The Nepal Weekly 
February 25, 2025
Minister for Energy, Water Resources and Irrigation Deepak Khadka has mentioned that the “Sustainable Energy Challenge Fund” will be an effective instrument for the government’s energy development goals. He said expressed this during the NREP (Nepal Renewable Energy Programme) Learning Sharing Programme on Thursday, 20th February in Kathmandu. The event was organised by the NREP, which has been operated by Alternative Energy Promotion Centre (AEPC).
“The Sustainable Energy Challenge Fund can play a crucial role in making the energy system high-quality and reliable”, Minister Khadka has said. “NREP has also provided significant support, including financial and technical assistance, for the financial viability and sustainable operation of projects,” he added.
He further remarked that the recently approved Energy Development Roadmap and Action Plan aligns with Nepal’s movement towards clean energy and climate change in line with international commitments. He reiterated that renewable energy, energy efficiency and clean energy transition have been given top priority in national goals.
Minister Khadka added that target of achieving cent percent electricity access for all households within the next two years by deploying off-grid solar, wind and small and micro hydropower plants in areas not connected to the national grid. He also referred to Nepal’s long-term goal of achieving net-zero emissions by the year 20245, the Second Nationally Determined Contribution (NDC), the 16th Development Plan and other national and international commitments.
He mentioned that achieving these goals require effort and substantial financial resources, where the Challenge Fund can play a vital role. He also stated that discussions and negotiations with development partners and donor agencies will be continued for the support this initiative.
Energy Secretary Suresh Acharya, on the occasion, said that efforts will be made to tap financial resources like the Green Climate Fund and the Sustainable Energy Challenge Fund to implement plans and programmes.
Similarly, British Ambassador to Nepal Rob Fenn said that Nepal has tremendous opportunities to develop clean and renewable energy. “NREP has played an important role in building the necessary infrastructure,” he added.
“The UK government will continue its support for alternative energy programmes,” he added. He also mentioned that Britain’s assistance to Nepal Electricity Authority (NEA) in building transmission infrastructure.
Nawa Raj Dhakal, executive director of AEPC focused that collaboration with the private sector has been appreciable with expected results. “Financial constraints have been a challenge for advancing renewable energy projects, so we aim to attract banking institutions through a Viability Gap Fund (VGF),” he stated. “This will help develop the private sector’s capacity, also enhance their confidence,” he added.
Similarly, Dr. Narayan Prasad Adhikari, deputy executive director of AEPC noted that NREP has been significantly successful in electrifying remote Karnali region and integrating agricultural irrigation and micro hydropower projects into the national grid. “The initiative has supported the decentralised development model and the implementation of federalism,” he opined. He also said that the Renewable Energy and Energy Efficiency Bill will pave way for more concrete progress for the development of renewable energy projects in the country.
NREP team leader Suman Basnet mentioned that the programme has played a crucial role in improving the livelihood of poor, marginalised and disadvantaged communities. “NREP has significantly contributed to reducing annual carbon and greenhouse gas emissions,” he said. “Though solar irrigation, fish farming and pellet usage, sustainable, green and reliable energy access has been expanded.”
Likewise, president of Renewable Energy Confederation of Nepal (RECON) Kushal Gurung opined that NREP has contributed to reducing carbon emissions. “This initiative should be expanded to other potential areas and household electric cooking must be widely promoted,” he said. A Sustainable energy campaign should be launched all through the Challenge Fund.”
AEPC has been implementing NREP with support from UK government. The provision for Energy Challenge Fund has been included in Central Renewable Energy Fund Operational Directive, 2021 (First Amendment).
The Nepal Renewable Energy Programme (NREP) is a Government of Nepal Programme with financial assistance of the British Embassy in Kathmandu. NREP aims to significantly increase private sector investment in the distributed sustainable energy market. It is implemented by the Alternative Energy Promotion Centre and a consortium led by DAI Global UK that includes Winrock International as an implementing partner.
NREP was designed to implement and provide Technical Assistance for activities designed to assess, develop and finance distributed renewable energy (DRE) projects in high-priority markets such as Commercial and Industrial missing middle markets, small businesses, health centres, schools and households. Ideally many of these projects will be formed as Public-Private Partnerships which leverage the assets and investments of Provincial and Local Governments to de-risk and mobilize private sector investment.
A critical mechanism to achieve DRE projects goals is the Sustainable Energy Challenge Fund (SECF), being implemented under AEPC’s Central Renewable Energy Fund (CREF), to provide Viability Gap Funding (VGF) to make marginally feasible projects bankable. Once operational, the SECF will utilize a market based approach to incentivizing DRE using VGF-based financial assistance—for projects that provide the highest levels of installed capacity with the least amount of SECF funding. Power Project Financing, RESCO and leasing service models, Interest rate buy-down, Incentives based on energy generation, Demand aggregation such as clean cooking solutions and M/SMEs are the modalities of NREP.
