September 22, 2023, Friday
Nepal 1:37:26 pm

Why Prioritize Renewable Energy?

The Nepal Weekly
May 23, 2023

By Guna Raj Dhakal

In terms of renewable energy generation, Nepal is a country with great potential. The country has a extensive potential for micro hydropower, solar energy, biogas, large biogas plants, wind energy and biofuels. Hydrogen energy is expected to be useful in future as well.

In Nepal, 68 per cent of the total energy requirement is supplied by traditional biological energy i.e. firewood. More than 70 per cent of the monthly trade loss of more than one trillion rupees is due to the import of petroleum products. Petroleum products are consumed in Nepalese kitchens to industries and transportation. As such, importance of renewable energy which is clean in nature is naturally high.

Due to the high consumption of petroleum products, the unbalanced foreign trade of the country has had a negative impact on the economy. At the same time, due to environmental pollution, climate change and human health are also being seriously affected by consumption of fossil fuels. Kathmandu has been listed as the most polluted and dirty city in the world air pollutions. As a result, the tourism industry which is one of the main sources of foreign exchange has been negatively affected.

The global community is becoming affected by effects of climate change. Nepal is also being affected and various witnessing negative impacts in various sectors. The country is plagued by environmental problems such as changes in weather pattern, glacier eruptions, loss of biological diversity, increasing snow melting, moving above the snow line, acid rain, etc. Due to environmental pollution, the number of patients with non-communicable diseases related to respiratory, disability and heart is increasing in Nepal. Reports say that 42,000 persons die in Nepal annually due to air borne diseases.

The need for clean energy is important to protect economy of the country which is dependent in the remittance and the human health of Nepali people. The energy generated in the country can reduce the said effects.

The use of renewable energy is viewed with importance not only in Nepal but in the entire world. The use of renewable energy is one of the important parts of the Sustainable Development Goals.

Nepal Renewable Energy Confederation is an umbrella organization established to provide access to all types of energy needed for rural and urban life based on the principles of environmental protection, gender equality and inclusiveness. With this organization, mobilizing renewable energy sources, promoting them, advocating debates at the policy level, training businessmen, technicians and the general public as needed, supplying the necessary technology, materials and equipment for the promotion of renewable energy, making the after-sales service sustainable and reliable, and private for commercial interests, etc. It has been raising its engagement as an umbrella organization in the region.

Renewable energy for overall development, renewable energy for agriculture, equity capital and investment for renewable energy promotion, technology transfer for renewable energy promotion, self-sufficient energy management, clean energy in all kitchens, the confederation has been putting efforts for. Apart from that, it has been standing up in the tasks influencing at the policy level and facilitating between national and international concerns.

Since renewable energy is an area related to natural resources, it is necessary to evaluate its place by the stakeholders and not limit it only to subsidies, but connect it with production and develop it as a commercial sector and mobilize it as a source of employment and income.

Maximum use of renewable energy is emerging as a reliable option for high economic growth and sustainable development in Nepal. The private sector active in the renewable energy sector has not only limited itself to profit and loss, but has also been working as a representative of the state. It also works with social responsibility forgetting profit and loss in the business. Thus, there is an urgent need for the state to come up with a special program to encourage the private sector working in this sector.

By this time, the government is preparing a new budget for the next financial year and on the eve of the 16th five-year plan, there is a need for policy reforms to provide relief to the private sector, which is contributing to the promotion and development of renewable energy technology, in the background of pressure being created from the public to take a leap for economic transformation. For that, three types of roles are noteworthy.

(a) Investing in the promotion and development of renewable energy and operate it.

(b) To provide technical services and consultancy for the development of renewable energy.

(c) Production and sales distribution of renewable energy technologies and providing after sales services.

Since rural and remote areas or communities cannot be served by the market system, it would be appropriate for the respective local government to purchase renewable energy technology through public bidding and distribute it with subsidies. However, it is better to leave the goods in the market where the market system can work well. For example, domestic solar systems, solar thermal systems, improved clay ovens and rocket ovens and electric ovens etc. can be taken. Working together with entrepreneurs to promote such technologies ensures quality, reasonable prices and competitive customer service. While such technologies are procured and distributed by tenders by government agencies, the development and sustainability of the market cannot take place. Subsidies can also be given for such technologies depending on the need.

Similarly, the Alternative Energy Promotion Center should be seen as a market development body for renewable energy. The role of the center may be to develop and implement projects for remote areas or communities; otherwise, the environment should be created to run projects through the private sector. The role of the center is important to regulate the quality, develop the capacity of the private sector, and facilitate investment through financial institutions when conducting projects with the involvement of the private sector.

The private sector, which plays such an important role, should be kept as a companion for the development of renewable energy by the state. For this, private sector-friendly policies and programs have an important role.

Following are the actions to be taken. 

(1) Banking loan facilities should be made available at easy and accessible with lower interest rates.

(2) Experienced private sector companies according to technology expertise should be listed and given opportunity to serve in the development of the same sector.

(3) To prevent the exodus of private sector manpower by preparing skilled manpower and for timely capacity development, provision should be made for additional training for capacity building in initiation of the government agencies.

(4) Marketing the alternative energy technology produced in Nepal in the international markets and coordinate to meet necessary quality test certificates to export.

(5) Providing technical, financial and other necessary supports to the companies that produce renewable energy equipment and devices.

(6) Provide necessary support to private companies working on renewable energy to participate in international exhibitions, workshops, conferences and trainings organized in different countries.

(7) To support studies, research and development required by the industry.

(8) Higher customs duty should be levied when similar goods produced in Nepal are imported from abroad, only 1 percent customs duty should be imposed when importing raw materials of domestically produced goods.

(9) Since the currently determined ratio for energy mix is practically inappropriate. The policy says that 5 to 10 per cent of energy from other than hydropower may be allowed in the national grid. Keeping in view importance of energy generated from other than hydropower plants the ratio should be increased to 25 per cent.

(10) For appropriate management of the electricity produced by solar power technology, initiatives have been a need for the immediate implementation of the technology for connecting the power produced by the solar rooftop net metering system to the national transmission through the procedure.

(11) Budget should be managed with 90% subsidy to upgrade micro hydropower projects and also to connect it to national transmission or operate as mini grid.

(12) Broadly develop and expand the program of solar pumping system for irrigation to increase the income of farmers in remote areas and turn them from subsistence to professional.

(13) Formulating a program to promote large, medium and small scale biogas systems for energy and agriculture to increase entrepreneurship in the private sector.

(14) The policies and procedures for obtaining loans from banks at low interest rates and for self-capital should be clarified for the industries that are opened to produce the necessary devices and equipment of renewable energy in Nepal.

(15) Special support should be arranged for such industries to be established in remote areas and away from main cities.

(16) There should be more clarity in the provision that banks should make mandatory investments in the deprived sector, targeting small enterprises and consumers in the renewable energy sector.

(17) There should be an arrangement for market study and research for the promotion of technology.

(18) Appropriate environment should be prepared in coordination with national and foreign agencies.

(19) An investment-friendly environment should be created for private sector investment growth.

(20) Arrangements should be made for up to 90 percent subsidy or investment in all types of technology.

(21) To make arrangements to coordinate with the relevant agencies to connect the established micro hydropower and other technologies to the national transmission line.

(22) Arrangements should be made for the maintenance of old micro hydropower plants that have not been reached by the national transmission line or have been invested but are awaiting maintenance.

(23) No matter where they live, facilities of smoke-free clean kitchens should be provided to all the people.

(24) In context to mandatory investment by banks in the deprived sector, for the development of the renewable energy sector, it should be clearly explained that investments should be targeted at small enterprises and consumers in remote, rural areas, and the ratio of investment should be increased.

(Author is Chairperson of Renewable Energy Confederation of Nepal, RECON)