Nepal’s clean energy transition plan and pathway
As a landlocked country with mountainous topography and no proven fossil fuel reserve, Nepal is heavily reliant on imported energy. The dependence on imports is not only fueling the trade deficit but also putting us at an energy security risk. Nepal is among the most vulnerable countries to the effects of climate change due to its fragile topography, climate-sensitive livelihoods of people, and limited adaptive capacity. As a least developed country (LDC), Nepal has an insignificant contribution to global emissions, but it has been badly hit by the effects of climate change. And we have to tackle these effects with limited financial resources and capacity. As we plan to graduate to a middle-income country by 2026, it is crucial for us to recognize the pathway to ensure a sustainable green economy. Energy plays a major role in economic growth. We need energy in the agriculture, transportation, and industries, commercial and residential sectors. We need to account for the usage of fossil fuels in various sectors and identify ways to reduce their reliance if we are to safeguard our energy security from oil price and supply shocks. Clean energy adoption has already taken off in Nepal. Over the past decade, access to energy has substantially increased. The off-grid coverage has significantly expanded in rural and remote settings, which are being overlapped by the expanding grid. More than 95 percent of the households are electrified, and we aspire to achieve universal electricity coverage for households by 2024. Given Nepal’s complex mountainous terrain and last-mile connectivity challenges; off-grid electricity generation and distribution approaches are needed to complement grid extensions. Alternative Energy Promotion Centre (AEPC) under the aegis of the Ministry of Energy, Water Resources and Irrigation, a Direct Access Entity (DAE) of the Green Climate Fund (GCF) sees a huge potential for the green energy transition. Residential cooking/heating and fossil fuel-based transportation systems which are dominated by the usage of traditional fuel sources and LPG remains a challenge for Nepal to replace with electricity. To mitigate the impact of climate change and strengthen resilience of the most vulnerable communities to adapt to climate change, AEPC is implementing the project, ‘Mitigating GHG emission through modern, efficient and climate-friendly solutions (CCS),’ with cooperation from Green Climate Fund (GCF). The main objective of this project is to increase the use of Clean Cooking Solutions by catalyzing innovative concepts of output-based financing for de-risking investments and mainstreaming and empowering local governments in the renewable energy sector. The five year project with a total budget of USD 49.15m has an expected mitigation impact of 6.5m tons of carbon dioxide equivalent (CO2eq) with direct beneficiaries of one million households of the 22 districts (150 municipalities/rural municipalities). The project aims to install 500,000 electric cook stoves, 490,000 tier, 3+ ICS and 10,000 household biogas plants. Nepal’s power system is hydro-dominated where the demands are covered primarily by run-of-river (ROR) and peaking run-of-river (PROR) hydropower plants. The ROR projects do not have storage facilities while the PROR projects have an average of four to six hours of daily peaking storage. The lack of storage based hydropower is also one of the challenges we face. Nepal’s 15th plan aims to diversify the energy mix by maintaining reservoir and pumped-storage projects at 30-35 percent, semi reservoir projects at 25-30 percent and other alternative projects at 5-10 percent. Nepal’s storage hydro capacity development needs huge financial resources, development time, and most crucially, reliable markets, which again demand regional cooperation and joint initiative. The recent discussion on Bangladesh, India and Nepal (BIN) joint initiative is the best approach to generate investment for green energy transition in the region. It is to be noted that the targets set by the second Nationally Determined Contribution (NDC) of Nepal are mostly conditional and dependent upon the mobilization of external resources. The cost of achieving Nepal’s NDC conditional mitigation targets is estimated to be $25bn. The country needs strong political will and huge financial and technical assistance for implementing innovative and cost-effective approaches for scaling up the clean energy projects in the country for climate change mitigation and adaptation. Capacity building of various actors, as well as adoption of latest technologies and diverse business models suited to changing contexts are also essential. Technical know-how and financial assistance of development agencies will play a vital role in accelerating Nepal’s clean energy transition. Efforts from the regional bodies—BIN and South Asian Association for Regional Cooperation (SAARC), Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC)—to have green growth and green economic cooperation will also be instrumental. They will also be in concurrence with the global initiative to resolve climate change issues discussed annually in the COP climate change conference. BIN aims to formulate, implement and review quadrilateral agreements across areas, such as water resources management, connectivity of power, transport, and infrastructure. Energy cooperation is a driver for the SAARC. BIMSTEC works on technological and economic cooperation, energy, technology, environment and disaster management, and climate change among Southeast Asian countries along the coast of the Bay of Bengal. Nepal can play a vital role in the region to share its green energy resources in a timely and mutually beneficial way to the region and to the world. The author is executive director at Alternative e Energy Promotion Center
Transforming Nepal’s energy system
Nepal’s clean energy transition plan and pathway are widely recognized as a key driver to the country’s future green economic growth. The largest available renewable energy resource is hydropower with the potential of generating approximately 83,000 MW of electricity. The potential, economists and technocrats argue, could be much more if the country adopted a regional integrated approach to utilizing its hydropower capacity. The latest statistics show that access to electricity has reached more than 95 percent of the country’s population. Small-scale renewable energy resources, mainly micro- and mini-hydro, solar energy, wind energy, and bioenergy are other key sources of energy. These sources are used for electricity and clean cooking demand in far-flung areas. But the modernization of traditional fuels can contribute to the modern energy mix, which is the biggest task ahead. Cross Border Energy Trade (CBET) can have a massive impact on the clean energy transition in South Asia. With the completion of some hydro-projects, the share of clean energy will increase not only in Nepal, but also in the entire region. A simulation conducted by the state-owned agency shows that Nepal will become a net electricity surplus country by 2024 and a pure exporter of power on a yearly basis. With a domestic annual electricity consumption growth rate of 15 percent, we cannot use surplus power as we lack energy-intensive industries and electric mass-transit systems. Nepal needs to export its hydro energy to kick-start the journey of economic prosperity and decrease the swelling trade imbalance with its immediate neighbors. The immediate markets are India and Bangladesh. Regional energy trading is now a reality as Nepal has already started exporting around 400MW of electricity to India. Nepal, Bangladesh, and India are currently discussing further high-capacity connectivity for inter-country bulk power trade. The need for transitioning into renewable energy has become imperative, as countries around the world have pledged to reduce greenhouse gas emission to offset the impact of climate change. The Paris Agreement (Article 4) makes it mandatory that each party outline, prepare, and communicate their post 2020 climate actions called Nationally Determined Contributions (NDCs). NDCs are at the heart of the Paris deal and the pathway to achieving the long-term climate goals. They embody efforts by each country to reduce national emissions and adapt to the impacts of climate change. Nepal submitted its second NDC report in December 2020, outlining the country’s climate targets for the next decade. Clean energy transition for mitigating emissions remains one of the key targets. Nepal aims to expand clean energy generation to 15,000 MW, of which 5-10 percent will be generated from mini- and micro-hydro power, solar, wind and bio-energy. There is also the target of raising the sales of electric vehicles to cover 25 percent of all private transports and 20 percent of all four-wheeler public transports. And by 2030, Nepal aims to increase the sales of e-vehicles to cover 90 percent of all private transports and 60 percent of all four-wheeler public transports. Transport electrification strategies provide multi-fold benefits. They lower the demand for oil products, hence reducing reliance on imported energy resources and contributing to climate change mitigation. Clean cooking access through promotion of electric stoves is another priority. Residential cooking has been prioritized with a target set at 25 percent of households using electric stoves by 2030. Sustainable heating technologies in the residential and commercial sectors with the use of energy-efficient household appliances and state-of-the-art technologies can also save substantial amounts of electricity demand, which is better than saving in extra generation expenses. With the Long Term Strategy for Net-zero Emissions, Nepal is committed to accelerating climate action with the goal to achieve net zero emissions by 2045. But Nepal would also like to gain recognition for its mitigation contributions beyond its border through clean energy trade. Aligning with Article 4 of the Paris Agreement, Nepal formulated long-term low greenhouse gas emission development strategies (LTS) in October 2021. It will provide a realistic time frame and measures for achieving the net zero emissions goal. The key elements of LTS are to increase the use of clean/renewable power in all sectors, such as adopting clean and modern energy sources in all economic sectors, improving energy efficiency, and maximizing benefits by utilizing clean energy efficiently in residential, industrial, and transport sectors. Shifting to electric mass transportation and increasing the use of clean fuels increase carbon sinks by managing forests and natural resources in a sustainable manner. But it is important to encourage sustainable agriculture and land use management to maximize co-benefits and expand the circular economy to improve industrial sustainability, promote industrial sector modernization. Nepal should simultaneously invest in new carbon-neutral compatible technologies and systems and deploy carbon removal practices while marching towards its climate goals. The author is Executive Director at Alternative Energy Promotion Center
