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World Small HydropoWer development report 2013
www.smallhydroworld.org
NEPAL
Published in 2013 by United Nations Industrial Development Organization (UNIDO) and International Center on Small Hydro Power (ICSHP).
2013 © UNIDO and ICSHP
All rights reserved
This report was jointly produced by United Nations Industrial Development Organization (UNIDO) and International Center on Small Hydro Power (ICSHP) to provide information about small hydropower. The document has been produced without formal United Nations editing. The designations employed and the presentations of the material in this document do not imply the expression of any opinion whatsoever on the part of the Secretariat of UNIDO and ICSHP concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries, or its economic system or degree of development. Designations such as “developed”, “industrialized” and “developing” are intended for statistical convenience and do not necessarily express a judgement about the stage reached by a particular country or area in the development process: Mention of firm names or commercial products does not constitute an endorsement by UNIDO or its partners. The opinions, statistical data and estimates contained in the articles are the responsibility of the author(s) and should not necessarily be considered as reflecting the views or bearing the endorsement of UNIDO and its partners.
While every care has been taken to ensure that the content is useful and accurate, UNIDO and ICSHP and any contributing third parties shall have no legal liability or responsibility for the content or the accuracy of the information so provided, or for any loss or damage caused arising directly or indirectly in connection with reliance on the use of such information.
Copyright: Material in this publication may be freely quoted or reprinted, but acknowledgement is requested, together with a copy of the publication containing the quotation or reprint.
Recommended citation: Liu, H., Masera, D. and Esser, L., eds. (2013). World Small Hydropower Development Report 2013. United Nations Industrial Development Organization; International Center on Small Hydro Power. Available from www.smallhydroworld.org.
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1
3 Asia 3.3 South Asia
3.3.6 Nepal Madhu Prasad Bhetuwal, Department of Electricity Development, Ministry of Energy, Nepal Key facts
Population 26,494,5041
Area 147,181 km2
Climate Varies from cool summers and severe winters in north to subtropical summers and mild winters in south.
2
Topography Tarai or flat river plain of the Ganges in south, central hill region (lowest point: 64 m), rugged Himalayas in north (highest point: Mount Everest, 8,850 m).
2 3
Rainfall pattern
Two rainy seasons, one during summer from June to September that brings around 80 % total annual rainfall and the other in the winter. Most part of the country experiences annual rainfall in the range of 1,500 mm to 2,500 mm. The rainfall variations in the different areas of the country ranges <250 mm in the Northern central portion near the Tibetan Plateau and 6,000 mm along the southern slopes of the Annapurna Himalayan ranges.
3
Electricity sector overview The Nepal Investment Board (NIB), the Ministry of Energy (MoE), the Department of Electricity Development (DoED), Nepal Electricity Authority (NEA), and the Alternate Energy Promotion Centre (AEPC) are responsible in the development of electricity sector. The NIB deals with hydropower project (HEP) with installed capacity of 500 MW or more. The DoED is a regulating and promotional body under the MoE that deals with projects having an installed capacity between 100 kW and 500 MW. The AEPC deals with projects less than 100 kW. The NEA, a government owned enterprise, is the main responsible organization for generation, transmission and distribution of electricity. Electrification rate in the grid connected area is 14.46 per cent.
4 As of 2011,
the NEA has more than 2.32 million consumers, out of them 94.94 per cent are domestic consumers.
4 It is
estimated that 42 per cent of the population have access to electricity in the grid connected areas.
4 In
off-grid areas, small hydropower and micro hydropower projects are the primary source of electrification. A recent survey revealed that the main source of lighting (67.26 per cent) of households is electricity.
1 Some of small and micro hydropower
projects are constructed and operated by the NEA and private sector.
Nepal is blessed with an enormous hydropower potential of 83,000 MW but less than one per cent of its potential has been harnessed for generating electricity so far.
5 The power demand has remarkably
grown at an average annual growth rate of 8.5 per cent.
4 Despite the growing electricity demand, the per
capita electricity consumption is very low (86 kWh/year).
4 The total installed capacity of electricity is
merely 750 MW of which 746 MW is grid connected.6
The estimated grid connected energy demand in fiscal year 2011/12 was 5,194.78 GWh, out of which 3,041.93 GWh energy was sold. With system loss of 26.43 per cent, the total volume of supplied energy in the integrated Nepalese Power Supply (INPS) grid was 4,178 GWh energy in fiscal year 2011/12.
4 In order to
manage exceeding power demand with limited supply, 746.07 GWh (17.8 per cent) energy was imported from India in the fiscal year 2011/12 and power cuts as well as rationing resulting in nearly 12 hours load shedding per day in the winter season have occured.
4
Small hydropower sector overview and potential Nepal adheres to the generally accepted small hydropower definition of an upper capacity limit of 10 MW. There are 20 small hydropower projects in Nepal with an aggregated installed capacity of nearly 70 MW (figure 1). The total annual energy generated from these projects is about 490 GWh. Out of these 20 small hydropower plants, 12 plants were built on a BOOT (Build-Own-Operate-Transfer) basis and are operated by Independent Power Producers (IPPs).
Table 1
Installed small hydropower capacity in Nepal
Ownership Number of
projects
Installed capacity
(MW)
By private sector on a
Build-Own-Operate-
Transfer basis
12 49.850
By public sector 8 20.062
Total 20 69.912
There are no small hydropower potential studies so far for Nepal. The theoretically and techno-economically viable hydropower potentials for Nepal have been estimated at 83,290 MW and 42,110 MW respectively. The summary of the same in various major basins is given in table 2 below.
Figure 1 Small hydropower capacities in Nepal Source: Nepal Electric Authority
7
1430 MW
70 MW
0 500 1000 1500 2000
SHP potential
SHP installed capacity
2
Table 2
Hydropower potential in Nepal
(Megawatts)
Name of basin Theoretical potential Technically feasible
Sapta Koshi 22 350 10 860
Sapta Gandaki 20 650 5 270
Karnali-Mahakali 36 180 25 100
Southern Rivers 4 110 880
Total 83 290 42 110
Keeping in mind increasing competency, effectiveness, managerial capacity and financial resources of the private sector and the country’s urgency to divert financial resources to other non-commercial sectors (e.g. health, education, social, security etc.), the Government of Nepal has adopted a liberal economic policy. As a consequence, Hydropower Development Policy (HDP), 1992 was approved and accordingly Electricity Act (EA), 1992 and Electricity Rules (ER), 1993 were enacted to motivate national and foreign private sector investment for the development of hydropower. Consequently, the private sector has become interested in the development of small hydropower and the previously active role of the public sector in the construction of small hydropower has been reduced. 22 small hydropower projects with a total installed capacity of 98.344 MW are currently being built by private developers.
6 Similarly, in various parts
of the country, several private companies currently are investigating and preparing feasibility studies of 155 small hydropower projects with a total estimated installed capacity of about 878.992 MW.
6 With the
expansion of infrastructure facilities (road and transmission lines), emergence of domestic developers as well as commercial banks in the power sector and a conducive environment to small hydropower development, the number of small hydropower projects is expected to increase in the near future. Renewable energy policy
The Government of Nepal approved a new Hydropower Development Policy in 2001.
5 Some of its
objectives are:
To develop hydropower projects on a competitive basis with the BOOT scheme (e.g. provision for generation license for 35 years for domestic project);
To follow a transparent process in attracting national and foreign investment (e.g. Guidelines and directives have been prepared and published);
To provide appropriate incentives (e.g. exemption of Value Added Tax (VAT) for machines, equipment, spare parts and penstock pipe, custom duty reductions for imported small hydropower related machinery or equipment, income tax holidays for first 10 years from project
commissioning date and thereafter 50 per cent for next five years);
To mitigate or avoid possible adverse environmental impacts and to make appropriate provisions to resettle the displaced families (for instance enactment of Environmental Act, Land Acquisition Act);
To encourage local level participation in small and mini hydropower projects for electrification of remote rural areas;
To establish a Rural Electrification Fund (REF) in order to make electric service available to many people;
To control unauthorized leakage of electricity with necessary technical measures and appropriate legal provisions;
To encourage the utilization of electric power during low demand hours;
To provide appropriate benefits at the local level while operating hydropower projects;
To make proper provisions to cover risks likely occurring in hydropower projects;
To restructure the existing institutions in the public sector to create a competitive environment, by encouraging the involvement of community/cooperative institutions, local bodies and the private sector in the generation, transmission and distribution of hydropower in order to extend a reliable and qualitative electricity service throughout the country at a reasonable price;
To safeguard the consumers' interests by providing reliable and qualitative electricity service to the consumers at a reasonable price;
To make rational and transparent process for electricity tariff fixation for reasonable electricity price;
To give more priority to utilize national labour and skills in the implementation of hydropower projects.
To establish an institution to impart training within the country to produce skilled human resources for the development of hydropower, to enhance the capability of those involved in this sector and to carry out studies and research works related to hydropower development.
Legislation on small hydropower The Electricity Act (EA) and Electricity Rules (ER) are the prime Acts and regulations. There is a two-stage licensing system in the power sector. In the beginning an applicant gets Survey License for Electricity Generation (SLEG) on the basis of first come first served basis, provided the applicant submits all the requirements in the stipulated time and carries out field investigation to prepare feasibility and environment study reports. After completing necessary studies, the applicant then applies for a Generation License within the valid SLEG period.
3
Besides, EA and ER, there are Environment Protection Act (EPA), 199; Income Tax Act, 2058; VAT, 1996; Foreign Investment and Technology Transfer Act, 1992; Forest Act, 1993, Water Resources Act, 1992; Bonus Act, 1974; Land Acquisition Act, 1977; Local Governance Act, 1999; Company Act, 2006 and their corresponding rules also relevant for the development and operation of the small hydropower. Barriers to small hydropower development There are numerous barriers constraining hydropower development in Nepal. A lack of political stability, good governance and law and order issues are important factors hindering progress and economic growth. Besides these, lack of firm transmission development plan, frequent changes of ministers and the government, frequent changes of working guidelines, lack of inter-governmental agency co-ordination, overlapping job responsibilities among various government intuitions, prolonged processes and procedures for environmental clearances from the government and a long list of excessive local demands have been posing a major threat to small hydropower development in Nepal. References 1. The Central Bureau of Statistics (2012). National Population and Housing Census. 2. Central Intelligence Agency (2012). The World Factbook. Available from www.cia.gov/library/publications/the-world-factbook/. 3. Water and Energy Commission Secretariat (2002). Water Resources Strategy Nepal. 4. Nepal Electricity Authority (2011). Distribution and Consumer Services Business Group, West. A year in Review, fiscal year 2010-11 of Nepal Electricity Authority. 5. Nepal, Ministry of Water Resources (2001). Hydropower Development Policy. 6. Nepal, Department of Electricity Development (2012). ‘Issued licences’. Home Page, Department of Electricity Development, Government of Nepal. Available from www.doed.gov.np/. Accessed February 2013. 7. Tamrakar, Surya Ratna, Nepal Electricity Authority 2011). Nepal survey for International Center on Small Hydropower answered December 2012.
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