Established in 1996, the Alternative Energy Promotion Centre (AEPC) is the Nepal government’s main agency for promoting renewable and alternative energy in the country. In 2018, AEPC was mandated with energy efficiency, climate finance, and collaborating with provincial governments and local levels to implement renewable energy and energy efficiency. In its 27 years of operation, AEPC has played a crucial role in promoting renewable energy and energy efficiency, by empowering local communities and institutions to implement decentralized renewable energy systems.
Nawa Raj Dhakal, Executive Director of AEPC, says that the centre has been working collaboratively to develop the alternative energy sector in the country. In a conversation with the HRM, he talked about the AEPC’s milestones, current priorities and possibilities in developing alternative energy projects. Excerpts:
The Alternative Energy Promotion Center (AEPC) has been active in promoting and popularizing alternative and renewable energy over the last two and half decades. What are the major achievements in alternative energy over these years?
AEPC was established 27 years ago with the objective of increasing energy access in rural areas and promoting modern energy solutions. The center focused on implementing projects related to micro and mini hydropower, solar energy, and bioenergy. At its peak, around 20 percent of the rural population received electricity services from the center’s initiatives, which were made possible through collaboration among development partners (DPs), government agencies, civil society organizations, and the private sector as well.
AEPC played a crucial role in coordinating with communities to develop energy solutions tailored for rural areas. The projects initiated by the center were community-owned, setting an exemplary model for other countries. As a result, the center’s work was replicated in numerous countries, contributing to global efforts in promoting alternative energy.
With the implementation of federalism, the center adapted its approach and began supporting provincial and local governments in implementing alternative energy projects. The constitution of Nepal has mandated that alternative energy is the exclusive responsibility of local levels, and the center is utilizing its experience to assist the local levels in the planning, development, and implementation of alternative energy projects.
What are the major milestones for AEPC in these 27 years?
Before the establishment of AEPC, various energy programs were carried out by different authorities. The Department of Forest implemented the Improved Cooking Stove Program, primarily aimed at conserving forests. The Department of Agriculture was responsible for the biogas program, which aimed to utilize biofertilizers produced by Biogas Plants. The Rural Electrification Program promoting micro-hydro and solar was managed by the Agriculture Development Bank Ltd. The establishment of AEPC helped consolidate all these programs under one umbrella, allowing for a more coordinated approach.
To name a few major programs, the Biogas Support Program (BSP), which received support from the governments of the Netherlands and Germany, came under AEPC. This program was initiated in 1992 and continued until 2012. Likewise, the Rural Energy Development Program supported by UNDP and the World Bank, previously under the Ministry of Local Development, also came under AEPC. It operated from 1996 to 2011. This program placed stronger emphasis on the community-led approach to the development of renewable energy projects in 2011, the program’s modality was changed, and it was renamed Renewable Energy for Rural Livelihoods (RERL). REDP focused on institutionalizing the planning and implementation of renewable energy projects under the district and village development committees taking the micro-hydro projects development as the entry point.
In 1999, the Energy Sector Assistance Program, supported by Denmark, was launched under AEPC. Later, Norway, KFW (Germany), and UK Aid also provided support to the program, which ran until 2012. Through this program, the center worked on micro hydropower, solar energy, and improved cooking stoves. Similarly, the Renewable Energy Project, supported by the European Union, was implemented from 2003 to 2011 and the Improved Water Mill Support Program supported by SNV was implemented between 2003 to 2008.
By 2012, both the center and the development partners recognized the need for unification and consolidation of program implementation modality. As a result, the National Rural and Renewable Energy Program (NRREP) was launched, with a budget of USD 170 million. This program operated from 2012 to 2017 and received support from Denmark, Norway, UK Aid, the German Development Cooperation (KFW and GIZ), the Asian Development Bank (ADB), the World Bank, UNDP, and other partners. However, during the implementation of NRREP, Nepal experienced a devastating earthquake, which temporarily halted program activities, and there were mixed learnings.
Then, the center implemented the Post-Earthquake Support Program from 2015 to 2017 focusing on relief and rehabilitation efforts. Under this program, damaged micro-hydro and biogas systems were reconstructed, and Solar lighting and improved cooking stoves were provided to those affected by the earthquake. This experience helped the center gain valuable insights into disaster response and relief efforts. As a result, the center continues to provide assistance to those affected by annual floods and landslides.
After 2017, NRREP continued as the AEPC’s flagship program with support from development partners and flexible modalities, and earmarking of the support from various development partners has been adopted.
In 2019, AEPC got accredited as Nepal’s first direct access entity to the Green Climate Fund (GCF). This allowed the center to develop climate-related projects and mobilize resources from GCF, as addressing climate change has become a global concern. To combat carbon emissions, which contribute to climate change, it is crucial to promote renewable energy and energy efficiency. The center aims to achieve this by utilizing the funds provided by the GCF.
AEPC’s annual budget has been declining over the years. Why the budget size is decreasing?
Following the start of the implementation of a federal system of governance in 2017, the responsibility for allocating the budget for alternative energy also shifted to local and provincial governments. As a result, the budget for AEPC’s programs, such as the National Rural and Renewable Energy Program (NRREP), was reduced by around 40 percent in that year compared to the previous year, with the funds being allocated to all three tiers of government. The current working modality involves the center utilizing its experience and expertise to assist and capacitate local and provincial governments in implementing alternative energy projects.
In the current fiscal year, the budget for the Alternative Energy Promotion Center stands at Rs 2.76 billion. This represents a significant reduction compared to previous years, and the decrease in development partners’ assistance has further contributed to the decline in our budget. The major development partners for various ongoing programs include UK Aid for the Nepal Renewable Energy Project (NREP), the World Bank for the Mini Grid Energy Access Program, the Asian Development Bank (ADB) for the implementation of the South Asia Sub-regional Economic Cooperation (SASEC) Power System Expansion Project, KFW for promoting solar energy in rural and semi-urban areas, GIZ for Renewable Energy and Energy Efficiency Program, and UNDP and Japan government for Renewable Energy for Rural Livelihoods (RERL) Program. However, support from Japan for RERL Program has recently ended, resulting in the downsizing of the program.
The Viability Gap Funding-based support that AEPC has initiated under the Sustainable Energy Challenge Fund with the help of NREP is going to be the game changer for adopting new modalities in the days ahead. Also, starting from the next fiscal year, the center will begin implementing the Clean Cooking Solutions project funded by the Green Climate Fund.
Recently, the AEPC received Rs 2.55 billion in funding from the GCF of the United Nations. How this fund will be utilized and for which program?
Starting from the next fiscal year, AEPC will begin working on clean cooking solutions to mitigate greenhouse gas emissions. The center became Nepal’s first direct access entity to GCF. In October 2021, the center received approval to implement its first project, which will commence in the next fiscal year. The project is planned to span five years with a total budget of USD 49.2 million, of which the Green Climate Fund has allocated USD 21.2 million in grants. The remaining funding will come from federal and local governments.
The project aims to provide clean energy solutions in 22 districts of the Terai region, targeting 150 local levels. Various clean cooking technologies will be deployed, including electric stoves, biogas, and improved stoves. In areas where electricity access is available, priority will be given to promoting electric stoves. The Nepal Electricity Authority has advised scattered implementation of electric cooking to avoid potential overload issues. For areas where cattle rearing and land availability are prevalent, support will be provided for biogas systems. Families who are unable to opt for either of these options will receive improved stoves. The identification of the appropriate clean cooking technology for each family will be carried out together with the local government.
The first year of the program will focus on identifying the needs of local levels and preparing the municipal energy plans accordingly. The second, third, and fourth years will be dedicated to implementing the core activities of the project, and the fifth year will involve wrapping up activities. Overall, the program is expected to benefit one million families by providing them with access to clean cooking solutions. This will reduce the use of traditional biomass and imported LPG contributing towards improved modern energy access, trade balance, and energy security.
With a surge in electricity generation along with increased grid connectivity in the last few years, access to electricity has increased considerably across the country but alternative energy projects have become shadowed. As the country aims to ensure 15 percent of the total energy demand is supplied from renewable energy, how important is it to maintain the energy mix?
Currently, 96 percent of the population in Nepal has access to electricity, with only four percent still lacking such access. For the electrification of the remaining areas, AEPC is closely coordinating with the Nepal Electricity Authority (NEA) to identify the areas where there will be no immediate grid expansion and such areas will be electrified by the center through off-grid energy solutions. AEPC and NEA are working hand-in-hand on completing this task within two years. If the availability of resources does not emerge as an issue, AEPC is ready to accomplish its part within two years.
The center emphasizes the need for Tier-3 Level of energy access, as per the Multi-Tier Framework (MTF), both in electrification and clean cooking.
The center has supported the development of micro and mini hydroelectric projects. When the national grid is expanded in the vicinity of such projects, AEPC prioritizes that these projects are connected to the national grid by the NEA. The center’s focus now is to ensure the power generated by these projects is effectively connected to the grid.
In order to meet the energy needs of the commerce and industrial sector that requires a reliable and uninterrupted power supply, the center is supporting them in developing small-scale grid-connected projects with a capacity of less than 1 MW that meets the partial energy demands, say 10 to 20 percent or so, of their own. While this may seem limited, it contributes to the improved quality and reliability of Nepal’s energy sector, and increase the contribution of small-scale renewable energy projects in the overall energy mix.
Nepal primarily relies on hydroelectric power, but given the global concerns regarding climate change, and climate-induced problems as well as natural disasters, the country needs to diversify its energy sources. Climate change predictions indicate a potential rise in temperature by two percent by 2100, leading to the melting of snow in the mountains and decreased river flow. To prepare for such scenarios, Nepal needs to harness its solar energy potential, as it experiences a high number of sunny days (300 days in a year) and long daylight hours (an average of 6.8 hours of sunshine).
The potential for solar energy generation is significant, including the possibility of adopting emerging technologies such as floating solar power projects, canal-top solar projects, agri-voltaics, and solar rooftops Therefore, the development of solar energy needs to be prioritized in hand-in-hand with hydropower development for sustainability and resilience of Nepal’s energy sector.
Wind energy is another viable alternative, as it has already become cheaper than hydropower in many countries. However, due to difficult geography, lack of good road access, and unavailability of long-term data on wind speed has become the major hurdle to the development of wind energy in Nepal. Districts such as Mustang, Accham, and Panchthar, where wind conditions are favorable, could invite private sector investments in developing wind power projects.
The recent floods in eastern Nepal damaged 20 large-scale hydroelectric projects and 31 micro-hydro projects. This highlights the importance of developing distributed, resilient, and clean energy sources. To ensure resilience, the center suggests long-term investments in solar and wind energy, which can be developed away from disaster-prone areas.
What are the key priorities of AEPC currently?
The top priority of AEPC is universal electricity access in the country. The last mile electrification plan that NEA and AEPC are implementing jointly, complementing each other, is serving as the basis for fully electrifying the remaining areas. Regular updating of the plan and partnering with provincial and local governments as well as other stakeholders need to be enhanced for the timely achievement of 100 percent electricity access. Grid connection of mico mini-hydropower and solar mini-grid projects is also a priority for enhancing the quality and reliability of the electricity supply.
Another priority area is clean cooking for all. The recent census report shows that the population relying on traditional biomass and LPG is 54 percent and 44 percent respectively. We need to promote electric cooking and biogas for clean cooking. Also, improved cooking stoves are the intermediate solution for households who can’t switch to electricity and biogas immediately.
Another priority area for AEPC is waste-to-energy. At-source segregation of waste is essential to effectively utilize its potential to generate biogas and organic fertilizer and for the ease of handling the waste. The biogas produced from large biogas projects can have diverse end uses including generating electricity, bottling to replace LPG, supplying to households through pipelines for cooking, and using as vehicle fuel.
In addition to biogas, biomass briquettes, and pellets are other sustainable alternatives. Biomass pellets produced from loose biomass including agriculture residue and forest waste can substitute imported dirty coal in the industries. This is an area that we need to explore further in partnership with the private sector and local communities to enhance the use of clean energy and contribute towards energy security.
Promoting productive use of energy in micro small and medium enterprises is also a priority to boost the local economy and to generate employment opportunities at the local level. We aim to assist industries in transitioning from coal-based energy sources to electricity. This shift not only reduces carbon emissions and environmental impact but also promotes sustainable practices within the industrial sector.
As we work towards increasing power consumption in the domestic market, our attention is to increasing electricity consumption in domestic, transport, business, and industrial sectors. This demands mainstreaming energy efficiency initiatives in all sectors. For the transition towards clean energy, we need to work in parallel for modern energy access, energy mix and increasing the quality, reliability and resilience of the energy system in Nepal.
We also prioritize building effective collaboration among concerned partners and stakeholders including provincial and local governments and the private sector, build the capacities of national and local level stakeholders, and mobilize resources for achieving the goals set by the government.
