The Nepal Weekly 
November 7, 2023
Nawa Raj Dhakal
Executive Director- Alternative Energy Promotion Centre (AEPC)
(Born in Kaligandaki Rural Municipality-6, Khadgakot, Gulmi, Nawa Raj Dhakal is a widely recognized energy professional in the national and international renewable energy sector with more than two decades of experience in renewable energy, energy efficiency and climate change. Dhakal has a proven track record across the areas of policy and strategy formulation, planning and resource mobilization, programme management, organization development and capacity building in multi-cultural and multi-stakeholder environment. He has led the process of accreditation of Alternative Energy Promotion Centre as the Direct Access Entity to Green Climate Fund. He has facilitated the process for Nepal’s membership to International Renewable Energy Agency.
Dhakal holds a Master of Science in Renewable Energy from Naresuan University, Thailand and Master of Science in Environmental Microbiology from Tribhuwan University. Government of Nepal appointed Dhakal as the Executive Director of AEPC in May 2, 2023.
AEPC, established on 3rd November 1996 (i.e., 18th Kartik 2053 B.S.) under then Ministry of Science and Technology and now under the purview of Ministry of Energy, Water Resources and Irrigation (MoEWRI), has swiftly transformed into a nationally and internationally recognized institution tasked with promoting, developing and deploying the renewable energy technologies and energy efficiency with particular focus in rural and remote areas of the country.
AEPC has completed its 27 years of establishment from November 4, 2023. On the occasion of 27th Anniversary, AEPC organized National Workshop on Energy Transition through Decentralized Renewable Energy and Energy Efficiency. Against this backdrop, Sirish B. Pradhan, Editor/Publisher of The Nepal Weekly had an encounter with Dhakal about the different aspects of renewable energy and energy efficiency sector in Nepal.)
How do you view the major achievements of AEPC since its establishment?
As we are in our 27th anniversary, we reflect on our many accomplishments through the continuous financial and technical support from the Government of Nepal and external development partners, dedication of our staff and the engagement of the private sector and local communities that have contributed tremendously to the achievement of increasing access to electricity and clean cooking solutions to majority of the population.
Over the years, AEPC has supported more than 15 million people across country realizing their energy needs through deployment of appropriate renewable energy solutions, subsidy and credit financing. More than 500 private service providers and numerous local communities are leading service delivery while creating direct and indirect employment opportunities to well over 30,000 people.
AEPC is GoN’s National Agency for promotion of Renewable Energy (RE) and Energy Efficiency (EE) in Nepal. RE and EE has been mainstreamed in national policies, strategies, plans, formal & informal education. AEPC has also got recognition as the Direct Access Entity of GCF. In the last 27 Years of AEPC, Renewable Energy Mix Growth increased from 0.015% in 1996 to 3.89% in 2023 with benefiting more than 3.6 million households and generating more than 85 MW electricity from RE source. Eight CDM projects has been registered in UNFCCC, producing 5.12 million CER units and earning more than 32 million USD carbon revenue generated till date. AEPC has also started implementation of 49.2 million USD GCF funded project. Similarly, GCF Readiness and Preparatory Support Programme (RPSP) is also being implemented by AEPC.
What is the importance of renewable energy and energy efficiency in Nepalese context?
The Constitution of Nepal 2015 has strongly recognized the need of conservation, management and use of natural resources amongst different political structures. It has prioritized sustainable and environmentally friendly way of using resources and distributing fairly amongst the local stakeholders.
The Government of Nepal, unwavering in its commitment to the advancement of renewable energy and energy efficiency, acknowledges the abundance of renewable energy resources within our grasp. GoN firmly recognizes energy’s pivotal role as the engine driving socioeconomic development. Thus, harnessing renewable energy stands as an imperative, both for the fulfillment of our domestic energy needs in a reliable and sustainable manner, and for the simultaneous promotion of economic growth and fortification of our energy security. Nepal distinguishes itself on the global stage by enshrining renewable energy development in its constitution as a state policy, an embodiment of our unwavering dedication to the preservation, stewardship, and judicious utilization of our precious natural resources.
Would you shed light on the private sector’s role in promoting renewable energy?
AEPC follows the Public Private Partnership (PPP) Model. The public sector works for creating conducive environment through capacity building, technical and financial assistance, coordination, quality assurance etc. and the private sector works for manufacturing, supply and installation and after-sales services. Private sector follows the policy and regulatory framework developed by government and works in the fore-front of service delivery accordingly. There is a provision of private sector representative in Alternative Energy Development Board. More than 500 private service providers are working in the sector. Hence, Private sector has an important role in expanding access to energy through renewable energy and energy efficiency in remote villages that have no access to the national grid.
What is the latest trend in development of renewable energy and its relevance in Nepal’s context?
Renewable energy got incorporated as a specific subject in the seventh plan (1985 to 1990). Thereafter, it got more and more priority in the subsequent plans till 15th Plan. Similarly, government’s policies and strategies in the recent past are giving increasing priorities for the development of renewable energy. Contribution of renewable energy in overall energy mix in Nepal is increasing. For example, contribution of RE in total energy mix in FY 2069/70, FY 2074/75 and FY 2079/80 is 1.65%, 3.25 and 3.89% respectively.
Development of renewable energy is relevant in the Nepal’s context for meeting the goals and targets set by various strategic documents including SDG roadmap, NDC, Long Term Strategy for Net-zero Emission. Furthermore, development of renewable energy will enhance Nepal’s energy access, reliability, quality and security. Also it can contribute directly to reducing the trade deficit by decreasing the import of fossil fuels and reduce dependence on traditional energy. Development of renewable energy can also contribute to reducing GHG emission from energy sector, increase environmental sustainability thereby contributing to better achievement of Nepal’s commitment towards environment and climate change.
Will you shed light on the role of RET in reducing carbon foot print and meeting the targets set by NDC?
As the climate change issues are currently in top global agenda and the countries have pledged to reduce greenhouse gas emission and to promote the usage of clean/renewable energy technologies. Since energy sector is one of the major contributors of global green house gas emissions, renewable energy can play big role in reducing the GHG, the promotion and adoption of renewable energy technologies that are resilient to climate change impacts.
The Paris Agreement (Article 4) requires each party involved to outline, prepare and communicate their post 2020 climate actions named ‘Nationally Determined Contributions’ (NDCs). NDCs are at the heart of the Paris Agreement and the pathway in achievement of these long-term goals. NDCs embody efforts by each country to reduce national emissions and adapt to the impacts of climate change. Parties shall pursue domestic mitigation measures, with the aim of achieving the objectives of such contributions.
Decentralized and small-scale renewable energy is still the most locally available and affordable source of energy in remote areas which can contribute in reducing carbon emission, ensuring reliable power supply and diversification, enhancing energy security and reducing dependency on fossil fuels.
AEPC is in forefront when it comes to the climate change related activities in Nepal. Climate and Carbon Unit (CCU) was established in 2010 and transformed into Climate and Carbon Section (CCS) in 2020 AEPC board decision to focus on streamlining the climate change related activities in AEPC.CCS has been instrumental in mobilizing carbon financing, accessing international climate finance and other climate change mitigation and adaptation activities in AEPC.
AEPC holds eight Clean Development Mechanism (CDM) projects and program of activities (PoA) which contribute as its regular source of revenue. Till date, around 5.96 million units of Certified Emission Reduction (CER) has been generated; and around 5.94 million units of CERs have been sold and earning carbon revenue of around 32.4 Million USD from Household Biogas, Improved Water Mill projects and Micro-hydro projects.
Recently, AEPC organized National Workshop on Energy Transition through Decentralized Renewable Energy and Energy Efficiency. As a Head of AEPC and key presenter at the workshop, in your view what are the key factors leading to “successful” energy transition in Nepal, and what role can DRE and EE play in this regard?
The main objective of the workshop was to discuss on energy transition through DRE and EE and sustainable financing for energy transition and climate resilient development among relevant stakeholders in the single platform and find out the possible way forward to accelerate energy transition. More than 100 RE experts from different
sectors took part in the workshop. During the workshop we have discussed on present energy situation and energy transition needs, key dimensions of energy transition in the country and roles of different institutions for energy transition. the opportunities, challenges and future scope of energy transition through DRE and possible way forward to accelerate energy transition.
Nepal is undergoing a significant energy transition marked by shifting towards renewable clean and energy sources to address its growing energy demand and energy challenges. Among the various energy sources, hydropower has been seen as the backbone of Nepal’s energy sector, contributing significantly to its electricity generation and overall socio-economic development of the country. Nepal has significant untapped hydropower potential, and it is actively pursuing the development of hydroelectric projects. Investment in this sector is crucial for reducing Nepal’s dependence on imported energy sources, improving the environment and also earning the foreign currency.
In addition to hydropower, Nepal has been increasingly diversifying its energy mix to reduce dependence on imported fossil fuels, traditional biomass and combat energy scarcity by exploring other renewable energy sources, such as solar energy, wind energy and bioenergy. Decentralized Renewable Energy (DRE) plays a vital role in Nepal’s energy transition. Off-grid solutions through micro/mini hydro, solar PV and wind energy are being used to bring power to communities that were previously without reliable electricity where grid extension is a challenging and economically unviable. Leveraging these smaller systems, as a key aspect of the energy transition, allows for generation of clean energy closer to the point of consumption, reducing transmission losses and extending access to electricity in remote areas in order to improve the living conditions of people.
Furthermore, Nepal has accorded high emphasis on energy efficiency. It is taking strides to improve the efficiency of its energy use across various sectors including industries, transportation and households. Modernizing the grid, reducing energy losses, and promoting energy-efficient equipment and practices in industries and households are all part of this effort.
Environmental considerations, such as minimizing the impact of hydropower projects on the ecosystem and mitigating climate change, are integral to Nepal’s energy transition.
Similarly, GoN formulated various policies, strategies and plans to accelerate the energy transition through reliable and affordable clean energy which includes 15th Plan, Present Situation and Future Roadmap of Energy, Water Resources and Irrigation Sector (MoEWRI White Paper, 2018), Second Nationally Determined Contribution (NDC), 2020, Biomass Energy Strategy (2017) National Energy Efficiency Strategy (2018), Long Term Strategy for Net Zero Emissions (2021) etc. Energy transition can be a key driver for country’s green economic growth.
What are the opportunities and challenges for AEPC and renewable energy sector in Nepal?
Nepal Government has been actively advocating for renewable energy since the mid-1970s. Over the years, it has periodically developed various policies, strategies, and guidelines to promote renewable energy within the country. Following a significant political transformation in the nation, addressing the substantial knowledge and information gaps among government authorities at various levels of governance has become a major challenge. With the recent establishment of a federal structure, there is a considerable challenge in aligning and coordinating renewable energy initiatives across all three tiers of government. Local governments have assumed greater roles and responsibilities in the comprehensive planning and implementation of renewable energy. Nevertheless, these local and provincial governments face limitations in terms of technical and managerial capacities as well as financial resources.
The sustainability of off-grid renewable energy systems is a significant issue for the sector. After the installation, rural communities often struggle to maintain and operate these renewable energy systems. Awareness about energy options and financing remains limited, and there is a lack of organized efforts to stimulate demand. Substantial financial obstacles persist, and the shift towards a market-driven or credit-based model has been sluggish. Moreover, the renewable energy market has not fully capitalized on innovative methods, the use of the most advanced technologies, and global best practices.
Despite the challenges, opportunities, it is essential to capitalize on these available opportunities. AEPC has opportunities for the implementation of renewable energy and adoption of energy efficiency, but the sector has not been successful in attracting an adequate amount of financial resources. AEPC is cognizant of the opportunities for energy financing through climate-related avenues and has initiated efforts to maximize its potential. Sectoral policies, strategies and plans prioritizing RE and EE provide opportunity for further advancement of RE and EE sector. Moreover, through the development of RE and EE, energy security, reliability and quality can be improved ultimately making the energy system resilient and sustainable.
What are your organization’s future plans?
AEPC is committed to peruse the activities in the area of universal access to electricity, clean cooking solutions, waste to energy, productive energy use, energy mix and reliability, energy transition, energy efficiency, capacity building of national stakeholders and mobilizing national and international finance for meeting the national goals and targets. AEPC aims to support overall renewable energy and energy efficiency by engaging the relevant partners and stakeholders in the changed context.
In the foreseeable future, subsidies and grants will remain a substantial part of the initial capital expenditure due to the high upfront costs associated with decentralized rural energy solutions. To attract private sector involvement in the operation and management of renewable energy systems, the subsidy policy includes not only upfront capital subsidies based on kilowatts but also subsidies for energy consumption to cover a portion of operational expenses. The enactment of Renewable Energy and Energy Efficiency Bill shall pave the path forward, forging a robust legal and regulatory framework for the advancement of the renewable energy and energy efficiency sectors in Nepal.
