Minihydro to boost local economic growth The case of Nepal

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Cory Thomas
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1 Minihydro to boost local economic growth The case of Nepal Clara Kayser-Bril for T.A.C.E.C. Workshop Milano July 9 th 2014

2 Nepal s hydropower potential Potential 40 GW Installed 1 GW 2 Photo : Clara KB

3 Electricity in Junbesi village 3 Photo : Clara KB

4 Electricity in Junbesi village Penstock & powerhouse Intake & channel 4 Photo : Clara KB Photo : Clara KB

5 Electricity in Junbesi village Mill Generator 5 Photo : Clara KB

6 Pico-micro-hydro in Nepal 2700 villages equipped with pico-microhydro 6 Data from Nepal s Alternative Energy Promotion Center

7 Financing scheme for pico-microhydro Typical financing scheme (investment) 40% Subsidies 30% Loans 10% VDC/DDC 20% Locals Typical investment cost: $4,500/kW Typica l contribution from locals: $150/household 7 Derived from interviews with Nepal s Alternative Energy Promotion Center

investment cost: $4,500/kW Typica l contribution from locals:

Typical use of energy Kerosene 1% Back-up lighting Others 2% Biogas, LPG, coal, batteries etc Microhydro 2% Lighting TV, radio Phone charging Biomass 95%

8 Typical use of energy Kerosene 1% Back-up lighting Others 2% Biogas, LPG, coal, batteries etc Microhydro 2% Lighting TV, radio Phone charging Biomass 95% Cooking Heating 8 Typical elec consumption: kwh/month/family Average energy mix of microhydro-connected rural household Data from World Bank AEPC 2009 survey

Cooking Heating 8 Typical elec consumption: 10-20 kwh/month/family Average

9 Direct impact on economic activities 9 Example: Rural Energy Development Programme (UNDP, WB, Nepal Govt) Total cost $35 million 5.5 MW of communitymanaged micro- and mini-hydro power plants Bringing electricity to 275,000 people (42,828 households) Data from UNDP report «Energy to move rural Nepal out of poverty: the REDP model», micro-enterprises recorded in programme areas (total number of established microenterprises probably exceeded 500).

5 MW of communitymanaged micro- and mini-hydro power plants Bringing electricity to 275,000 people (42,828

10 Electricity for tourism 10 Photo : Clara KB

11 Typical load curve Installed capacity Load (kw) «Wasted» energy Morning Daytime Evening Time Load factor ~ 20% 11

12 Increase consumption for tourism? More electricity for tourism => increase of morning/evening peaks Load shedding Load factor decreases 12

13 Increase day-time consumption Load (kw) «Wasted» energy is reduced Installed capacity Morning Daytime Evening Time 13

14 Electricity for poultry farming 14 Photo : Dilli Ghimire

15 Quality and reliability of supply 15 Photo : Clara KB

16 Other obstacles Access to markets Transportation Business connections Access to finance Informal loans from family, neighbours Microcredit through local savings and credit cooperatives 16 Photo : Clara KB

loans from family, neighbours Microcredit through

17 Durlung Khola small hydropower project Proposed Durlung Khola SHP : 800kW, 5.1GWh annually Power distribution : through existing 11kV grid Surplus energy sold to Nepal Electricity Authority Reliable power supply for economic activities Better electricity access for rural households 17

1GWh annually Power distribution : through existing 11kV grid Surplus

18 Durlung Khola small hydropower project Integrated approach Capacity is sufficient to run many small businesses Quality and reliability of supply are improved Access to finance: microcredit through the Cooperative s existing network Access to markets: dirt road to Kathmandu Capacity building of operators with Electriciens Sans Frontieres Capacity building of local entrepreneurs with PlaNet Finance 18

Cooperative s existing network Access to markets: dirt road to Kathmandu Capacity building of

19 Durlung Khola small hydropower project Grant from Alstom $130k SLREC contribution $46k DDCs & VDCs $93k Local population $46k Proposed financing plan Local contribution up to 10% of total costs 55% as debt International support Debt $1150k Discussion on-going with investors $625k 19

financing plan Local contribution up to 10% of total costs 55% as debt

20 Conclusion Small hydro a key enabler for economic growth BUT other factors must be considered: Limited capacity Quality and reliability of supply Access to markets Access to finance All the obstacles must be identified and addressed Productive end-uses to be considered from the onset, not as an afterthought 20

to markets Access to finance All the obstacles must be identified and

21 Thank you for your attention

22 Further reading Microhydro s impact on income in Nepal: Assessment of Rural energy development Programme (REDP) Impacts and its Contribution in achieving MDGs Survey of microhydro-connected households and businesses: Power and People: the benefits of renewable energies in Nepal Namche Bazaar minihydro boosts tourism: Evaluation of Small Hydro Projects in Namche Bazaar (Nepal) and Rangjung (Bhutan) Salleri Chialsa minihydro scheme: Power plant extension of Salleri Chialsa electricity company (SCECO) Proposed Durlung Khola small hydropower project: Project webpage Clara Kayser-Bril [email protected] 22

Table 2.1: Component construction costs of some representative MHPs Present Value (10%) Unit cost, $ Project Civil Gen. Equip.

Table 2.1: Component construction costs of some representative MHPs Present Value (10%) Unit cost, $ Project Civil Gen. Equip. Cost and Revenue Structures for Micro-Hydro Projects in Nepal Paper prepared by Dr. Vaidya, micro-hydro specialist under contract with AEPC Cost Structure of Micro Hydropower Plant The cost of the MHP