Despite immense potentials for electricity generation, Nepalis have to suffer long hours of power-cuts. This affects its industrial output as well, which in turn makes Nepal a less attractive destination for foreign investments. To come out of the current mess, experts offer many models but the problem is they donâte agree on which one to pursue in what degree. In this cover story, New Business Age unravels the industry and the roadblocks.

 

Nepal's current energy situation is in dire straits, to say the least. Despite its potential to be a credible power producer even to the extent of exporting surplus energy, it has miserably failed at meeting its own domestic demand. A mammoth 68 per cent of our energy needs are met by exploiting forest resources which has resulted in reducing Nepal's forest area to a mere 30 per cent. If deforestation continues at the current rate, one should not be surprised if we have no forests to talk about in the next three to four decades.

 

With increasing population, Nepal will not be able to fulfil its energy requirements if it depends so heavily on the declining forest resources. The consumption of petroleum products has grown incredibly over the past decade-and-a-half so much so that we spend more money on importing petroleum products than we earn by our total exports. “Nepal will have to take a World Bank loan in 2020 only to buy petrol fuel if its import continues unabated in the present manner and that will be a total disaster, says Dr Jagan Nath Shrestha, Professor and Council Member at Centre for Energy Studies, Institute of Engineering, Tribhuvan University. 

 

Nepal still does not have its own reserves of gas, coal or oil in economically significant quantity. Although its most significant energy resource is water, less than one per cent of hydropower potential is currently harnessed. Nepal is extremely lucky in terms of clean water over 225 billion cubic metres of water flows down its rivers every year which is approximately 20,000 litres of water per person per day. Even if Nepal was an aggressive agro-economic country, it would consume less than 5,000 litres per person per day. Looking at this surplus, Er Gyanendra Lal Pradhan, Executive Chairman of Hydro Solutions Pvt Ltd, says, “I see no reason why we should not exploit our water resources for meeting domestic water needs as well as exporting the daily per capita surplus of 15,000 litres of water.”

 

It's no secret that Nepal's economic and social development is critically hampered by its inadequate energy supply. Moreover, developing and exporting surplus energy resources can help develop other sectors and enable the country to import other products that cannot be produced indigenously.

 

Energy Mix

The total energy consumption of Nepal currently stands at over 10 million tonnes of oil equivalent (TOE). While close to 90 per cent energy is derived from traditional resources, the rest comes from commercial and renewable sources. Nepal’s electricity generation is dominated by hydropower and only one per cent energy need of the country is fulfilled by electricity. Bulk of the energy need is dominated by fuel wood (68 per cent), agricultural waste (15 per cent), animal dung (8 per cent) and imported fossil fuel (8 per cent).

 

Energy Consumption

Energy mismanagement has been plaguing the country for a long time now. It has become absolutely important to focus on energy resources that promise sustainable supply. “The total energy availability and the accessibility, impact and applicability of renewable energy are ever so growing because energy consumption of electronic devices has come down to from about 1/4th to 1/100th,” claims Dr Shrestha. He adds that people have to become conscious about and inculcate a habit of conserving energy. For example, every kilowatt hour (kWh) of energy saved is equivalent to one kWh generation.

 

The overall energy consumption in Nepal is largely dominated by the use of traditional and non-commercial forms of energy such as fuel wood, agricultural residues and animal waste. The remaining energy consumed comes through commercial sources such as petroleum fuels, coal and electricity and renewable sources. It would be worthwhile to mention here that the share of commercial sources in Nepal’s overall energy consumption has increased considerably in the last decade-and-a-half. The renewable energy consumption has been registering an annual growth of more than 15 per cent on an average. And, within the renewable energy system, solar energy consumption is increasing at a more-than-steady 200 per cent annually.

 

A staggering 18 million metric tonne of forest timber is cut every year while experts say that the sustainable level is only half of it. There are 5.8 million households in Nepal but only 400,000 households use Improved Cooking Stoves (ICS). These households using fuel-efficient stoves save half the energy. Barring the urban areas where ICS cannot be brought to use, a good 3 million households in rural Nepal can benefit from this improved technology. If this endeavour could be pursued in a focused manner, the consumption of timber-for-fuel can come down to half i.e. 9 million metric tonne in the next three to five years. This could help the forests grow and make the forest usage more sustainable.

 

The new boundary of Traditional Energy Resources (TER) has extended beyond the territory of forestry. Biomass is the major source of energy, particularly in rural Nepal as availability of biomass resources for energy production exists in abundance. The new territory of bio-energy now encompasses agriculture, livestock, industry and human settlement sectors as well. However, the use of some traditional energy sources is neither sustainable nor desirable from environmental considerations.

 

More than 300,000 households use solar electricity in Nepal whereas an average of four-five kWh per square metre per day of solar energy can be generated in Nepal. The solar dryers have extensive use in the rural areas for drying of agriculture products and food. Solar Cookers are being used to cook food which saves fuel and helps deforestation to slow down. For a large part of the rural population consuming low electrical energy, there is no viable alternative to solar electricity. Besides, solar electricity generating systems do not need fuel or extensive infrastructure and are easy and quick to install.

 

Water is plentiful in the rugged hills of Nepal and micro-hydro provides a more practical and cost effective alternative. An estimated 150,000 households benefit from the micro hydro sector in Nepal and it has greater potential to be a major source of energy in the rural areas.

 

The hydropower sector has made some progress indeed over the last five years or so. The private sector has come forward promising to develop 2,000 MW while the government has projects for 600 MW under construction and another 250 MW has been added recently. “We are certainly not late in identifying the sector’s immense potential but we must make it work now to ensure that we are not behind schedule in the future, Pradhan says on a cautious note. He adds, “This country will collapse if we don’t export hydropower in the near future because we have so much to import for which we need to pay through exports.

 

However, the present situation is that Nepal has developed approximately 600 MW of hydropower only. Therefore, the bulk of the economically feasible generation has not been realized yet. Although bestowed with tremendous hydropower resources, only about 40 per cent of Nepal's population has access to electricity. Most of the power plants in Nepal are run-of-river type with energy available in excess of the country's demand during the monsoon season and deficit during the dry season.

 

Looking at the energy consumption pattern of the world, Nepal has one of the lowest energy consumption levels. An average of 15 gigajoule (GJ) per capita is the minimum that a country can think of. Out of this 15 GJ, most of the energy is spent on cooking and thermal applications. Dr Shrestha analyses the situation thus: Nepal's electricity consumption is probably one of the lowest in the world, hitting our economic activities hard. We are facing the consequences because of low production levels in this country.

 

The residential needs account for the major share of energy consumption (89.1 per cent), followed by transport (5.2 per cent), industry (3.3 per cent), commercial (1.3 per cent) and then the agricultural sector and others. Due to inadequate numbers of energy intensive industries, the industrial sector holds the third position in Nepal’s total energy consumption.