in GW)

Year Residential Industrial Commercial Transport Agricultural Others Total

1995-
1996 8.60 0.38 0.09 0.28 0.02 0.01 9.38
1996-
1997 8.82 0.21 0.10 0.38 0.03 0.01 9.55
1997-
1998 9.05 0.22 0.09 0.44 0.04 0.01 9.85
1998-
1999 9.25 0.24 0.10 0.48 0.02 0.01 10.11
1999-
2000 9.49 0.51 0.12 0.41 0.10 0.01 10.63
2000-
2001 9.68 0.42 0.13 0.44 0.10 0.01 10.78
2001-
2002 10.12 0.40 0.16 0.39 0.09 0.01 11.17
2002-
2003 10.30 0.38 0.17 0.41 0.09 0.01 11.36
2003-
2004 10.49 0.44 0.17 0.42 0.09 0.02 11.64
2004-
2005 10.66 0.41 0.17 0.45 0.10 0.02 11.81
2005-
2006* 10.89 0.55 0.19 0.46 0.10 0.02 12.20
Table: 3.4 Sector Wise Energy Consumption Scenario from year 1995/96 to 2005/06
Source: Energy Synopsis Report 2006, WECS (* provisional figures)

Page | 25
Of the total energy consumption in the FY 2004/05, share of residential sector was
90.28 percent, industrial sector 3.47 percent, commercial sector 1.4 percent,
transportation sector 3.8 percent and agriculture sector 0.8 percent whereas in the
FY 2000/2001, share of residential sector was 88.9 percent, industrial sector 4.8
percent, commercial sector 1.2 percent, transportation sector 4 percent and
agriculture sector 0.9 percent.

In the FY 2005/06, this energy consumption pattern is expected to remain with

residential sector comprising of was 89.26 percent, industrial sector 4.5 percent,
commercial sector 1.5 percent, transportation sector 3.7 percent and agriculture
sector 0.8 percent.

It can be observed that share of residential sector in the total energy consumption
is decreasing in a steady rate while other sectors have a increasing trend. With the
establishment of industries, industrial sector has maintained the third position in
the total energy consumption.

Resource wise/Sector Wise Energy Consumption

Scenario
In year 2004/05 (in 000GJ)

Sector Residential Industrial Commercial Transport Agricultural

FuelType
Traditional 317798 2245 2049 0 0
Commercial 11815 10516 3286 13894 3085
Electricity 2898 2750 394 21 180
Renewable 2134 0 0 0 0
Biogas 2078 0 0 0 0
Microhydro 53 0 0 0 0
Solar 3 0 0 0 0
Total 331567 12761 5335 13894 3085

Table: 3.5 Resource Wise/ Sector Wise Energy Consumption Scenario

Source: Energy Synopsis Report 2006, WECS

The total energy consumption in the FY 2004/05 was 11.64 GW. Out of this
substantial portion was in residential sector in which traditional energy occupies
95.8 percent and that of petroleum 2.7 percent. Of the total energy consumption in
the FY 2004/05, share of traditional alternative energy was 0.6 percent.

Page | 26
Till now, renewable energy sources are not used by other sectors. So it can be
concluded that the sole consumer of renewable energy sources is residential
sector. As we know residential sector accounts for 90% of total energy
consumption, renewable energy sources can be used the traditional energy
sources. In the year 2004/05 this sector consumed about 331 million GJ of energy.
Biomass resources are the major fuels in this sector (MOF, GON. (2002), pp-123).

Sectoral Energy Consumption, 2004/05

81%

4%

6%
1%

1%
3%
1% 3%

Fuel Wood Agriculture residue Animal dung

Commercial Petroleum Coal Electricity
Renewable Biogas Micro Hydro
Solar
Figure: 3.1 Sectoral Energy Consumption by Fuel Type, 2004/05 (In percentage)
Source: Energy Synopsis Report 2006, WECS

Renewable sources like biogas and electricity from micro hydro and solar home
systems are slowly substituting the conventional fuels which are mainly used for
cooking and lighting. The commercial sources of fuel used in urban areas are
nominal. The population growth rates as well as economic situation of the
households are reflected in the pattern of residential energy consumption. The
overall growth pattern in the residential sector is about 1.2 % each year.

About 3.5% of the total energy consumption is accounted by industrial sector and
this rate has been increasing each year. In the year 2004/05, 12.7 millions GJ of
energy has been consumed by this sector. This sector relies mostly on fuelwoods
and agricultural residues. The main end uses in this sector are process heating,
motive power, water boiling and lighting. This sector does not consume renewable
energy sources.

Consumers like school, hotels, restaurants, government and non-governmental

institutions etc. are categorized as commercial sector. The energy consumption in
this sector in the year 2004/05 is 5.3 millions GJ with an increase of 8% each year.

Page | 27
Fuelwoods, LPG, kerosene and electricity are the main sources used by this
sector.

Transport sector and agricultural sector also has an increasing energy

consumption trend. Transport sector is heavily dependent on imported fossil fuels.
Diesel contributes 65.7% followed by petrol with 18.9%. Aviation Turbine Fuel
contributes 15% where as the share of electricity and coal is negligible. These all
facts indicate that the energy demand in the country is rising at a speedy rate and
to cater the demand of energy new strategy are to be formulated and implemented.

3.4 Growth and future potential of the renewable energy consumption

It is easy to predict that world energy demand, and especially that for electricity,
will increase greatly during this 21st century, not only because of demographic
pressures, but also through an improvement in living standards in the less
developed countries, which will represent 7 billion inhabitants in 2050 (78% of the
total).

Consumption of primary energy will increase up to threefold by the middle of this

century, and the increase will be even greater for electricity. In view of this
situation, many sources of energy will be necessary, but for environmental
reasons, a high priority should be the development of all technically feasible
potential from clean renewable sources, especially hydropower. (WEC. (1998), pp-
67)

About 87% Nepalese live in rural areas with agriculture as main livelihood. Energy
consumption in rural areas constitutes about 87% of the country‟s total energy
expenditure. The rural people mainly use the energy for different end uses.
Cooking only accounts for 65% of the of the energy consumption whereas space
heating, water boiling, agro processing and lighting are other applications for which
the energy is required in rural areas.

Renewable energies are essential contributors to the energy supply portfolio as

they contribute to the world energy security, reducing dependence of fossil fuels
resources and providing opportunities for reducing emissions of greenhouse
gases. Total renewables supply experienced an annual growth of 2.3% over the
last 33 years (IEA, 2006). Renewables are the third largest contributor to global
electricity production. They accounted for 17.9% of production in 2004, after coal
(39.8%) and natural gas (19.6%), but ahead of nuclear (15.7%) and oil (6.7%) and
non renewable wastes. Almost 90% of electricity generated comes from
hydropower plants while close to 6% comes combustible renewables and waste.
Geothermal, solar and wind have now reached for 4.5% of generation (IEA, 2006).

Renewable energy consumption will increase by 1.8% per year from over
1400Mtoe in 2003 to 2300Mtoe, a rise of more than 60%. In this scenario, the
share of renewables in global energy consumption will remain largely unchanged

Page | 28
at 14%. As developing countries like Nepal shift to modern forms of energy,
dependencies upon traditional biomass will be reduced. Renewables will continue
to increase their market shares in the power generation mix. Overall they will
account for 20% of world electricity generation in 2030, up from 18% today. While
heating and cooking will remain the principle use for renewables; mostly in
developing countries where three quarters of renewables (especially traditional
biomass) are consumed, the power sector will lead the increase in renewable
energy consumption between2003 and 2030. its share of global renewable energy
consumption is expected to rise from a quarter in 2003 to 38% by 2030.

Non-hydro renewables in electricity generation will triple, from 2% in 2003 to 6% in

2030. Of non-hydro renewables:

 Wind power will see the biggest increase in market share.

 Biomass used for electricity generation will triple between now and 2030.
 Geothermal power will grow at the same rate as biomass.
 Solar, tidal and wave energy will make more substantial contributors
towards the end of projection period.

A major hindrance to the future penetration of renewable energy is the intermittent

nature of much of it (wind, solar, ocean, and hydropower). There is a little doubt
that efficient and inexpensive energy storage technologies can play a significant
role in overcoming this obstacle.

With all these developments, Nepal alone cannot remain unaffected. The
development of RETs is Nepal is even more prominent as can been seen from the
consumption pattern and the consumer structure. Major portion of the consumers
live in rural areas and most of the energy is used for basic purposes like cooking
and lightening. Hence the viability of replacing traditional fuelwoods used currently
for these purposes can be easily replaced with introducing new, clean and
environment friendly RETs. A recent development in this field signifies and proves
that this can be done in Nepal.

A total number of 1588 MHPPs (Pico-hydro included) have been installed in

different parts of country from 1962 to mid July 2005, generating 8827.5 kW of
electrical energy (CADEC, (2005), pp-12). Till 2005 11905 households (about
130kW) have installed Solar PV Home System in 67 districts. Solar program of
Energy Sector Assistance Program (ESAP) has succeeded in installing 58,131
systems with installed capacity of about 2 MW peak. Beside this there has been
also 293 Solar Dryer used for the purpose of cooking or drying foods in 21 districts.
Solar Dryer is used for drying up fruits or any agro products. There are
150,000 Improved Cooking Stove (ICS) installed in 32 mid hill districts benefiting
54731 households till July 2005 (AEPC, (2006).

Till year 2005, 96129 people of 17478 households in 56 districts has benefited
from biogas support program. there are about ten biogas companies and 152,373

Page | 29
biogas plants have been installed till July 2005. Considering the high temperature
requirement for biogas generation and minimum number of livestock per
household, about 640,000 biogas plants are the potential. Small credit fund has
also installed 829 plants in 19 districts (Bajgain Sundar and Shakya Indira,
(2005)).

All these figures show that the future growth of RETs is inevitable.

4. Institutions involved for the support of renewable

energy
4.1 Policies and Organization

The government‟s Five-year plans shape a great deal of the policy environment for
development works. From the sixth five year plan (1980-1985) onwards, the
Government of Nepal has supported the development and further dissemination of
RETs. The government has then increasingly recognized the importance of RET
development and has carried it since.

The fifth five-year plan (1975-1980), for the first time, considered the role of micro-
hydro plants in rural electrification. The goal of rural electrification according to the
plan was to promote expansion of agriculture, commerce and small-scale
industries. Under the guidance of the plan, the Small Hydropower Development
Board was established in 1975, which played a crucial role in the electrification of
rural hill areas. Under the Sixth Plan Period (1980-1985) ADB/N, instituted in 1981,
the Rural Electrification Project provided financial as well as technical assistance to
promote rural electrification through micro-hydropower plants.

In 1984, HMG delicensed plants up to 100 kW to encourage private participation in

rural electrification through micro-hydropower. The provision of subsidies for micro-
hydropower in 1985 provided further encouragement. Under this provision, 75 %
cost of electric components of MHPP was subsidized for remote districts and 50 %
for the remaining districts and was channeled through ADB/N. since then, GON
has been actively pursuing rural electrification through MH schemes.

The Eight five-year plan is more specific. It gives more stress to private sector
involvement for developing and promoting improved water mills and water turbines
and generating both mechanical and electrical power to establish various rural
industries. The development of the energy sector has been given special priority in
the eighth five-year plan. The basic objectives of the energy plan concerning
MHPP development are to maintain regional balance in the energy sector with
hydropower by maximum utilization of indigenous energy resources, and to
develop alternative and decentralized energy resources available in the country.
Targets for MHPP were set at 5 MW for the period.

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4.1.1 Institutions involved in RET Sector

The establishment of Alternative Energy Promotion Centre (AEPC) in 1997 as the

government agency for the promotion of renewable energy technologies, including
micro-hydro, led to a reformulation of the subsidy policy. Since 2000, the AEPC‟s
Interim Rural Energy Fund (IREF), supported by Danish International Development
Assistance (DANIDA) Energy Sector Assistance Programme (ESAP), has
administered subsidy of micro-hydro and other RETs.

Alternative Energy Promotion Center was formed in 1997 with the view to aid in
the development of Alternative technologies. In addition to the AEPC‟s micro-hydro
support programme, supported by ESAP/ DANIDA, the Rural Energy Development
Programme (REDP) of the United Nations Development Programme (UNDP)
formed in 1996 provides significant assistance to this sector. REDP supported
micro-hydro projects obtain subsidy funds from AEPC‟s IREF. The REDP, which
sees micro-hydro as an entry point to enhancing rural livelihoods, supports
community projects in 15 districts. Major features of REDP are the involvement of
local government in energy planning and social mobilization.

The GoN’s Remote Area Development Committee (RADC) is another key

player in the promotion of micro-hydro. Supporting community-owned plants with
an aim of achieving regionally balanced growth, efforts are directed at remote
areas.

The introduction of new GON subsidy policy and delivery mechanism channeled
through the AEPC increased the level of subsidy from 20-25 % of total investment
to 50-75% of total investment on different types of RETs. Also subsidy is provided
as a part of a promotion program that links financial support with a structured
project cycle, productive end-use and quality requirements.

GoN has created a number of ministries in order to implement various programs

related to the micro-hydropower development.

Ministry of Water Resources (MOWR) is the focal ministry with respect to power
development. Policy and development programs relating to the proper utilization of
water resources are formulated by this ministry. It is also responsible for promoting
the private sector‟s participation in hydroelectric projects, and for enabling the
optimum utilization of water resources.

Ministry of Finance (MOF) looks after overall financial affairs of the government.
Its scope of work includes matters relating to economic policy, allocation of
financial resources, mobilization and coordination of foreign assistance, as well as
raising internal loans.

Water and Energy Commission Secretariat (WECS) is responsible for

comprehensive planning in both the energy and water sectors. It is the planning

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and policy arm of the Water and Energy Commission (WEC), and is responsible for
recommending appropriate policy and strategy to GON for the water and energy
development sector.

Beside above government agencies there are other semi-government agencies

that are involved in the development of this sector. They are listed below.

Agricultural Development Bank, Nepal (ADB/N) is a major development and

financial institution specialization in the field of agriculture and rural credit. It has
become a leading public enterprise for the promotion and dissemination of micro-
hydro technology. However, it has withdrawn all-round support for MHPP and has
limited its role to MH financing alone.

Nepal Electricity Authority (NEA) is the only public utility responsible for the
generation and distribution of electric power throughout the country. The Small
Hydro Division (SHD) within NEA replaced the Small Hydro Development Board.
After the restructuring of NEA, the SHD is placed under the Rural Electrification
Directorate within two departments under it- the Rural Electrification Department
and Small Hydropower Department. Constraints experienced by SHD are the long
bureaucratic process of international tendering for plant equipment and
accessories, non-availability of contractors, and the slow decision- making
process.

The Community Rural Electrification Department (CRED) is a newly

established department which oversees rural electrification through community
participation under the NEA Bye-Law 2061.

The Tariff Fixation Commission (TFC) is an autonomous body under MoWR. It

was created as per the Electricity Act 1992. It is responsible for fixing electricity
tariff. Under the proposed Electricity Ordinance, this commission will be abolished.

4.1.2 Private Sector Institutions

Private sector institutions involved in electrification and RETs may, broadly, be

classified as:
 independent power producers (IPPs)
 utilities
 distributing institutions
 private companies (specialized in supplies/trainings and installation)

4.1.2.1 Independent Power Producers (IPPs)

Presently, there are eight IPPs which generate and sell power to the NEA namely
Annapurna Power Company P.Ltd., Arun Valley Hydro Power Development Co. P.

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Ltd., Bhotekoshi Power Company, Chilime Hydropower, Lamjung Electricity
Development Company, National Hydropower Company, Rairang Hydro Power,
and Sanima Hydropower Company Ltd. They own plants with a total installed
capacity of 71.3 MW. In addition, there are three IPPs whose plants are under
construction (NEA, 2005, p. 61).

4.1.2.2 Utilities

There are four companies in this category. Two of them, namely, Butwal Power
Company Limited (BPC) and Himal Power Limited (HPL) generate power, sell to
the NEA as well as distribute electricity on their own in rural areas. In addition,
there are two companies, Salleri Chialsa Electricity Company (SCECO) and
Khumbu Bijuli Company (KBC), which generate in isolated mode and distribute
electricity on their own in rural areas. A brief description of companies engaged in
generation and distribution of electricity follows.

Butwal Power Company (BPC) Limited, established in February 1993, is one of

the leading hydropower developers of Nepal. BPC, a public company with majority
holding of the government, was privatized in 2003. It owns and operates the 12
MW Jhimruk Hydropower Plant and the 5.1 MW Andhi Khola Hydropower Plant.
Besides supplying power to the national electricity grid, the Company has
electrified more than 20,000 households through these power plants under its rural
electrification program in Pyuthan, Syangja and Palpa districts.

Himal Power Limited (HPL) owns and operates the 60 MW Khimti Hydropower
Plant. The power generated from this project is sold to the NEA. HPL, under
Jhankre Rural Electrification and Development Project, also owns a 500 kW
Jhankre Power Plant, the power of which has been used to electrify about 2,000
rural households in Ramechhap and Dolakha districts since July 2000. The project
is being managed by user cooperative - Khimti Rural Electric Cooperative Ltd.

Salleri Chialsa Electricity Company (SCECO), a locally managed company,

owns a 400 kW power plant located in Salleri, the district headquarters of
Solukhumbu district. The power plant was built with support from the Swiss
Government and was commissioned in 1993. It has served about 900 customers in
30 villages in the southern part of the district.

Formed in May 1994, Khumbu Bijuli Company (KBC) is a locally managed

company. KBC owns a 620 kW Thame Hydropower Plant located at Khumjung
VDC in Solukhubu district. The plant was built in 1989-1994 with support from the
Federal Government of Austria through Eco Himal, an Austrian NGO. The plant
has electrified about 650 households in Namche Bazar and nearby villages.

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4.1.2.3 Distributing Institutions

In the recent years, a few community level institutions have evolved and have
undertaken the responsibility of electricity distribution in their communities.
Presently, there are 13 such institutions which have entered into agreement with
CRED for the distribution of on-grid electricity.

The Lamjung Electricity Users' Association (LEUA) was the first distributing
institution established as a pilot project in 1997 under GON and NORDIC funding
to manage the extended electricity distribution system of Lamjung district in west
Nepal (BPC, p.19). The objective of the association is to manage electricity
distribution system by forming a local association among the consumers for
catering them better services at least cost and restricted system losses. It has a
legal status of a non-governmental organization (NGO). Previously, LEUA was
operational under the NEA's Small Hydro and Rural Electrification Department.
Now, it has also come under the CRED.

Beside these ICIMOD also has been actively involved in the development of this
sector with providing both technical and other types of supports like trainings etc.
others INGO‟s like United Mission to Nepal (UMN) has been actively involved in
Nepal since 1954. It has established number of projects to support and implement
the mini-micro hydro programm in Nepal through the establishment of the Butwal
Technical Institute (BTI) in 1963,

Developing and Consulting Services (DCS) in 1972, Butwal Engineering Works

(BEW) in 1977, and Nepal Hydro Electric Company (NHE) in 1986. it has also
established the Butwal Power Company (BPC) in 1966, Himal Hydro and General
Construction Company in 1978 and Himal Power Limited (HPL) recently are key
players in Nepal‟s power sector

Other organizations like Swiss Federal Institute of Technology (SKAT),

Intermediate Technology Development Group (ITDG), German Technical
Cooperation (GTZ) etc has also been involved in this sector

Different research institutes are also actively involved in this sector. Organizations
like Research Centre for Applied Science and Technology (RECAST) established
in 1977 as a research arm of Tribhuvan University has been involved in research
on traditional water wheels, development of MPPU, prototype construction of
improved water mills, and test-site development of micro-hydro. Royal Nepal
Academy of Science and Technology (RONAST) is involved in the improvement
and promotion of appropriate indigenous technologies. It has, so far, not played
and crucial role in mini-and micro-hydro technology dissemination.

Considering the growing market and popularity of MHPP many Private Companies
are involved in this sector with different types of roles as manufacturers/installers,
consulting agencies and training institutions.

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4.1.2.4 Private companies (specialized in supplies/trainings and installation)
Many companies have been involved in installation, supplies and training activates
related to RETs like solar, biogas, microhydro and wind energy.

So we can conclude that RETs has contributed in economic development, energy

sector and environmentally also. RETs have been widely used as a means of
reducing foreign exchange payments for imported energy and fuels. It is also a
cheap source of daytime energy easily convertible to heat and mechanical power.
The introduction of privately owned micro-hydro power in the rural areas has
initiated the basis of entrepreneurship in those areas. Moreover it has created
implications in overall development of remote people with employment and other
income generating ways.

RETs though small has contributed in the energy scenario of Nepal by providing
access to those rural populations of nation, which are not touched by national grid.
Other fact is that RETs has very low effect in the structure of landscape thus
making it environmental friendly scheme than the large projects. It has introduced
new technologies in remote areas. The positive attitude of government and active
support from different agencies has remarked a significant development of this
sector in a good and promising way and the future of micro-hydro in Nepal is very
positive

4.2 Energy Policies of GON

Nepal has followed planned economic development model since the early fifties in
the form of a year development plan. Recently the period of 9th five-year plan
(1997-2002) is completed and the 10th five-year plan has been formulated.

However the specific policy in the energy development was mentioned only from
the fifth five year plan (1975-1980) which was probably triggered by the first world
energy crisis in the early seventies. A brief summary of the energy policies and
programs in the five-year plans by GON is presented below.

Energy Policies in the 5th five-year plan (1975-1980): The main objectives in this
plan are to reduce dependency on imported petroleum products and to promote
the development of water resources and traditional fuel sources. Beside this it has
also emphasized on capitalizing water resources along with the promotion of
research and development activities on Alternative Energy sources. It also focused
on encouraging effective investment on the exploration of small hydropower
potential from private sectors through participatory approach.

In the 6th five-year plan, policy of developing energy resources together with other
factors was promoted. This plan emphasized on the development of both small
and large hydro electric projects with two different objectives. The development of
large projects was targeted to meet the long-term needs of the country and with
the view of exporting the surplus power to augment the foreign exchange earnings.
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Similarly the small hydropower projects to be developed in appropriate places to
supply power for hill irrigation and rural industries.

In the 7th five-year plan (1985-1990) the main policies were execution of
hydroelectric projects suited to medium and long term power needs along with the
erection of integrated transmission systems and extension of rural electrification
programs. Other objectives were to carry out research and analysis of the
managerial and technical aspects of small hydro generation.

The 8th five-year (1992-1997) plan postulated many targets for the development of
energy sector. Promotion of energy self-reliance; encouragement of rural energy
programs and energy conservation measures; maintenance of environment and
safety measures for energy projects; participation of private sector etc were some
of them.

The 9th five-year plan (1997-2002) came with more strong objectives and policies.
It focused the development of hydro electricity as to fulfill the power need of
agriculture, industry, and other sectors by generating electricity economically, to
export power, to co-ordinate rural electrification with rural economic activities for
developing the economy and to reduce rural-urban power disporting for regional
balance with consideration for environmental protection. More liberal policies were
formulated and the generation was not only targeted for internal demand but also
for export. Different policy like subsidy and other kinds were implemented in order
to attract the private parties in the development of this sector. Rural electrification
was also emphasized for the first time with reduction of the system losses along
with major changes in the institutional structures existing.

The 10th five-year plan and National Water Plan has set specific targets that are to
be achieved by 2007, 2017 and 2027 (WECS, 2002).

Arguing for rural electrification, the Tenth Plan (2002-07) states “Currently, the
urban population is consuming most of the electricity. But majority of people live in
the rural areas and most of the agro-industries, irrigation and cottage industries are
also concentrated in rural areas. As the overall development of the nation premises
on the development of the rural areas, balanced development can be achieved
only through creating opportunity for equal consumption of power in the villages
and the urban areas” (NPC, 2002, p. 288).

The sole objective of the Tenth Plan is to alleviate poverty. Hence all sectoral goals
are aimed at contributing towards the primary purpose of poverty alleviation.
Accordingly, the Plan has emphasized rural electrification and set separate
objectives, policies and programs of rural electrification.

Two separate policies are in place having bearing on rural electrification – the
Hydropower Development Policy 2001 and Renewable Energy Subsidy Policy
2000.

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The Hydropower Development Policy 2001 is a revision of the Hydropower
Development Policy 1992. The objectives of 1992 policy were to (i) supply
electricity as per the demands of the people in urban and rural areas through the
development of water resources, (ii) enhance the development of hydropower to
meet the energy needs required for the industrial development in the country, (iii)
motivate private sector for the development of hydroelectric power, and (iv) render
assistance in the conservation of environment by supplying clean energy. The
policy for the first time opened space for private sector to invest on small and mini
hydropower projects. It further encouraged domestic private sector to invest on up
to 1,000 kW projects by relieving license requirement. The Policy emphasized on
rural electrification for the development of agriculture and cottage industries in hill
and the Terai regions.

The 1992 policy was amended in 2001. The objectives of Hydropower

Development Policy 2001 are to: (i) generate electricity at low cost by utilizing the
water resources, (ii) extend reliable and qualitative electric service throughout the
kingdom at a reasonable price, (iii) tie-up electrification with the economic
activities, (iv) support to the development of rural economy by extending rural
electrification, and (v) develop hydropower as an exportable commodity.

However, looking at the consumption pattern of commercial sources of energy, the

1992 policy failed to replace other sources of commercial energies (e.g. coal and
petroleum). The share of electricity consumption in total commercial consumption
of energy has declined to 12 percent in 2001/02 from 13 percent in 1992/93 (MoF,
2005, Statistical Table, p. 77).

The Policy has several provisions to gradually expand rural electrification. In

addition to REF mentioned above, it has a provision of special investment for
infrastructure development of rural electrification. There is also a provision of grant
for micro-hydro projects to be disbursed through the Alternative Energy Promotion
Centre. However, there is no provision of a central agency to oversee RE.

The Renewable Energy Subsidy Policy 2000 has an objective among others 'to
support rural electrification as well as gradually reduce the growing gap of
electricity supply, consumption, etc. between rural and urban areas' (AEPC, 2000,
p. 1). It has provisions to provide subsidy for installation of a range of renewable
energy technologies including micro-hydro plants and solar home systems. Both
the micro-hydro plants and solar home systems have been considered as
alternative means to electrify rural areas. In line with the Subsidy Policy, an Interim
Rural Energy Fund (IREF) has been created to provide subsidy to micro-hydro and
solar home systems. IREF is managed by the Alternative Energy Promotion Center
(AEPC). IREF will be converted into a permanent Rural Energy Fund.

The Nepal Electricity Authority Act 1984 was put in place to establish and define
operation of the Nepal Electricity Authority (NEA). The NEA‟s scope of work as
described in the Act includes generation, transmission and distribution of electricity

Page | 37
throughout the country. The Act has a provision (Clause 16) that the NEA should
operate on commercial principle. Also, the provisions in the Act envisage that the
NEA would run as autonomous corporate body with public participation.

The Water Resources Act 1992 was enacted to conserve, manage, develop and
use water resources of the country. It does not have any specific provision that is
of significance to rural electrification. However, the Act has made a provision to
register „Water Users‟ Association‟ as a corporate body which can work as rural
electrification entity.

The Electricity Act 1992 was put in place to develop electric power by regulating
the survey, generation, transmission and distribution of electricity and to
standardize and safeguard the electricity services. Although there is no specific
reference to rural electrification, this Act has encouraged electrification of rural
areas through establishment of isolated mini hydropower projects generating up to
1,000 kW. No license is required for a national or corporate bodies to generate
transmit and distribute electricity in the said range. Income tax is exempted and the
person or corporate body can fix electricity tariff on its own in less than 1,000 kW
projects. Electricity Regulation 1993 complements Electricity Act 1992.

The most comprehensive regulation designed so far to expedite rural electrification

is the Nepal Electricity Authority Community Electricity Distribution Bye-
Laws 2003. The Bye-law has been formulated to promote public participation, to
encourage community management and to attract private investment in the field of
rural electrification. The Bye-law aims to promote technical and managerial
capability of rural community in the field of electricity distribution through
distributing institution.

Presently, an Electricity Ordinance is under consideration by the government. As

reported in the public media, the Ordinance has spelt out mechanisms for the
development of electricity that includes generation, transmission and distribution of
electricity. It has also attempted to simplify rules and regulations for companies
involved in electricity distribution and expansion. The ordinance is said to have
made a provision of the National Electricity Regulatory Commission (NERC). The
Commission, as an umbrella organization, will create and enforce mechanisms for
power development, prevent monopoly, develop a code of conduct for registered
electricity generating companies, diversify the electricity market and suggest
companies to maintain a sound accounting system. As the ordinance will annul the
Tariff Fixation Commission 1993, the NERC, hence will fix the electricity tariff.

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 5 Conclusion
Energy resources are classified in three major groups: traditional, non-traditional
and alternative in Nepal. Non-traditional (or commercial) resources have replaced
the traditional energy resources. Therefore, renewables falls under this group.
There is a huge theoretical potential for hydropower, but the economically feasible
potential is assessed at 42,000 MW or about 147 TWh (at an assumed capacity
factor of 0.40). Total hydro capacity at the end of 2006 was 613 MW. A number of
other, smaller hydro plants are in various stages of construction, completion. To
increase per capita consumption, supply of power need to be increased. The
market for electrical energy is growing day per day but considering the terrain and
topology of the country and the population distribution, electrifying the rural areas
has been the major issue since long time back. This problem is very much
addressed with the aid of RETs which has been playing a significant role in fulfilling
the energy requirements of the rural people and delivering the fruits of technology
and economic benefits.

Though the share of RETs to the total energy demand is negligible (less than 2%),
considering the rural electrification the share is termed very considerable. Most of
the rural areas have been electrified and hundreds of thousands of people has
benefited from these technologies. To support the pace of its development many
private companies like Butwal Power Company etc has played a significant role.

According to the different reports and study conducted worldwide, renewables are
substituting the traditional fuel types and same is the case with Nepal. The figures
show that the trend of renewable energy consumption, development and
investment is increasing each year in this sector. This signifies that the future of
RETs is very bright and people are willing to use these resources than other types
of energy resources.

With the formulation of new policies and restoration of peace in the country and the
availability of technical manpower will prove as an additional advantage in the
development of this field. The rising price of petroleum products and the depletion
of the forests will eventually lead to no option rather than development of
renewable sources and hence will see the increment in consumption of renewable
energy.

So we can conclude that the demand of energy consumption in the country is

rising with unavailability of traditional fuels have shift the consumption pattern to
the renewables and hence the popularity of this source is even triggered by
government policies and institutions involved along with the subsidy policies. The
investment is increasing with the local skills developing in manufacturing; repair of
these technologies will surely increase the growth of RETs.

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