Energising Development (EnDev) 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 Germany, the Netherlands, Norway, the United Kingdom, Switzerland and Sweden
Country: Nepal
Lead executing agency: Ministry of Energy
Overall term: 2009 to 2018

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 city dwellers benefiting from a connection compared to just 61 per cent of the rural population. People in rural areas still rely heavily on traditional sources of energy, and many use kerosene lamps and candles for lighting. The shortfalls in the power supply also curtail opportunities for education and quality health care, as well as access to information and the potential for income generation.

Objective
More than 330,000 people, about 3,200 micro, small and medium-sized enterprises (MSMEs) and more than 700 social institutions have access to sustainable, modern energy services for lighting or other electrical appliances. In addition, around 148,500 people have access to better cooking technology.

Approach
This project is part of Energising Development (EnDev), a global, multi-donor energy partnership which aims to provide 20 million people worldwide with access to sustainable energy services by 2019. It is a results-oriented global programme, collectively financed by Germany, the Netherlands, Norway, the United Kingdom, Switzerland and Sweden. The respective governmental institutions are the German Federal Ministry for Economic Cooperation and Development (BMZ), the Directorate-General for International Cooperation of the Dutch Ministry of Foreign Affairs (DGIS), the Norwegian Ministry of Foreign Affairs (MFA), the UK Department for International Development (DFID), the Swiss Agency for Development and Cooperation (SDC) and the Swedish International Development Cooperation Agency (SIDA).

EnDev Nepal supports access to modern energy services through grid-based electrification, as well as access to financing for micro hydropower projects, and it promotes the productive use of electricity. Grid-based electrification contributes to the Ministry of Energy’s community-based rural electrification programme, run by the national utility, Nepal Electricity Authority (NEA). The communities are bulk customers of NEA. They are responsible for running the local distribution network, 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 can 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. Furthermore, it supports the productive use of electricity at the local level, in order to stabilise the financing model for the communities and promote business opportunities. To this end, the project cooperates with HELVETAS Swiss Intercooperation and NACEUN, the local umbrella organisation for the community electrification entities.

As well as extending grids, EnDev Nepal also cooperates with NEA in a pro-poor grid densification component. This is intended to support households with direct incentives channelled through the community micro-utilities. The micro-utilities identify users who have so far declined access to electricity due to the high initial connection costs, and connect them to the existing grid for a reduced connection fee. When a new customer is connected, the incentive is claimed by the respective micro-utility.

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 for what have traditionally been considered ‘risky projects’.

Another area of activity, primarily in the most remote villages, is the electrification of traditional, mechanical watermills. In this measure, existing watermills are technically improved to generate electricity, which is distributed to the village. This EnDev component is implemented in cooperation with SNV, the Dutch non-governmental organisation for international development.

Using a results-based financing mechanism, the project supports efforts to encourage the wider uptake of improved cooking stoves, some of which are also installed with smoke hoods. The cooperation partner for this is Practical Action Nepal. Producers receive training, and market development plans are created for each project district. Technicians receive a subsidy for each successfully installed stove. The project now also pursues the distribution of portable improved cooking stoves in earthquake-prone areas.

Results
To date, more than 200,000 people have gained access to electricity through the grid and through hydropower facilities. Some 600 social institutions have been connected to the electricity, as well as nearly 3,000 MSMEs. The severe earthquake in April 2015 had a major impact on efforts to distribute the improved, energy-efficient cooking stoves. Around 63,000 people have been reached so far.

Electrification has helped to create additional income-generating opportunities, for instance through rice mills, timber processing plants and poultry farms. Some 15 business service providers have benefited from training and now offer services and advice on the commercial use of electricity. Meanwhile, EnDev’s capacity building activities have improved the level of understanding in community organisations regarding the productive uses of electricity. These organisations have also shown a willingness to provide business incentive packages with subsidised tariffs.

The developers of 26 micro hydropower plants have so far benefited from financial support through the micro hydro debt fund run by the two commercial banks. Since the earthquake of 2015 many of these plants have reopened, with 18 in operation as of December 2016. The rest are set to reopen after having received support for their rehabilitation from the Alternative Energy Promotion Centre.

Feasibility studies have been completed for 17 upgraded watermills for power generation. Nine of these are already being installed.

Contact

Jaime Sologuren
jaime.sologuren@giz.de