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