Improving access to modern energy services in Nepal

Project description

Title: Energising Development (EnDev) Nepal
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ) within the scope of the EnDev energy partnership, financed by the Netherlands, Germany, Norway, the United Kingdom, Switzerland and Sweden
Country: Nepal
Lead executing agency: Ministry of Water and Irrigation
Overall term: 2009 to 2021

Context

Only 76 per cent of Nepalese people have access to electricity despite the country’s huge hydropower potential. Moreover, there is a significant urban-rural disparity, with about 94 per cent of the urban population benefiting from a connection to the national grid compared to just 61 per cent of the rural population. People in rural areas still rely heavily on traditional sources of energy such as fuelwood, dung and crop wastes and many use kerosene lamps and candles for lighting. The shortfalls in power supply also curtail opportunities for education, impact the quality of health care, and limit access to information and potential opportunities for income generation.

Objective

Through the on grid component 14,500 new households have access to grid electricity. Through the off-grid component, 3,300 households have access to electricity through Micro and Pico hydro systems. 10,000 households are provided with improved cooking stoves. 180 social institutions and 2,650 micro, small and medium enterprises have sustainable access to modern energy services.

Approach

This project is part of Energising Development (EnDev), which aims to provide reliable, affordable, socially acceptable and environmentally friendly energy services to people worldwide. It is a multi-donor partnership, currently financed and governed by the Dutch Ministry of Foreign Affairs (MFA NL), the German Federal Ministry for Economic Cooperation and Development (BMZ), the Norwegian Agency for Development Cooperation (NORAD), the UK Foreign Commonwealth and Development Office (FCDO), the Swiss Agency for Development and Cooperation (SDC) and the Swedish International Development Cooperation Agency (SIDA).

In its third phase, EnDev Nepal supports access to modern energy services through grid-based electrification, as well as through off- grid technology micro hydropower projects by providing accessible credit finance to rural communities. Grid-based electrification contributes to the community-based rural electrification programme of the Nepalese Ministry of Energy, Water Resources and Irrigation, which is run by the Nepal Electricity Authority (NEA). The communities are bulk customers of NEA. They are responsible for running the local distribution networks, and they also manage the billing system, both to NEA and to individual consumers. EnDev has developed a rotating fund operated by NEA, which enables communities to secure soft loans for grid extensions and system upgrades. It also provides technical assistance to those communities for the operation, maintenance and administration of their micro utilities. 

To support the off-grid sector, EnDev works with the Alternative Energy Promotion Centre of the Government of Nepal to facilitate access to loans for developers of micro hydropower facilities. It does so through a micro hydro debt fund operated by two local private banks. While enabling the developers to secure the necessary financing for their projects, the fund also allows private banks to participate in energy access projects. This, in turn, encourages increased lending to projects that have previously been considered risky in financial respects.

EnDev Nepal is also partnering with the Netherlands Development Organisation (SNV). SNV aims to support the electrification through Pico hydro systems primarily in the most remote areas of Nepal.

Moreover, the project supports the wider uptake of improved cooking stoves. The cooperation partners are Practical Action Nepal and SNV. Producers receive training, and market development plans are created for each project district.

Results

Previous phases of the project have surpassed their original goal of providing 20 million people worldwide with access to sustainable energy services by March 2019. More than 21.3 million people gained access either to electricity and lighting devices or improved cooking technology.

As of June 2019, more than 323,000 people have gained access to electricity through the grid and micro hydropower technology. Some 775 social institutions have been connected to the electricity, as well as nearly 4,500 MSMEs have been provided with electricity access. About 175,000 people have been provided with energy-efficient cooking stoves.

By the end of 2019 EnDev Nepal has supported 59 rural community electrification companies to provide grid electricity to rural communities. 30 micro hydro power plants have received financing through the revolving fund run by two commercial banks, this has benefitted remote/isolated communities of Nepal to get access to electricity. Out of 26 old financed Micro Hydro Projects (MHPs), eight MHPs have successfully cleared its loan and five MHPs reached a position to settle their loan completely. 

Further information