Poverty Amidst Plenty: Renewable Energy-Based Mini-Grid Electrification in Nepal

Providing access to electricity to a large section of rural population in Nepal has traditionally been a challenging exercise. This has been exacerbated by difficult geography, poor-socio-economic profile of rural Nepal and moreover by the on-going energy crisis. This chapter conducts an objective assessment of the renewable energy-based off-grid electricity sector in Nepal, with specific focus on micro-hydro-based mini-grid systems by applying a mixed method research design built on both qualitative and quantitative research techniques. While the country’s experiences of developing micro-hydro- and solar energy-based off-grid interventions are captured by qualitative analysis, a standard techno-economic analysis of a micro-hydro mini-grid project is conducted to explore the possibility of introducing additional productive loads and to examine the cost efficacy of generating energy from micro-hydro vis-à-vis solar. Assessment of off-grid electrification options reveals that despite visible progresses, there still exist multiple roadblocks to scale up. Absence of clearly spelt out policy goals, weak institutional designs, low load factors, and lack of adequate finance and overall regulatory concerns stand as major obstacles for off-grid electricity sector development in the country. In addition, project-specific analysis reveals that solar loses out as a cost-effective option compared to micro-hydro. But optimal use of energy generated from micro-hydro-based mini-grids requires creation of productive applications at the local scale on a sustainable basis.