Energy in Nepal: Development and Progress

Nepal is one of the countries in the world which has over 90% of the nation/s total electricity generation capacity generated by hydropower plants. Nepal has not been able to tap other resources as the source of energy besides hydropower but noted that few plants such as diesel, air energy, coal are minor sources for energy. Hydroelectricity plays a vital role in the Nepalese economy in the present context as well as to scale up its potential energy in Nepal in the future. Even though Nepal has economically viable probable to put in a place over 40,000 megawatts (MW) of hydro energy generation capacity. If this potential is exploited by Nepal, it could practicably meet the power demand and also create a surplus that could be exported to the neighboring nations around its territory (South Asia). (NEPAL HYDROPOWER DEVELOPMENT PROGRAM).

Condition of Energy in Nepal

Nepal has no known major oil, gas, or coal reserves, and its position in the Himalayas makes it hard to reach remote and extremely remote topography. Accordingly, most Nepalese citizens have historically met their energy needs with biomass, human labor, trade-in kerosene, and/or traditional water-powered mills, yet per capita, energy consumption is thus “alarmingly low” at one-third the average for Asia as a whole and less than one-fifth the global average (Nepal Energy Situation). Due to these circumstances, the country faced load shedding throughout Nepal due to an imbalance between electricity demand and supply. To balance this load shedding. Electricity Authority of Nepal (NEA) has designed the time schedules to cope with the peak demand and supply situation.

However, after the change of Managing Director of NEA in 2016, Mr Kul Man Ghising has taken an initiative for self-dependency and load shedding free Nepal by adding new lines to the national grid and other projects. Mr Ghising has approached in managing electrical demand and supply. Thus, eliminated load-shedding issues with uninterrupted electricity to its customers all over Nepal. Although after his commitment to self-dependency and load shedding free Nepal.

But due to lack of proper planning on how to produce electricity at cheaper rates and provide at cheaper tariffs.  Also, proper facilitation to the industries and organizations, lack of proper plan to promote electronic items to commercial and domestic customers. Not only the Nepal Electricity Authority of Nepal but also the Ministry of Finance (MoF), Ministry of Energy (MoE) and other related Ministries & Authorities have to come under the same table to discuss how the energy issues of Nepal can be solved.

 

Development and Progress of Energy in Nepal

In Nepal focusing on the energy, the issue comes up with the electricity that is generated from the flowing water from rivers and streams. According to the national census, about 75% of Nepal’s population has access to electricity. Either from the grid connections or small and rural off-grid systems. The on-grid connections are the connections governed by the NEA. Whereas off-grid connections are developed and managed by certain locality and members of a certain area to provide electricity to that locality in rural and remote areas.

To meet the demand and supply ration. NEA has developed its milestone policy but there needs to be some changes and considerations. NEA, Investment Board of Nepal (IBN), Ministry of Finance, Ministry of Energy, Nepal Hydropower Development Project (NHDP) and other non-government organizations. Like USAID, etc. have encouraged and facilitated the private sector investment in hydropower in an environmentally and socially sustainable manner. Along with these, they provide project assistance in the area of project appraisals.

Also, design and issuance of power purchase and other project agreements and transmission of transactional advisors to review and evaluate the pipeline of hydropower generation and transmission projects. These facilitation and encouragement programs can lead to improve economic growth, job creation and quality of life. As well as greater energy security due to enhanced domestic generating capacity and integration with neighboring markets. On the other hand, the energy crisis can minimize through the reduction of tariff rates on the electricity. Also reduce service charge, promote the use of electric items, promote to bring data centers in Nepal rather than set up off in foreign markets.

Steps taken to manage Electricity Crisis

Nepal has been executing energy economic measures for about two decades in different scales and at different levels. But till now, there is not any nodal organization focusing the issues of energy efficiency. And leading the process of promoting and improving energy efficiency. Even though NEA and MoE are working together on drafting new energy efficiency initiation regulatory framework. To set of energy reformation in Nepal, they need to focus on some factors as mentioned below.

Reduce Electricity Tariff Rates

The electricity rate as per March 2019 for household, kWh is Nrs. 8.786 and business or commercial purpose is Nrs. 9.212. In equivalent to the US dollar, the following price comes to be $ 0.077 per kWh for household and $0.081 per kWh for businesses with all components of the electricity bill. Such as cost of power, distribution, and taxes. When this rate is compared, it seems to be cheaper than that of the United States i.e., $0.14 per kWh for household. And $0.12 for business and commercials (Global Petrol Prices).

As Nepal Electricity Authority has initiated the plan to reduce the price of electricity on December 4, 2019. NEA planned to charge lower than Nrs. 7 to the customers bringing into a group who consume from 20 to 120 kWh units. This revise domestic tariff rates could be cheaper than the previous rates they decided on July 16, 2017. The new rates are yet to be publish to the customer’s references.

Along with this, NEA can automatically upgrade amperes for single-phase customers with upgrading amperes. Such as, 5 to 15, 15 to 30, 30 to 60 and so on with feasible service and energy charges rates so that the customers can cope with the initiation of NEA to use electric items. The service charge for three-phase customers still seems to be expensive. NEA should also revise the service and energy charges to promote electricity consumption.

Promote Investment and financing.

The energy market has a higher potential for investment and returns in Nepal. According to the UNDP surveys on potential lenders in energy sectors and the commercial banks. They are not generally interested in investing in energy due to lack of proper, separate evaluation of “long term debt financing” for energy projects. On one hand, the institutions are not readily motivated to invest in renewable energy technologies. Due to immature business market insecurity and implementation and usage risks (Vienna: REEEP Secretariat, 2012). On other hand, NEA, IBN and the Ministry of Forest and Soil Conservation (MoFSC) should not only promote electric energy production. Also, the investment on solar energy can also be the other vision in the field of renewable energy production.

Promote Electric Items

As the correspondence of the Managing Director of NEA encouraged to use more electric items to its customers. But the main core problem is lack of assurance of energy balance and price of electric items. As NEA directed its customers to increase the use of electrical applications than the non-renewable sources of energy. Like LPG, Coal, etc. as the source of energy. To bring this vision into action, NEA needs to have collaboration with other departments and concerned authorities. The cost-minimization approach should be planned and take into action by the government along with other related parties on electric items. Such as induction stove, electric geezer, electric vehicles and electric equipment that is use in our daily life.

Nepal Government has initiated electric vehicles. Such as, electric scooters, electric cars and electric buses with the collaboration of different organizations to utilize the energy in Nepal. This action is not only enough for the promotion of electric items. But, the tax reductions, tariff rate reductions for import and promotion of manufacturing of such items and applications need to be encouraged.

Promote Data Centers in Nepal

Most of the big corporate houses and organizations have their data centers in a foreign nation. This is due to the lack of proper energy management in Nepal and the cost associated with other sources of energy. Data centers require 24/7/365 real-time energy supply as well as internet services along with its infrastructures and standardizations. This is possible only when there is a proper facility for electricity. Nepal government should promote and encourage these kinds of organizations. To put their data centers in Nepal providing them the electricity at cheaper service and energy charges. Large economy that was paid for maintaining such data centers abroad can be utilized in Nepal.

Utilization of Energy in Nepal

There is still a dominance of commercial energy choices such as petroleum and coal offer certain energy in Nepal. Regardless of the nation’s huge potential of hydroelectricity. The entire energy in Nepal is a negligible part of the overall energy account of Nepal. In recent years, Nepal Electricity Authority has come up with different visions and planning. For the consumption of electricity, but NEA has not been able to fulfill its requirement. NEA is a working number of projects by the use of non-renewable energy like coal and diesel. Instead of working, utilizing such resources NEA can use an alternative source of energy. For diesel plants with its electric power with the pre-feasibility study. For example, NEA can extend its transmission line to that area. And use its electricity for the construction of its project. By doing such, NEA can save a large amount of energy and economies.

Henceforth, these initiations and alternatives can only be feasible and cost-effective. On the joint effort of the Ministry of Energy, Ministry of Finance, Investment Board of Nepal, Nepal Electricity Authority, Department of Industry and Commerce, and other related parties along with public. This energy shift can not only benefit the NEA or MoE but the overall economies of Nepal.