NOTE: Images, tables, and charts may not display correctly. Please see PDF document for full detail

Government of Nepal 

Water and Energy Commission Secretariat 

Singha Durbar, Kathmandu 

National Energy Strategy of Nepal 

2013 

                                                                     Kathmandu                                                                                                                                               

Table of Contents 

Page No. Table of Contents 

List of Tables 

List of Figures

Table of Contents.................................................................................................................... i 

Abbreviations......................................................................................................................... vii 

Background............................................................................................................................ 1 

Global Energy Scenario.......................................................................................................... 2 

National Energy Scenario....................................................................................................... 7 

1.1.1 Traditional Energy Resources....................................................................................... 7 

1.1.1.1 Wood fuel Resources............................................................................................... 7 

1.1.1.2 Animal Dung Production potential............................................................................. 11 

1.1.1.3 Agricultural Residue Production Potential.................................................................. 13 

1.1.2 Commercial Sources of Energy................................................................................... 15 

1.1.2.1 Hydro-Energy Resources........................................................................................ 15 

1.1.2.2 Coal Resources..................................................................................................... 20 

1.1.3 Renewable Energy Resources.................................................................................... 21 

1.1.3.1 Solar Energy Resources......................................................................................... 21 

1.1.3.2 Wind Energy Resources......................................................................................... 22 

1.1.3.3 Biogas Resource Potential...................................................................................... 23 

1.1.3.4 Micro-Hydro Resources.......................................................................................... 26 

1.1.3.5 Other Biomass Waste Production Potential................................................................ 26 

Energy Consumption Scenario............................................................................................. 28 

1.1.4 Energy Consumption by Fuel-types............................................................................. 28 

1.1.4.1 Traditional Fuel Consumption by Sectors.................................................................. 29 

1.1.4.2 Commercial Fuel Consumption by Sectors................................................................ 30 

1.1.5 Sectoral Energy Consumption..................................................................................... 31 

1.1.5.1 Residential Sector Energy Consumption................................................................... 31 

1.1.5.2 Industrial Sector Energy Consumption...................................................................... 31 

1.1.5.3 Transport Sector Energy Consumption...................................................................... 32 

1.1.5.4 Commercial Sector Energy Consumption.................................................................. 32 

1.1.5.5 Agricultural Sector Energy Consumption................................................................... 33 

Current Energy System Analysis.......................................................................................... 33 

1.1.6 Dwindling traditional sources of energy........................................................................ 33 

1.1.7 Increasing imports of petroleum products..................................................................... 33 

1.1.8 Some current facts on energy economics..................................................................... 35 

1.1.9 Dismal situation of electricity supply............................................................................. 36 

1.1.10 Problems in energy sustainability and security............................................................. 36 

1.1.11 Some options for energy security and sustainability..................................................... 37 

Current Energy Policies........................................................................................................ 38 

1.1.12 Periodic Development Plans..................................................................................... 38 

1.1.13 Hydropower Development Policies 1992 and 2001, Water Resources Act 1992, and Electricity Act 1992   38 

1.1.14 Water Resources Strategy 2002 and National Water Plan 2005..................................... 38 

1.1.15 Nepal Electricity Regulatory Commission Bill............................................................... 39 

1.1.16 National Electricity Crisis Resolution Action Plan 2008................................................. 39 

1.1.17 Task Force for Hydropower development.................................................................... 39 

1.1.18 Local Self-Governance Act, 2055 (1998).................................................................... 40 

1.1.19 Rural Energy Policy 2006......................................................................................... 40 

1.1.20 Forest Sector policies and Forest Act, 1992................................................................ 41 

1.1.21 Petroleum, Coal and Natural Gas Sub-sector Policy..................................................... 41 

1.1.22 National Transport Policy 2001.................................................................................. 42 

Current Institutional Situation............................................................................................... 42 

Chapter 2: Energy Issues in Nepal.................................................................................................. 43 

General Issues...................................................................................................................... 43 

2.1.1 Energy Classification................................................................................................. 43 

2.1.2 Energy Poverty......................................................................................................... 43 

2.1.3 Integrated Energy Planning........................................................................................ 43 

Specific Issues...................................................................................................................... 43 

2.1.4 Issues on Traditional Energy....................................................................................... 44 

2.1.4.1 Policy Issues on Traditional Energy.......................................................................... 46 

2.1.4.2 Institutional Issues on Traditional Energy................................................................... 47 

2.1.4.3 Environmental Issues on Traditional Energy.............................................................. 48 

2.1.4.4 Social Issues on Traditional Energy.......................................................................... 49 

2.1.4.5 Economic and Financial Issues on Traditional Energy................................................. 50 

2.1.5 Issues on Commercial Energy..................................................................................... 51 

2.1.5.1 Technical Issues.................................................................................................... 51 

2.1.5.2 Policy Issues on Commercial Energy Sector.............................................................. 52 

2.1.5.3 Institutional Issues on Commercial Energy Sector...................................................... 53 

2.1.5.4 Environmental Issues on Commercial Energy Sector.................................................. 54 

2.1.5.5 Social Issues on Commercial Energy Sector.............................................................. 54 

2.1.5.6 Economic Issues on Commercial Energy Sector......................................................... 55 

2.1.6 Issues on Renewable Energy Sector............................................................................ 56 

2.1.6.1 Technical Issues.................................................................................................... 56 

2.1.6.2 Policy Issues on Renewable Energy......................................................................... 57 

2.1.6.3 Institutional Issues on Renewable Energy................................................................. 58 

2.1.6.4 Environmental Issues............................................................................................. 58 

2.1.6.5 Social Issues......................................................................................................... 59 

2.1.6.6 Economic Issues.................................................................................................... 61 

Chapter 3: Energy Scenarios Analysis.................................................................................... 62 

BAU Scenario (Baseline Scenario)....................................................................................... 62 

Reference Scenario or Interim Plan Scenario........................................................................ 65 

3.1.1 Energy Indicators at Reference case or Interim Plan Scenario......................................... 68 

Accelerated Growth Scenario or High Growth Scenario....................................................... 69 

Comparison of the energy scenarios..................................................................................... 72 

Strategic Interventions at Reference Scenario....................................................................... 73 

3.1.2 Introduction of Clean Energy Technology at Reference Scenario..................................... 73 

3.1.3 Penetration of energy efficient lighting at Reference Scenario......................................... 76 

3.1.4 Introduction of New Transportation Technology at Reference Scenario............................ 78 

3.1.5 Combined Strategic measures at Reference Scenario.................................................... 81 

3.1.6 Comparison of energy demand projection in different scenarios...................................... 84 

3.1.7 Energy Indicators in the Combined Strategic Intervention Scenario.................................. 85 

Chapter 4: National Energy Policy Principles.................................................................................... 90 

Vision.................................................................................................................................. 90 

Strategic Objectives.............................................................................................................. 90 

Principles of Energy Sector.................................................................................................. 90 

Sectoral Energy Strategy...................................................................................................... 91 

4.1.1 Hydropower Development.......................................................................................... 91 

4.1.2 Efficiency and Conservation........................................................................................ 93 

4.1.3 New Renewable (Alternative Energy)........................................................................... 94 

4.1.4 Biomass................................................................................................................... 94 

4.1.5 Fossil Fuels.............................................................................................................. 95 

4.1.6 Institutional and Legal................................................................................................ 96 

4.1.7 Regional Cooperation................................................................................................ 98 

Chapter 5: Energy Strategies and Targets........................................................................................ 99 

New classification of energy sectors..................................................................................... 99 

Strategies on Fossil Fuels Sub-sector.................................................................................. 100 

Strategies on Renewable Energy Sector.............................................................................. 102 

5.3.3 New Renewable Energy........................................................................................... 105 

Energy Pricing and Deregulation of Energy Sector............................................................. 106 

Social Aspect...................................................................................................................... 107 

Environmental Aspect........................................................................................................ 107 

Institutional and Capacity Development.............................................................................. 109 

Strategy on Nuclear Energy................................................................................................ 112 

Chapter 6: Implications of Different Forms of Energy Mix on the National Economy.............................. 113 

Chapter 7: Climate Change and Disaster Risk Reduction................................................................... 115 

Introduction........................................................................................................................ 115 

Evidence of climate change................................................................................................ 115 

Causes................................................................................................................................ 116 

Impacts............................................................................................................................... 116 

GHG Emission Reduction from Energy Strategies.............................................................. 116 

Reference.................................................................................................................................. 118 

List of Tables 

Page No. 

Table 1: World Primary Energy demand (Mtoe) .........................................................................................................3

Table 2: Land use classification and area in 1978/79 in Nepal .................................................................................... 8

Table 3: Distribution of Land Use by Dev. Region (1985/86) ...................................................................................... 9

Table 4: Forest Inventory of Nepal (1987-1998) ............................................................................................................ 9

Table 5: Estimation of Forests and Shrub land in FAO Reports .............................................................................. 10

Table 6:  Terai Forests Resources (1990/91-2000/01) ................................................................................................. 10

Table 7: CF area by development region and physiographic region (2010) ............................................................ 10

Table 8: Sustainable Fuelwood Supply from Accessible Land Areas (1978/79) ...................................................... 11

Table 9: Annual Sustainable Fuelwood Production by Land use and Region (2008/09) ....................................... 11

Table 10: Total Dung Production by Development Region and Physiographic Region (2008/09) ........................ 12

Table 11: Potential Production of Agricultural Residue, 2008/09 ............................................................................. 13

Table 12: Energy Production Potential of Agricultural Residue (2008/09) ............................................................. 14

Table 13: Theoretical Hydropower Potential .............................................................................................................. 15

Table 14: Technical Hydropower Potential ................................................................................................................. 15

Table 15: Economical Hydropower Potential .............................................................................................................. 16

Table 16: Existing Power Plants and Capacity............................................................................................................16

Table 17:  The Power demand projection .................................................................................................................... 17

Table 18: Under Construction Power Plants and Capacity ....................................................................................... 17

Table 19: Planned and Proposed Power Plants and Capacity ................................................................................... 18

Table 20: Petroleum Storage Capacity in Different Places of Nepal ........................................................................ 19

Table 21:  Number of Tank Trunk Supplying Petroleum Products for NOC ......................................................... 19

Table 22: Primary production and Import of Coal Resources in Nepal .................................................................. 20

Table 23:  Application of PV Power by Sector (until 2005) ....................................................................................... 22

Table 24: Yearly Installation of Solar Home System ..................................................................................................22

Table 25: Biogas Potential in Nepal (1997/98) ............................................................................................................. 23

Table 26: Biogas Production Potential in Nepal (2008/09) ......................................................................................... 24

Table 27: Potential Biogas Availability (2008/09) ....................................................................................................... 24

Table 28: Biogas production potential in Nepal (2008/09) ......................................................................................... 24

Table 29: Yearly Installation of Biogas Plant by Capacity Size ................................................................................ 25

Table 30: Yearly Installation of Micro hydro plants .................................................................................................. 26

Table 31: Waste Generation in Five Municipalities (tons/day) ................................................................................. 27

Table 32: Market price, efficiency and effective price of major fuel types in Nepal .............................................. 35

Table 33: Monthly Life Cycle Costs of Cooking for an Average Nepali Family (NRs) .......................................... 35

Table 34: Fuel Consumption by years in BAU scenario .............................................................................................62

Table 35 Sectoral consumption at BAU scenario ........................................................................................................64

Table 36: Peak power plant capacity at BAU scenario .............................................................................................. 65

Table 37: Fuel consumption at reference scenario ......................................................................................................65

Table 38: Sectoral consumption at reference scenatio ................................................................................................ 67

Table 39: Peak power plant capacity at reference scenario ....................................................................................... 68

Table 40: Energy indicators in reference scenario ...................................................................................................... 68

Table 41: Energy consumption at accelerated growth scenario ................................................................................ 69

Table 42: Sectoral consumption at accelerated growth scenario .............................................................................. 71

Table 43: Peak power plant capacity in accelerated growth scenario ...................................................................... 72

Table 44:  Future energy demand by years.................................................................................................................. 72

Table 45:  Power requirement in different scenarios by years ..................................................................................73

Table 46:  Fuel Consumption in Clean Energy Technology in Cooking at Reference Case .................................. 74

Table 47: Sectoral Consumption in Clean Energy Technology in cooking at Reference Case ............................. 76

Table 48:  Peak Power Plant Capacity in Clean Energy Technology Case .............................................................. 76

Table 49:  Fuel Consumption in CFL Penetration at Reference Scenario ............................................................... 76

Table 50: Sectoral Consumption in Penetration of energy efficient lighting at Reference Scenario .................... 77

Table 51: Power Plant Capacity in Penetration of energy efficient lighting at Reference Scenario ..................... 78

Table 52: Fuel Consumption in New Transport Technology Penetration at Reference Case ............................... 78

Table 53: Sectoral Consumption in New Transportation Technology Penetration Scenario ................................ 80

Table 54:  Peak Power Plant Capacity in New Transport Technology Penetration Case...................................... 81

Table 55: Fuel Consumption in Combined Policy Measures at Reference Case ..................................................... 82

Table 56: Sectoral Consumption in Combined Strategic Intervention at Reference Scenario ............................. 84

Table 57: Peak Power Plant Capacity in Combined Strategic Measures at Reference Scenario .......................... 84

Table 58: Comparison of energy demand projection in different scenarios (unit in Million GJ) ........................ 84

Table 59: Energy indicators for combined case .......................................................................................................... 85

Table 60: Five Yearly Investments on Electricity Sub-sector t 2004/05 prices (Based on the Reference Scenario)

 ............................................................................................................................................................................... 113

Table 61: Share of Investment on Electricity, Gas and Water in GFCF................................................................ 113

Table 62: Impacts of the Investment in Electricity, Gas and Water Sub Sector on the National Economy ...... 113

List of Figures 

Figure 1: World total primary energy supply by fuels .................................................................................................2

Figure 2: World total final energy consumption by sector .......................................................................................... 3

Figure 3: Relation between Per Capita GDP and Energy Consumption ................................................................... 4

Figure 4: Relation between Per Capita GDP and Electricity Consumption .............................................................. 4

Figure 5: Relation between Per Capita GDP and Electricity Consumption .............................................................. 4

Figure 6: Per capita total primary energy supply by countries and regions ............................................................. 5

Figure 7: Per capita electricity consumption by countries and regions ..................................................................... 6

Figure 8: Total primary energy supply per GDP (GJ/thousand 2000 USD) ............................................................. 6

Figure 9: Production and Availability of Animal Dung .............................................................................................13

Figure 10:  Contribution of Crops in Residue Production (2008/09) ........................................................................ 14

Figure 11: Share of Energy Consumption by Fuel-types ........................................................................................... 29

Figure 12: Petroleum Products Import against Commodity Export of Nepal ........................................................ 33

Figure 13: Annual average prices of diesel and petrol ............................................................................................... 34

Figure 14: Forecasted prices of crude oil in the international market ..................................................................... 34

Figure 15: Analysis of Percentage of Petroleum Imports to Goods Exports in 2015 .............................................. 37

Figure 16: Fuel Consumption Trend as per BAU Scenario ....................................................................................... 63

Figure 17: Energy Mix in BAU Scenario in 2015 ........................................................................................................ 63

Figure 18: Energy Mix in BAU Scenario in 2030 ........................................................................................................ 64

Figure 19: Fuel consumption trend at reference scenatio .......................................................................................... 66

Figure 20: Energy mix as per reference scenario in 2015 .......................................................................................... 66

Figure 21: Energy mix as per reference scenario in 2030 .......................................................................................... 67

Figure 22: Energy consumption trend at accelerated growth ................................................................................... 70

Figure 23: Energy mix as per accelerated growth in 2015 ......................................................................................... 70

Figure 24: Energy mix as per accelerated growth in 2030 ......................................................................................... 71

Figure 25: Fuel Consumption in Clean Energy Technology in Cooking at Reference Case ................................. 74

Figure 26: Energy mix in clean Energy Technology in cooking at reference case in    2015 ............................. 75

Figure 27: Energy mix in clean energy technology in cooking at reference case in 2030 ....................................... 75

Figure 28: Fuel Consumption in Penetration of energy efficient lighting at reference scenatio ........................... 77

Figure 29: Fuel consumption in new transport Technology penetration at reference scenario ............................ 79

Figure 30: Energy mix in new transport Technology penetration at reference scenario in 20152015 ................. 79

Figure 31: Energy mix in new transport Technology penetration at reference scenario in 2030 ......................... 80

Figure 32: Energy consumption in Combined Strategic Intervention at reference scenario ................................ 82

Figure 33: Energy mix in Combined Strategic Intervention at reference scenario in 2015 ................................... 83

Figure 34: Energy mix in Combined Strategic Intervention at reference scenario on 2030 .................................. 83

Figure 35: Comparison of per capita energy consumption ........................................................................................ 85

Figure 36: Growth Trend of Per Capita Electricity Consumptions ......................................................................... 86

Figure 37: Household Electricity Consumption Per Capita ...................................................................................... 86

Figure 38: Access to Electricity to Households ............................................................................................................ 86

Figure 39: Falling Trend Energy Intensity (USD1.00=NR 70.00) ............................................................................. 87

Figure 40: Share of Non Carbon Energy in Total Final Energy ............................................................................... 87

Figure 41: Share of Renewable in Total Energy Consumption ................................................................................. 88

Figure 42: Per capita CO2 Emissions ........................................................................................................................... 88

Figure 43: Comparison Net Imports of energy commodity to the Total Energy Consumptions .......................... 89

Figure 44: Current Classification of Energy Resources in Nepal ............................................................................. 99

Figure 45: New Classification of Energy Resources ................................................................................................. 100

Figure 46: Comparative GHG emissions in MT at 5.6 percent GDP growth rate for reference case and 

combined policy measures scenarios ................................................................................................................. 117

Abbreviations

CRT/Nepal : Centre for Rural Technology Nepal. 

MARKAL     : MARKet  ALlocation 

RES-IMIOM : Reference Energy System –Integrated Macroeconomic Model Input-Output Model 

Chapter I: Introduction 

Background 

Energy is one of the essential drivers for social and economic development. A sustainable energy supply, both in the short and the long term, is needed for enhancing economic development, people's quality of life and protecting the environment. Availability of quality energy could augment the productivity and the effective supply of physical and/or human capital services. Advanced industrialized countries are able to use modern machinery and techniques for increasing the capital-labour ratio and productivity of the workers because of the availability of required amount of energy.  

Per capita energy consumption of Nepal is low. It is only about 15 Gigajoule and used mainly in non-productive sectors. Present practices of energy consumption are neither sustainable nor economical. Country is suffering with the acute shortage of reliable energy supply. Energy supply is managed by separate entities which are working with different principles, objectives, regulatory and institutional mechanism. About two third of the total national energy comes from fuel wood that are managed by the Ministry of Forests and Soil Conservation. National Grid Electricity supply is being managed by Nepal Electricity Authority under the Ministry of Energy. Ministry of Environment looks after the promotion and development of alternative energy resources. Nepal Oil Corporation, under the Ministry of Commerce and Supply manage the petroleum imports and sales within the country. Ministry of Industry is responsible for exploring and developing the coal resources. That has created challenges to establish effective coordination mechanism among the institutions for integrated planning of the energy sector and also in implementing the planned activities.  

Government of Nepal has initiated to formulate the National Energy Strategy (NES) to address the challenges as well as for the development and utilization of energy resources in sustainable manner. 

The preparation of National Energy Strategy was started in 2007 and completed in two phases. The first phase of the study assessed and analysed the energy sector issues at national and regional level. Five regional consultative workshops were organized in five development regions of the country represented by energy sector stakeholders including supply side and demand side. The identified energy sector issues were grouped into different category such as general issues, specific issues, issues of traditional, commercial and renewable energy etc.  

The second phase of the energy strategy preparation included the analysis of future energy supply and demand side by fuel types and economic sectors. Future energy demand was assessed for three possible economic growth scenarios of the country. Energy requirement at the business as usual economic growth scenario (3.9% average GDP growth), medium growth scenario (5.6% average GDP growth) and accelerated growth scenario (8.6% average GDP growth) were assessed up to the strategic horizon of 2030. In each scenario, the energy mix up to 2030 were assessed to understand the changes of energy consumption pattern with time. Future energy demands were assessed using different computer based programme namely the MARKAL (Market Allocation Model) and MAED-2 (Model for Analysis of Energy Demand).  

After identifying the future energy demand and energy mix for different time line, the strategic programmes and activities were designed for each category of the energy resources. The designed programme and activities were finalized by incorporating the suggestions from regional consultation workshops held in five development regions and national consultation workshop held in Kathmandu.  

Global Energy Scenario 

The world energy demand increased by about 3% between 2007 and 2008 reaching about 12267 Mtoe. In 2008, fossil fuels accounted for 81% of the global production (IEA, 2010a). In recent years, the growth of the coal has steeply risen and the growth of oil has been much weaker. Among non fossil fuel sources, biomass and other combustible renewable occupies about 10% share in global energy production. Nuclear and hydro resources contribute about 6% and 2% of the total production respectively. Other renewable represents about 1% of the total production with pronounced growth rate.  

The world's Total Primary Energy Supply (TPES) has more than doubled in 2008 compared to 1971. Oil is the dominant fuel in 2008, reducing its share from 44% in 1971 to 33%, whereas gas increased from 16% to 21% and nuclear from 1% to 6% during the same period. The share of coal is increasing constantly in the recent years reaching the highest level (27%) since 1971.  

Industry is the largest energy consuming sector accounting about 37% of the world total final energy consumption. More than one fourth (about 27%) of the total final consumption goes for transport sector followed by residential sector (about 24%), commercial and services (about 8%), agriculture (about 2%) and others (2%).  

The total final consumption of energy was about 8428.41 Million Ton Oil Equivalent (Mtoe) in 2008 at global level (IEA, 2010a). Globally, fossil fuels remained the dominant source of energy, accounting more than two third of the total energy consumption. Oil is the single largest fuel in the primary energy mix in 2008 followed by gas and coal resources. Biomass and other combustible renewable accounted for about 13% of the total final consumption. Other renewable namely the geothermal, solar, wind etc. had a nominal contribution in the global energy system. 

Figure 1: World total primary energy supply by fuels 

           Source: IEA, 2010a 

Figure 2: World total final energy consumption by sector 

Source: IEA, 2010a 

The primary energy consumption, if policy measures are not taken, is projected to increase by 1.6 percent per year between 2004 and 2030, reaching 17.1 billion tons of oil equivalent (IEA, 2006). The average projected rate of growth is, nevertheless, slower than that over the period of 1980-2004, when demand grew by 1.8 percent per year. The pace of demand growth slackens progressively over the projection period: in the period 2004-2015, it grows by 2.1 percent. By 2015, total global energy demand is one-quarter higher than in 2004. The rate of growth drops to 1.3 percent in 2015 -2030. 

Table 1: World Primary Energy demand (Mtoe)1 

Source: IEA, 2006.     

Oil is the world’s vital source of energy and will remain so for many years to come, even under the most optimistic assumptions of the pace of development and deployment of alternative technology. The sources of oil to meet rising demand, the cost of producing and the prices that consumers will need to pay for are extremely uncertain. The surge in oil prices in recent years coupled with much greater short-term price volatility, have highlighted sensitiveness of the prices to short-term market imbalances. This situation has also alerted people to the ultimately finite nature of oil (and natural gas) resources.  

Global energy-related carbon dioxide emissions increase slightly faster than primary energy use, because the fuel mix becomes more carbon-intensive. The power sector contributes around half the increase in emissions from 2004 to 2030. Coal remains the leading contributor to global emissions over the outlook period.  

Current Energy Scenario in the South Asia 

Figure 3: Relation between Per Capita GDP and Energy Consumption 

Source: IEA, 2008 

Per capita energy consumption, in general, and the electricity which is an advanced and fine form of energy, in particular, has strong positive correlation with socio-economic prosperity. It can be clearly seen from the relations between per capita GDP and per capita energy consumption and per capita GDP and per capita electricity consumption as well as the HDI and per capita electricity consumption.  

Figure 4: Relation between Per Capita GDP and Electricity Consumption 

Source: IEA, 2008 

Figure 5: Relation between Per Capita GDP and Electricity Consumption 

Source: IEA, 2008 and UNDP, 2009 

In the regional context, the per capita primary energy supply of Nepal is only 14 Giga Joule (GJ), which is one of the lowest values just above Bangladesh. Nepal's consumption is one fifth of the world's average and less than half of the asian average. The per capita consumption in China and India are 75 GJ and 22 GJ respectively.  

Figure 6: Per capita total primary energy supply by countries and regions 

In the context of electricity consumption, Nepal’s per capita consumption is 90 KWh (IEA, 2010). The asian average is 719 KWh. China has the highest per capita electricity consumption of 2471 KWh in the region.  

Figure 7: Per capita electricity consumption by countries and regions 

Total primary energy supply per GDP production (GJ per thousand of 2000 USD) is very high (56 GJ) in Nepal compared to other countries of Asia as well as at the region. This indicates the most inefficient energy use in term of GDP production.  

Figure 8: Total primary energy supply per GDP (GJ/thousand 2000 USD) 

National Energy Scenario 

Nepal's energy resources are broadly divided into three categories: Traditional, Commercial and Alternative. Traditional energy resources include all types of biomass resources that are used for energy production with conventional practices. All the energy resources with well established market prices are grouped into commercial energy category, whereas, indigenous renewable energy resources are grouped into alternative category. 

1.1.1 Traditional Energy Resources 

The common biomass fuels that fall under the classification of traditional energy (TE) include only the solid biomass fuels derived from plants and animals. Both woody and non-woody biomass derived from shrub and grass lands, forests, agricultural lands (crop harvesting and processing residues), as well as residues of animals in the form of excreta (mostly cattle dung) are under traditional category. Recently the charred materials of some wild shrubs and other loose biomass materials were being compressed into biomass briquettes for energy. 

1.1.1.1 Wood fuel Resources 

Wood fuels consist of woody biomass, i.e. stems, branches, twigs, etc., saw dust, other residues from logging and wood processing activities, as well as charcoal from these sources. The primary sources of wood fuels are both forest and non-forest land. Forest and other wooded land include natural forests (including degraded forests), shrub lands, wood and timber plantations, woodlots, grasslands and non cultivated inclusion. Nonforest land includes agricultural land, agro-forestry systems, road side plantation, home gardens, etc.  

Currently, accessible National Forests (areas with more than 10% crown cover) and shrub lands (areas with less than 10% crown cover) as well as private and community forests, tree plantations in block or linear lines, play a crucial role in fuel wood supply. These forests could be natural in origin or in the form of tree plantations, in blocks, lines or as scattered trees in public and community lands. Besides, private forests, and trees, including trees grown in non-forest lands of different types also contribute to both locally consumed and commercially traded fuel wood production. 

All forests, excluding private forests, whether marked or unmarked with forest boundary markers are treated as national forests, including waste or uncultivated lands, unregistered lands surrounded by or adjoining to forests, as well as paths, ponds, lakes, rivers or streams and riverine lands within forests. The legal definition of forest, according to Ministry of Forest and Soil Conservation-Department of Forest (MFSCDoF), in 1999, includes all fully or partly covered areas by trees, including land use types such as Forest, Shrub land, Grassland, Non-cultivated inclusions, and other lands. Except the cultivated land, which is mostly registered under private or institutional ownership, all other land use types are owned and managed by the forestry or other related agencies in the public sector.   

Nepal’s forest resources have been regulated by Forest Act, 1993 and Forest Regulation 1995. This law and regulation has classified the forest into two broad categories for the management purpose. Such categories are National forests and Private forests. Nepal's current forest policy and legislation make a provision to earmark the national forests into a number of categories namely the Community forest, Leasehold forest, Government managed forest, Religious forest and the protected forest. Such categories were made to support the management purpose of the forests. Collaborative Forest regime is also added in Nepalese forest management system through the government directive. Additionally, buffer zone of the protected areas are also providing large amount of fuel wood resources for locals. National Parks and Wildlife Conservation Act (1973) and Regulation has also categorized different forest type namely the Buffer zone Community forest, Buffer zone Leasehold Forest and Buffer zone Religious Forest and Buffer zone private forest.  

Forest land, shrub land, grass land, non-cultivated inclusion and cultivated land are the major land use types in Nepal where forests and tree resources exists in different intensity. The remaining land uses are grouped into other land category that includes water bodies, ice and snow coverage, rocky slopes etc. 

Status of Forest Resources in Nepal 

Forest and tree resources of Nepal were assessed in different time period. Some assessment was made in terms of area whereas some other assessment was made both in area and stock level. The first assessment of the forest resources goes back to 1960s covering the Terai and adjoining Hill districts of Nepal. The second assessment was made only in terms of area for the year 1978/79 from Land Resource Mapping Project (LRMP). MPFS (1988) assessed the forest resources both in area and stock with some field study for the year 1985/86. Another assessment was done during 1987 to 1998 from DFRS with the support from Government of Finland. District wise forest statistics was also estimated by JAFTA in 2001 analysing the remote sensing image. Assessment to find the area coverage of 20 Terai districts was completed in 2004. Forest Resources Assessment Project is being conducted by DFRS with the support from Government of Finland using LiDAR technology.  

About 6.4 million hectares of forest and shrub-land was assessed for the year 1964/65, out of which, about 58% was covered by crown, 6% by shrub-land and remaining area was not covered by crown within the forest land and about 17% wass found within the lower stocking level. About 42% forest was found in medium stocking and remaining 41% forest was highly stocked in the same duration. 

The area assessment of the forest up to district level was completed for the year 

1978/79. This second assessment was based on aerial photo interpretation. Land Resources Mapping Project (LRMP) estimated the area coverage of each land category.  WECS (1988) had carried out a detail analysis of aerial photo of the 1978/79 and classified the land use. About 42% of the total land was found under forest and shrubland categories. Trees and woody plants were found in their natural state in such land types. The second largest land use was cultivated land which was about 20% of the total land surface of that time. Grassland occupied about 12% of the total, whereas, shrubland was just about 4%. Snow cover, ice cover, rocky land, water surface etc. were grouped into other land category which was about 18% of the total.  

Table 2: Land use classification and area in 1978/79 in Nepal 

Unit in 000 ha. 

Source: WECS (1988) 

MPFS (1988) had estimated the forest area coverage for the year 1985/86 at regional and national level based on the LRMP findings, WECS estimates and deforestation rate of the 1964/65 to 1978/79 period. Table 1.3 shows the distribution of land use by development and physiographic region in 1985/86.  

Table 3: Distribution of Land Use by Dev. Region (1985/86) 

Unit in 000 ha. 

Source: MPFS (1988a) 

The forest of Nepal was estimated to be 5.5 million ha or 37.4% of the total area of the country. Figure 2.4 shows the distribution of forests by physiographic region. The Department of Forest Research and Survey with the support from Finland had completed assessment of forest resources both in area and stock perspective in 1999. During this assessment both the aerial photograph and satellite images were analyzed to estimate the forest and shrub coverage. Summary of the forest inventory is presented in table 1.4.  

Table 4: Forest Inventory of Nepal (1987-1998) 

Source: DFRS/FRISP (1999) 

FAO has been carrying out Global Forest Resource Assessment in its member countries at every five years interval. Table 2.10 provides forest cover statistics of Nepal, which had been reported to FAO in the course of preparing country report on Global Forest Resource Assessment 2000 and 2005. The result is provided in table 1.5. 

Table 5: Estimation of Forests and Shrub land in FAO Reports 

Source: *FAO, 2001; **FAO 2006 

The recent study shows that forest in the twenty Terai districts including protected areas cover around 1.39 million hectares (DoF, 2005). The productive forests in these regions have a significant role not only in the economic development of the country, but also in sustaining rural livelihoods. Table 2.11 provides information on forest statistics of 20 Terai districts. 

Table 6:  Terai Forests Resources (1990/91-2000/01) 

Source: DoF, 2005  

Community forest has covered more than one fourth of the total national forests in Nepal. It is the second largest management regime after the government managed forests. Table 1.7 shows the community forest land by physiographic and development region in Nepal. 

Table 7: CF area by development region and physiographic region (2010) 

Unit in 000 ha 

Sources: FECOFUN, 2010. 

Sustainable Wood and Fuelwood Production 

Estimating fuelwood supply and demand involves many variables, both physical and socio economical. The productivity of land varies from time and space and therefore, the amount of wood producing land is very difficult to estimate. Consumption is also different in different parts of the country and is difficult to measure. Table 1.8 provides the sustainable fuel-wood supply information by land use and development region in the year 1978/79. 

Table 8: Sustainable Fuelwood Supply from Accessible Land Areas (1978/79)  

Unit in 000 MT 

Sources: WECS (1987) 

In the LRMP data, the non cultivated inclusion areas (NCI) which includes forests, shrubs and other land use were too small to map at a scale of 1:50,000. Therefore, estimating supply of fuel-wood from NCI, the yield per hectare used for shrub land (i.e, 0.69 tons/ha/year) is adopted for both the forest and shrub.   

Sustainable Fuelwood Supply in 2008/09 

The sustainable supply of fuel-wood from reachable area of all type of land resources for the year 2008/09 is presented in Table 1.9. The sustainable supply was about 12.5 million tons for the same year. This estimate is significantly different than the earlier estimation because it includes the community forest as the managed forest regime which has almost double or more annual wood yields as compared to the productivity of unmanaged natural forests. This report is further based on the proportion of timber yield and fuelwood yield equal to 25% and 75% respectively of the total annual wood yield.  

Table 9: Annual Sustainable Fuelwood Production by Land use and Region (2008/09) 

Unit in 000 MT 

Source: WECS, 2010 

Forest land contributes more than three fourth of the total sustainable fuelwood production in the country. Furthermore, cultivated land supplies 9.3%, NCI 5.5%, shrub land 4.5% and grassland 0.4% respectively.  

The highest fuel-wood production comes from EDR supplying about 27% of the total production of community forests. About one-fourth of the supply comes from MWDR followed by CDR, WDR and FWDR respectively. Extraction and consumption of the fuelwood derived from community forest can be different than that of its sustainable production.  

1.1.1.2 Animal Dung Production potential 

Where both woody and herbaceous biomass supply sources are scarce, not sufficient to meet the traditional energy needs of the people, there, historically animal excreta, mostly gobar (cow dung) were used as a source of energy. The cow dung either in a dried cake form or mixed with other left over herbaceous biomass like cattle shade refuses and twigs and turned into stick form, has been the important traditional energy supplement in areas located away from the remaining forests, mostly in the Terai belt of western, central and eastern Nepal. 

WECS' estimate of annual dung supply potential for energy, only in the form of dung (excluding bio-gas generation potential) is given in table 2.29.The table exhibits the total dung production by development region and physiographic region for the year 2008/09. Total production is about 14.9 million tons that is enough to meet about 40% of the total energy requirement of the country. However availability of the dung is just around 80% of the total production in the country. The estimate was derived based on annual dung production per unit of animal in dry form; the total animal population included only the existing cattle and buffalo’s heads in 2008/09 in different development regions of the country. 

Animal waste, particularly dung, is the second most important sources of indigenous energy and occupied also second largest position in terms of primary energy consumption. Animal dung in dried cake form has been the common energy for the poor, even if the energy content in dung is very low due to high moisture content. Recently, this biomass has been used for generating methane gas through anaerobic digestion. This modern form of energy produced from animal dung has become very popular. The number of new biogas digester establishment has reached more than 2,00,000 plants to date.  

Table 10: Total Dung Production by Development Region and Physiographic Region 

(2008/09) 

000 MT 

Source: WECS, 2010 

Animal waste particularly dung is not only the second largest source of indigenous energy but it also occupies the second largest position in consumption terms. Dung cakes are the poorest form of energy and are regarded as the energy of the poor. However, if animal waste in the form of dung is used in a biogas plant, it turns into a clean form of energy without any adverse effects to the environment and agricultural production. Figure 1.10 shows the total supply potential of animal dung in different physiographic region for the year 2008/09, that can be used either in the form of dung cake to produce energy or in the form of compost manure to use in agriculture land. This data has considered the availability factor of animal dung in Mountain, Hills and Terai region are 50%, 75% and 100% respectively. Out of 14.9 million tons of total production, about 12.2 million tons is available for utilization. It is, therefore, around 82% of the total dung production can be considered for availability for the utilization purpose.  

About 40% of the total energy requirement of the country can be met by animal dung alone if used only for energy purpose. About 15% of the total potential of dung production has already been used for energy purpose, which effects the agricultural system of rural Nepal as subsistence oriented farming system heavily depends on animal dung for agricultural productivity.  

Figure 9: Production and Availability of Animal Dung 

Source: WECS, 2010 

1.1.1.3 Agricultural Residue Production Potential 

In rural areas, where national forests does not exist anymore and wood-fuel supply is limited, the field and processing residues of crops such as paddy, maize, wheat, millets, oil seeds, grain legumes, jute etc, in dry, solid form, have become the important alternative fuels to the traditional users for domestic energy (cooking and heating). The agricultural residue production potential is provided, in table 1.12.  

Table 11: Potential Production of Agricultural Residue, 2008/09 

Unit in 000 tons 

Source: WECS, 2010 

The third largest indigenous biomass source of energy in terms of consumption is agricultural residues, which directly come from the agricultural crops. Two types of residues are generally considered for energy purpose, one is field residue generated during the crop harvesting and another is process residue derived as the by-product during the agro processing. Residues collected at the field just after harvesting the main crops are named with field residues. Residues coming from agro-processing are called process residues such as rice husk, maize cob, wheat barn, etc. Figure 1.11 shows the contribution of individual crops in total residue production in the country. Paddy is the largest contributor in terms of crop residue production providing about 47% of the total residues. Maize gives around one quarter of the total residue production followed by wheat, sugarcane, grain legumes and millets respectively. Just three crops namely the paddy, wheat and maize provides more than three-forth of the total residue production. This figure has considered both the field residues and process residues of major crop types for assessing the agricultural residues at national level.  

Figure 10: Contribution of Crops in Residue Production (2008/09) 

Source: WECS, 2010 

Supply potential of agricultural residues is estimated at 19.4 million tons for the year 2008/09. This amount is equivalent to 243 million GJ in terms of energy, which is about 61% of the total energy consumption of the same year. Table 1.13 shows the energy production potential of agricultural residues in 2008/09.  

Table 12: Energy Production Potential of Agricultural Residue (2008/09) 

Unit in 000 GJ 

Source: WECS, 2010 

1.1.2 Commercial Sources of Energy 

1.1.2.1 Hydro-Energy Resources 

The first Hydropower development in Nepal started with the commissioning of Pharping Power Plant in 1911 located on the right bank of Bagmati River in the South of Kathmandu valley. This power plant with a capacity of 500 KW was inaugurated on 22nd May 1911. The second hydropower plant was established in 1934 with an installed capacity of 900KW at Sundarijal. This power plant is still in operation and producing 640KW. Third hydropower plant with capacity of 1600 KW was constructed in 1942 at Chisang Khola (Morang district) in the private sector by Morang Hydro electric Company. It later was damaged due to several landslides (Pradhan, 2006).   

Prior to 1960, the hydropower stations were constructed through grant aid. Panauti (2.4MW) from former USSR, Trisuli (18 MW), Devighat (14.1 MW), Gandak (15 MW) and Surajpura-Kosi (20MW) from India and Sunkoshi (10MW) from China. Since 1970, bilateral and multilateral funding were available for hydropower development. The major donor countries in the period were Japan, Norway, Germany and South Korea including Canada, Finland, Denmark, Sweden and USA. The lending agencies were the World Bank, Asian Development Bank (ADB), Japan Bank for Industrial Corporation (JBIC) former Overseas Economic Co-operative Fund (OECF), Saudi Fund for Development, Kuwait Fund and others. From the 1990's subsequent to the adoption of the policy of economic liberalization, hydropower development took a new turn with the private sector entering the arena (MOWR, 2004). 

Hydropower Potential 

Nepal's theoretical hydropower potential has been estimated at about 83,000 MW and its technically and economically feasible potential of about 45,000 MW and 42,000 MW respectively. Table 1.14 summarizes the theoretical hydropower potential classified within the major river system in Nepal, while Table 1.15 and Table 1.16 illustrate technically and economically feasible potential. The Karnali and Mahakali river systems represent approximately 43 percent of theoretical hydropower potential and 55 percent of the technical/economical potential. 

Table 13: Theoretical Hydropower Potential 

Table 14: Technical Hydropower Potential 

Table 15: Economical Hydropower Potential 

The above estimates are based on Dr. Hariman Shrestha's doctoral thesis prepared in 1966 (Shrestha, H.M., 1966).  

Hydropower Generation and Supply System 

Nepal, till date, has total installed capacity of 689.3 MW (Privately owned microhydropower plants not included). Out of which, Independent Power Procedures (IPP) contribute 158.3 MW. Table 1.17 gives the current power plants in the country. In addition to power being supplied by the indigenous hydropower plants, around 50MW of power is being imported from India (Vidyut, 2064).  

Four more hydropower plants with a total installed capacity of 353.4 MW are under construction. Chameliya (30MW) and Kulekhani-III (14MW) are planned to be completed in 2011 and 2010/11 ??respectively (NEA, 2009). 

Table 16: Existing Power Plants and Capacity 

Source: NEA, 2009 

Nepal Electricity Authority is primarily responsible for planning, construction and operations for electricity supply. Presently, there are various Independent Power Producers (IPPs), who generate electricity and under the Power Purchase Agreement with NEA sell the bulk power to NEA.  NEA is also in the process of unbundling and there will be separate entities for generation, transmission and distribution as envisaged in National Water Plan 2005.  

Power Demand Forecast 

The Power demand projection for INPS has been carried out by NEA considering the Power consumption date of FY 2006, macro-economic indicators and rural electrification programs (Table 1.18). 

Table 17:  The Power demand projection 

Source: NEA, 2009 

 Power Generation Expansion Plan 

Table 18: Under Construction Power Plants and Capacity

Source: NEA - A Year in Review (FY 2007/08) 

Table 19: Planned and Proposed Power Plants and Capacity 

Source: NEA,2009                                                     *Capacity in MW 

Power Demand –Supply Imbalance 

Presently, the NEA system is supply deficit. This is being evident from load shedding being implemented for last several years. Data of fiscal year 2007/08 revealed that, the peak power supply demand in wet season and dry season were 640 MW/542 MW and 720 MW / 308 MW respectively, resulting into load shedding of above 30 hours a  week. This kind of load shedding due to supply deficit is to continue till substantial generation of hydropower is added to the system.  

 Transmission and Distribution 

NEA is operating at system voltage levels of 132 kV and 66 kV. Increasing load demands have created load saturation in some sectors of these transmission lines leading to poor regulation and reliability at the supply terminals resulting in high technical losses. The projects like the Middle Marshyangdi would require augmentation in the current carrying capacity of the major 132 kV network and construction of some 220 kV lines. The urgently needed 220 kV sections are Hetauda – Bardghat and Khimti – Dhalkebar. The Khimti – Dhalkebar 220 kV transmission line is under construction. Presently, Hetauda-Bharatpur 220 kV transmission Line land associated substations are under implementation. After completion, this will ease transmission congestion in Hetauda-Bharatpur corridor. In addition to the above several Grid Substation Reinforcement Project, Chandranigahpur System Reinforcement Project, Kawasoti 132 kV Substation Project are also under execution (NEA, 2007/08). NEA is also constructing three power exchange links, namely, Butwal-Sunauli, Parwanipur–Birganj and Dhalkebar–Bhittamod at the 132 kV level to enhance the transfer capability of the NepalIndia cross border interconnections (MOWR, 2004). Besides, it has recently completed transmission line route alignment survey of a) Duhabi-Purnia 400 kV, 90 km, b) ButwalGorkhapur 400 kV, 100 km and c) Dhalkebar-Mujaffarpur 400 kV, 140 km. 

At present, the Integrated Nepal Power System (INPS) consists of 1,132 km of 132 kV single circuit, 412.1 km of 132 kV double circuit, 231.46 Km of 66 kV single circuit, 161.3 Km of 66 kV double circuit, 22 Km of 66 kV and 132 double circuit, 3.37 Km of 66 kV four circuit and 2,362 km of 33 kV single circuit transmission line. Total sub-station capacity of the system is 902.45 MVA. All the Head Quarters of 75 districts of the country are provided with electricity (NEA, 2006). The remaining areas are being progressively electrified.  

Petroleum and Natural Gas 

The Government of Nepal has signed two Petroleum agreements with Cairns Energy PLC, UK in 2004 for the petroleum explorations in the Blocks 1 (Dhangadi), 2 (Karnali), 4 (Lumbini), 6 (Birgunj), and 7 (Malangawa). Though the company has started its preliminary study and planning for conducting exploration works in its acreage but the actual exploration work has not been initiated. All the petroleum products consumed in Nepal are imported from India or overseas in the refined form for direct consumption. Nepal Oil Corporation (NOC) is the sole organization responsible for the import and distribution of petroleum products. The NOC has storage facility for all the essential petroleum fuels, except for LPG. LPG is bottled and distributed by private companies around all parts of the country. Table 1.20 provides the petroleum storage capacity all over the country.  

Table 20: Petroleum Storage Capacity in Different Places of Nepal 

Source: NOC, 2065BS 

Table 1.21 shows the number of Tank Trunk used in supplying the petroleum products for Nepal Oil Corporation. 

Table 21: Number of Tank Trunk Supplying Petroleum Products for NOC 

Source: NOC, 2065 BS 

1.1.2.2 Coal Resources 

Nepal has some sporadic deposits of low-grade lignitic coal. A very small amount of the total coal supply is extracted in Dang district for consumption in brick industries. For the major supply, coal is imported from India and abroad. Nepal Coal Limited was the sole agency for the import of coal before 1993. After 1993, NCL has become inactive and private enterprises came into existence for the import of coal. These enterprises make their own agreement with Coal India Limited or other suppliers abroad and supply coal to the market. These enterprises are entitled to fix their own prices for the coal.  

There are some small occurrence of coal and lignite in Nepal, which are not commercially attractive. The occurrences of coal can be classified in to four major categories: 

• Quaternary lignite of Kathmandu Valley 
• Coal from Dang (Eocene coal from Mid-Western Nepal) 
• Siwalik coal 
• Gondwana coal  

Out of these four types identified, the Quaternary lignite deposit of the Kathmandu Valley and coal from Mid-Western Nepal are of some economic significance. The Siwalik coal deposits, though widely distributed throughout the Siwalik range of the country, are small and sporadic and have not been commercially exploited. Likewise the Gondwana coal from the east of Nepal is of low quality, small in size and of no economic significance. Table 2.49 gives the primary production of coal and import statistics in Nepal.  

Table 22: Primary production and Import of Coal Resources in Nepal 

Unit in 000 tons 

Source: DoM&G, 2010 and DoC, 2010 

In the year 2008/09, Nepal imported about 293 thousand tonnes of coal from India. Kathmandu alone consumes about 40% of imported coal. It is mainly used in the industrial sector like cement, lime, and brick industries in Nepal. Primary production of coal resources within the country is about 5% of the total coal import of the year 2008/09. There are some open pit mining practices in the Dang area for the extraction of lignitic coal. The primary production of this coal is about ten thousand tonnes, which are mainly used in brick manufacturing industries. Also Nepal imports from India through private organizations under agreement with Coal India Limited.   

1.1.3 Renewable Energy Resources 

1.1.3.1 Solar Energy Resources 

Nepal, being located in favourable latitude, receives ample solar radiation. The average solar radiation varies from 3.6–6.2 kWh/m2/day, and the sun shines for about 300 days a year. The development of solar energy technology is thus reasonably favourable in many parts of the country. Average daily insolation in Nepal in kWh/m2 is given in the Table in annex 2. These figures also emphasize high solar energy potential and possibilities of development of solar energy technology. As per the recently published report of AEPC, 2008 under Solar & Wind Energy Resource Assessment in Nepal (SWERA), the commercial potential of solar power for grid connection is 2,100 MW. 

With national average sunshine hours of 6.8/day and solar insolation intensity of about 4.7 kWh/m2/day, there is a huge potential for solar thermal devices such as Solar Water Heaters (SWH), Solar Dryers (SD), Solar Cookers (SC). Presently SWH have been fully commercialized and till 2009 more than 185,000 SWH have been installed in the country. SD and SC are still in the phase of dissemination and commercialization. This shows quite significant improvement in SWH installations in recent years.  

Solar Electricity Generation 

For a large part of the rural population consuming low electrical energy, there is no viable alternative to solar electricity for rural electrification. The operation and maintenance cost of diesel generators is too high, biogas technology does not work satisfactorily on the fairly cold high altitudes or in the mountains and would be difficult to achieve with roving herds of cattle. Small Hydro turbines need specific topographical conditions that are only found near a small percentage of users’ dwellings. Solar electricity generating systems, which do not need fuel or extensive infrastructure, are easy and quick to install. This could be very viable option in many locations of the country. However, it cannot be claimed that solar electricity can solve rural electrification issues completely. Solar electricity too has limitations and problems but these can overcome with proper planning. 

Solar Electricity Potential 

The country has 300 sunny days per annum and thus is very rich in solar power potential. Using PV module of 12% efficiency, total energy generated will be   0.12* 4.5 * 

147,181*10⁶= 80,000GWh/day = 17.7 TW (assuming peak sun to be 4.5 hours). This energy generated is more than energy required for fulfilling the whole energy demand of the world. The total estimated world energy demand at present is about 13 TW. If we use just 0.01% of the total area of Nepal, we can generate solar electricity of 8 GWh/day that is 2920 GWh/year (which is more than the energy generated by NEA in the year 2003 amounting 2261 GWh/year). 

Major Users of Solar Electricity in Nepal 

Information on first officially recorded use of solar electricity in Nepal was not available. It is said that the Nepal Telecommunications Corporation (NTC) was the first organization to use solar electricity to power a high frequency communication transceiver located in Damauli in 1974. Since then NTC has become one of the significant users of solar electricity amounting to more than 1000 kWp generating about 47000 kWh/day of electrical energy at more than 3000 locations, without national grid supplied electricity. 

Seventy five percent of all the Public Call Offices (PCO) in NTC is being powered by PV. 

The estimated market potential is huge and about 5 MWp of photovoltaic power is currently being used in various public and private sectors (telecommunication, utility supply, stand-alone, water supply, aviation etc.) in Nepal are shown in Table 1.23. 

Table 23: Application of PV Power by Sector (until 2005) 

Stand-alone Solar Home System (SHS) constitute above 5000 kWp with 185017 numbers up to 2008/09. The installation of stand-alone SHS is shown in Figure 10. The trend of SHS installation shows a steep rise after 2000 due to the subsidy policy implemented by AEPC/ESAP. Till December 2004, 51 solar PV pumping systems have been installed, of which 28 were installed after 2000 with subsidy provided from AEPC. 

Table 24: Yearly Installation of Solar Home System  

Source: AEPC, 2010 

Some INGOs are said to have installed solar pumps (3.2 kWp in Mustang) and solar PV driven mills (1.2 kWp and 1.6 kWp in Mustang) for grinding wheat and millet. 

1.1.3.2 Wind Energy Resources 

Wind is still unharnessed energy resource in Nepal. Due to its diverse topography and the consequent variation in the meteorological conditions, it is difficult to generalize wind conditions in the country. Specific areas have been identified as a favourable for viable wind energy generation. Studies made for the World Bank in 1977 indicate that in the Khumbu area, average wind speed obtainable for wind energy generation is over 5 m/s. The Department of Hydrology and Meteorology (DHM) conducted a study in 1983 and recorded wind speed data for a number of stations. The conclusion drawn by DHM indicates that wind could be used for electricity generation in the hills and for irrigation and pumping of drinking water in the Terai. The study by DANGRID, a Danish consulting firm in 1992 reported that a potential to generate 200 MW of electrical power with an annual energy production of 500 GWh from the wind resources along the 12 km valley between Kagbeni and Chusang in Mustang District. WECS along with DHM, Alternative Energy Promotion Centre (AEPC) and Nepal Academy of Science and Technology 

(NAST) carried out study on the Potential of Wind Resources in Nepal in the year 19992002. This study shows that there is not high potentiality of wind energy except for some high mountainous locations i.e. Thakmarpha, Khumbu and Khanjiroba.  

Report of AEPC, 2008 under Solar & Wind Energy Resource Assessment in Nepal (SWERA), revealed that the commercial potential of wind power is 3,000 MW. A pilot project for demonstrations and dissemination is being carried out by various organizations like AEPC, ITDG etc. ITDG has installed five 200-watt wind turbines at various locations on Kavre, Tansen Palpa, Makawanpur, Chisapani (Karnali), and Udayapur for the stand-alone system whereas AEPC has installed one 400-watt wind turbine at Nagarkot for demonstration purposes.  In connection to geothermal energy resources, 32 hot water spring sites are situated at various parts of the country, with a water temperature up to 50° Centigrade (CES, 2000). They are used for the therapeutic purposes and a study is needed to investigate the possible end uses of the hot water spring resources. 

1.1.3.3 Biogas Resource Potential 

Biogas-a modern form of energy derived from anaerobic digestion of animal waste mainly cattle dung, and recently also human excreta mixed with cattle dung in some areas, has been the alternative source of energy for cooking and sometimes for lighting in rural households, mostly in the Terai and some low lying villages in the mid-hill districts of Nepal. 

The Biogas Support Programme (BSP) under the Alternative Energy Promotion Centre and with the cooperation from various donors such as SNV and KfW is promoting the installation of biogas plant in various part of the country. There are more than 2,00,000 biogas plants installed in various districts of Nepal. Also there are about 60 private biogas companies and 15 biogas appliances manufacturing workshops in the country for the effective dissemination of this technology. Also biogas program is developed as the first CDM project in Nepal. 

BSP-Nepal (2005) present the biogas production potential based upon the number of cattle/buffalo in the country in 1997/98 (Table 1.25). Their estimate takes into account the quantity of dung that could be available for biogas and the micro-climatic pockets where biogas production could be technically feasible in different parts of the country.  

Table 25: Biogas Potential in Nepal (1997/98) 

Source: CMS, 1999 (in BSP-Nepal, 2005). 

Considering only 75 percent of the potential could be realized due to other uses of dung, the above data indicate a potential of 2.9 million biogas plants in Nepal (smallest size biogas plant capacity 4m³). The above assessment does not take into account the droppings of poultry and the excreta of pigs and goats, nor that of human beings. If all these were added then the biogas production potential could be greatly enhanced in the country.  

Different studies have tried to assess the biogas potential in the country. In 1992, Wim J. van Nes es (in BSP-Nepal, 2005) calculated the potential of establishing 1.3 million plants. CMS and SNV/BSP (in BSP-Nepal, 2005) assume a technical potential ranging between 1.3-2.9 million plants, the economic potential was considered only to be 60,000 plants. This estimate takes into account the quantity of dung that could be available for biogas and the micro-climatic pockets where biogas production could be technically feasible in different parts of the country.  

Table 26: Biogas Production Potential in Nepal (2008/09) 

Unit in 000 GJ 

Source: WECS, 2010 

Total biogas production potential in the year 2008/09 is about 43 million GJ which is about 11% of the total energy demand of the same year.  Table 1.27 provides the information on potential of biogas availability in 2008/09. Potential of biogas availability in the country is about 81% of the total biogas production. The availability factor of the biogas production in the Terai, Hills and Mountain region is 100%, 75% and 50% respectively. 

Table 27: Potential Biogas Availability (2008/09) 

Unit in 000 GJ 

Source: WECS, 2010 

Table 28: Biogas production potential in Nepal (2008/09) 

Source: WECS, 2010 

The estimated total technical potential of biogas plants is about 1.9 million plants of which 1,000,000 plants are thought to be economically viable. As of December 2008/09, more than 2,00,000 biogas plants of varying capacities (4, 6, 8, 10, 15 and 20 m³) have been installed (BSP, 2010). The trend observed during the period of 1998-2004 shows an increase, mainly because of the technical and financial support from BSP/SNV. The yearly installation and trend are shown in Table 1.29. It is also noteworthy to quote that more than 90% of these plants are operational. 

Table 29: Yearly Installation of Biogas Plant by Capacity Size 

Source: AEPC, 2010 

Alternative Energy Promotion Centre and Biogas Support Programme have identified some of the most important socio-economic benefits of biogas plants as follows:  

• Reduction of the workload of mainly women and girls by about 3 hours/day/household. The saved time is used for education, income generation activities and leisure.  
• Annual savings of:  

-       Fuel wood used for cooking to the extent of 282,024 (@2 tons/plant) (at 90%operability) 

-       Agriculture waste to the extent of 49,354 tons (@0.35 ton/plant). 

-       Dung cakes to the extent of 84,607 tons (@0.60 ton/plant). 

-       Annual saving on kerosene of 3.5 million liters (@25 liters/plant). 

• Annual reduction of GHG emissions to the extent of 987,084 tons CO2 – equivalent (@7 tons/plant). 
• Annual production of 246,771 tons – dry weight (@1.75 tons/plant) bio slurry and bio compost   
• Proper usages bio-slurry and bio-compost in 125,344 (at 80% households). 
• Improved agriculture yields and reduced use of chemical fertilizer.    Improvement of rural sanitations by connecting 98,708 toilets in 70% plants           Reduction of indoor pollution due to kitchen smoke in 141,012 households.  
• Reduced incidence of illness and expenses on health. 
• Generation of direct and indirect employment.  
• Annual total thermal power output 443 MW (at 3.14 kW/plant/day at 90% operability). 
• 550 MW electric power stations is needed to generate 443 MW thermal energy at 80% electric stove efficiency. 

1.1.3.4 Micro-Hydro Resources 

The hydro power stations for generation of mechanical and electrical energy up to a capacity of 100 kW come under micro-hydro category. The installations of such units up to 1000 kW do not require any license from the Government. Till 2008/09, there were about 1977 micro-hydro (including pico-hydro) electrification schemes installed in various part of the country since 1962, with the total installed capacity of about 13.9 MW. In addition, there are about 6253 units (approx. 15.2 MW) for mechanical power generation for the milling purpose. Realizing the significant potential of micro-hydro, Government of Nepal is promoting its development by providing subsidies for the installation of microhydro plant according to the location and remoteness of the districts. Table 1.30 provided the some data on micro-hydro.  

Table 30: Yearly Installation of Micro hydro plants  

Source: AEPC, 2010 

1.1.3.5 Other Biomass Waste Production Potential  

Solid waste 

The other biomass waste having energy potential include municipal solid waste, forest and agro-industrial wastes. ADB/ICIMOD (2006) reported that there were 58 municipalities of varying sizes in the country that generated over 1,350 tons of solid waste every day. Among them, the Kathmandu Municipality was the largest one and produced 383 tons of solid waste on a daily basis, which was slightly less than one-third of the total municipal waste generated in the country. In the Municipal solid waste, the household waste comprised of about 75 percent. The per capita solid waste production per day varied from 0.11 to 0.93 kg (average 0.34 kg). 

The households on the outskirts of smaller towns are rural in nature and used most of the waste for feeding domestic animals. This report cited SWMRMC (2004) for presenting the composition of solid wastes generated in the municipal areas, which comprised of: 

• Organic material 66 percent by weight (with a range of about 39 to 95 percent from municipality to municipality); 
• Metal, glass paper, and plastic combined, 20 percent by weight (range 5 to 50 percent), plastic alone constitutes 7.6 percent (range 1.6 to 21 percent); Inert material 9.6 percent (range 0 to 37 percent); and "Other" (including medical waste) about 5 percent.  

Another source (ICIMOD/MoEST/UNEP, 2007) stated that, "Solid waste generation rates vary depending upon living standards, livelihood practices, and consumption patterns." It was also of the view that the waste generation rate has changed over the years in the urban areas, and the current estimation of municipal solid waste generation in five municipalities of the Kathmandu Valley was provided as shown below in Table 1.31. 

Table 31: Waste Generation in Five Municipalities (tons/day) 

  Source: Nippon Koei 2005 (in ICIMOD/MoWST/UNEP, 2007) 

From the above table, it can be observed that five municipalities generated daily about 435 tonne of solid waste, of which more than 70 percent was from the Kathmandu municipality. Currently, management of these wastes is a challenge to these municipalities, which requires land, human and financial resources. 

In the above table, most of the contents in the municipal solid wastes belonged to the classification of biodegradable organic waste, which comprised of energy potentials but the estimated energy generation potentials of these sources is yet to be determined. The non-biodegradable wastes generated in municipal areas have already been included under the municipal solid wastes in ADB/ICIMOD (2006). 

The data concerning biodegradable wastes generation outside of these studied areas was not available for consideration of its energy potential. Besides the traditional forest and agro-based industries such as saw mills, rice and wheat mills etc, other industries also generate significant amount of biodegradable organic wastes in different shape and forms, i.e. molasses in sugar mills, black liquor in paper mills, etc. However, the cumulative biomass waste production data by industry type was not available, which, limited the assessment of the bio-energy potential. 

Secondary Sources of Wood-fuel 

Secondary sources of wood-fuels are residues from logging and wood processing industries, but also recycled wood from construction activities, packing crates, pallets, driftwood, furniture, etc.   

 Logging residues 

Recovery rates vary considerably depending on local conditions. A 50/50 ratio is often found in the literature e.g. for every cubic meter of log removed, a cubic meter of waste remains in the forest (including the less commercial species). The logging residue consists of stump, branches, leaves, defect logs, off-cuts and sawdust. However recovery rate has been found up to 66 % in some logging areas. In some cases the residues are converted into charcoal. In order to calculate the amount of logging residues an average recovery factor of 60% has been used. 

 Saw-milling 

Recovery rates vary with local practices as well as species. However, for calculation purposes, a residue recovery factor (yield factor) of 50% has been used (38% solid wood waste such as bark, slabs, edgings, trimmings etc. and 12% sawdust). 

 Plywood production 

Plywood making is a large-scale operation and involves the cutting of the logs to the length required and de-barking the logs. Residue recovery rates in plywood production vary from 45 to 50% with the main variable being the diameter and quality of the log. For calculation purposes a yield factor of 50% has been used, with 45% solid wood residues and 5% in the form of dust.  

 Particle board production 

Particleboard production basically involves size reduction of the wood, drying, screening, mixing with resins and additives, forming of the mat, pressing and finishing. All types of wood are used for the production of particle board such as solid wood, solid wood residues (off cuts, trimmings), low grade waste such as hogged saw mill waste, sawdust and planer shavings, etc. For calculation purposes a residue factor of 10% has been taken, consisting of screening fines and dust while 17% of the residues are assumed to be recycled. 

Perennial Plantation Crop Residue Coconut 

Coconut trees generate residues in the form of wood, fronds, husks and shells. About 12 to 14 fronds are shed per tree per year, yielding about 1.5 kg of dry woody biomass per frond or, assuming a density of 120 trees per ha., about 2,400 kg. per ha. Based on a literature survey, an residue to product (RPR) value of 0.419 for husks with a moisture content of 10.3% (based on actual measurements) while for shells an RPR value of 0.12 with a  moisture content of 8.7% are used. 

Others 

Besides the plantation crops mentioned above, there are other sources of residues in the crop plantation industry, e.g. tea (pruning every 7-10 years of tea bushes and uprooting after productive life) and coffee (pruning of shade trees and uprooting). However, very little information is available and these have therefore not been considered. 

Energy Consumption Scenario 

1.1.4 Energy Consumption by Fuel-types 

Figure 1.12 shows the distribution of energy consumption by various fuel-types in 2008/09. The overall energy consumption of Nepal is largely dominated by the use of traditional non commercial forms of energy such as fuel-wood, agricultural residues and animal waste. The share of traditional biomass resources, commercial energy resources and renewable energy resources are 87%, 12% and 1% respectively. The share of traditional fuel decreased from 91% in 1995/96, 88% in 2004/05 and 87% in 2008/09. The remaining 13% of energy consumed is through commercial source (Petroleum fuels, Coal and Electricity) and Renewable. There is a slow pace of energy shift from traditional to modern one. The share of commercial has increased from about 9% in 1995 to about 12% in 2008/09. Similarly there is a growing trend in the alternative energy. Within the commercial source, electricity is in the higher side in substituting other fuels. Fuel-wood is the largest energy resources in Nepal providing about 77% of the total energy demand in the year 2008/09. Other sources of biomasses are agricultural residues and animal dung, which contribute about 4% and 6% respectively. Share of petroleum fuels in the total energy system is about 8%. Other sources of commercial energy are coal and electricity both of which contributes about 4% in the total energy supply. The total consumption is about 9% higher than the year of 2004/05 with an average growth of 2.4% annually. 

Figure 11: Share of Energy Consumption by Fuel-types 

Source: WECS, 2010 

1.1.4.1 Traditional Fuel Consumption by Sectors 

Fuel-wood consumption was about 311 million GJ which is 77% of the total energy demand of the country in 2008/09. Average annual growth of fuel-wood consumption is around 2.5%. More than 99% of the total fuel-wood is consumed only in the residential sector. Other fuel-wood consuming sectors are industrial and commercial. These sectors use fuel-wood especially for heating, boiling and mixing with the coal.  

Agricultural residue is the third largest fuel-types providing energy, especially in residential and industrial sectors. Total agricultural residue consumption in the year 2008/09 was about 14.6 million GJ which is about 4% of the total energy demand of the same year. Generally such residues are used for igniting the wood fuels while mixing with the wood fuel resources. About 10% of the total residues are consumed in industrial sector for heating and boiling purposes. Rice husk is one of the major fuels in many industries that require heat for its operation. Agri- residue consumption is growing by about 1.9% annually.  

Animal dung is consumed only in the residential sector so far. However, its contribution is very high in the total energy system because it supplies about 6% of the total energy demand annually. Animal dung is widely used in the Terai region of the country where forest resources are not easily available. Animal dung is being used in both form that are dry cake and gaseous. This fuel is the poorest form of energy while looking from energy ladder perspective.  Growth of animal dung is around 2.3% annually. However, use of animal dung in biogas generation is increasing by about 15% in annual basis. 

1.1.4.2 Commercial Fuel Consumption by Sectors 

Coal is one of the important energy resources for Nepal because it provides more than half?? of the total energy requirement of the industrial sector. This resource provides heating and boiling services in the industries. Minimal amount is used in residential and commercial sector also. In earlier years, it was also used for railway transport in Janakpur-Jaynagar corridor.  

With the increasing growth rate of customers availing electricity services of NEA, the power and energy demand is also increasing accordingly. In 2007/08, the numbers of customers grew by 9.07% as compared to that of previous year. Accordingly, the power and energy demand also grew by 11.31% and 10.76% respectively in that year. This growth is more significant in residential and industrial sector compared to other development sectors (NEA, 2009). 

Electricity in the residential sector is mainly used for lighting. However, depending upon the degree of urbanization, it is also increasingly used for running domestic appliances. They include from the most basic electrical/electronic appliances such as cooking ranges, audio-visuals, computers, refrigerators, air conditioners etc. Approximately 1.0% of total residential energy consumption was met by electricity in 2008/09. Electricity provides about one-fourth (23%) of the industrial energy requirement. The contribution of electricity in transport sectors is minimum about 0.1% only. It is used mainly to run cable cars, ropeways and trolley buses, which are very few. The share of electricity consumption in commercial sector is only about 11%. The main uses of electricity in commercial  sector, is similar  to those in residential sectors, e.g. cooking, heating, lighting, water pumping and running other electrical appliances. About 5% of the energy requirement in agriculture sector comes through grid electricity. Electricity, in this sector, is used mainly for lift irrigation. 

Petroleum is the second largest energy fuel after fuelwood, supplying about 8% (about 33 million GJ) of the total energy demand of the national economy. This fuel has significant role in economic development processes. Because, three major economic productive sectors namely transport, commercial and Industrial output is mostly depend on this fuel resources. About 63% of the total petroleum is consumed in the transport sector followed by residential sector (16.6%), agriculture sector (10.5%), commercial sector (8.2%) and industrial sector (1.4%).  

1.1.5 Sectoral Energy Consumption 

The energy consuming sectors are classified as residential, commercial, transport, industrial and agriculture sector. For energy accounting, energy consuming entity which does not fall in the above five sectors such as, street light, temples, church and mosques, etc, are categorised as others. The total energy consumption in the year 2008/09 was 401 million GJ. The sectoral energy consumption has changed marginally compared to the previous years. Figure 5.7 shows the different share of energy consumption by various sectors in 2008/09. The figure shows that the residential accounts for the major share of energy consumption (89.1%), followed by transport (5.2%), industry (3.3%), commercial (1.3%) and then the agricultural and others.  

1.1.5.1 Residential Sector Energy Consumption 

The residential sector used about 356.7 million GJ (89.1%) in 2008/09. Biomass resources are the major fuels used in this sector, namely fuel-wood, agricultural residue and the animal waste. Recently, renewable sources like biogas and electricity from micro-hydro and solar home systems are substituting conventional fuels used mainly for cooking and lighting. The commercial sources of fuel used are nominal and is mainly used in the urban centers. Fuel-wood supply 86% of the total energy requirement followed by animal dung, agri-residue and petroleum. Share of alternative energy resources is still less than 1%. Residential sector is broadly divided into two categories namely the rural residential and urban residential. WECS (2006) has assessed that the energy consumption in urban residential sector was 47.7 million GJ, which is about 14.5% of the total residential energy consumption. Urban sector energy consumption pattern is different than the rural residential. About 52% of the urban energy is used for cooking purpose followed by electric appliance (14%), Lighting (13%), heating and cooling (10%), animal feeding (8%) and agricultural processing (3%).   

It has been observed that the LPG is substituting as a cooking fuel in the urban centres as the consumption growth rate of about 23% per annum for the last few years followed by electricity with 10%. Though the consumption of renewable is nominal in quantitative terms, the annual growth rate of solar is quite high with more than 200% followed by biogas and electricity from micro-hydro with 15% and 32% respectively. Decreasing trend is observed in the use of kerosene in the residential sector. The overall growth rate of energy consumption in the residential sector is about 2.3 % per annum. 

1.1.5.2 Industrial Sector Energy Consumption 

Total Energy consumption in the industrial sector is about 13.4 million GJ (2008/09) which is about 3.3% of the total energy demand. The energy consumption has been increasing marginally during the last few years. The industrial energy consumption has increased only by about 0.4% annually since last eight years. The main end uses in the industrial sector are process heating, motive power, boiling in the boilers and lighting. WECS (1998) has assessed the industrial sector energy consumption pattern both in traditional and modern sector. Industrial energy consumption was 9.1 million GJ for the year 1996/97. Industrial sector is broadly categorized into two types; modern and traditional. Modern industries are also grouped into large industry and medium industry. The share of energy consumption in large modern industry is about 78%, followed by medium industry (17%) and traditional industry (5%). Industrial energy consumption by physiographic region shows wide variation. 63% of the total energy is consumed in Terai region, whereas 29% in Hills and only 8% is consumed in Mountain region. Regarding end use, Boiler dominated other type of end use. Other end uses of the sectors are power motive (31%), process heating (30%) and lighting (2%).  

1.1.5.3 Transport Sector Energy Consumption 

Transport is the second largest energy consuming sector only after the domestic sector. Energy consumption in this sector is about 20.8 million GJ (5.2%) in the year 2008/09. The total energy consumption in the transport sector is in increasing trend. It is observed that for the past few years the energy consumption growth rate in this sector is about 8.9 % annually. It is found that High Speed Diesel takes the highest share with 67% followed by Motor Spirit with about 20% and then Air Turbine Fuel with 12%. The contribution of LPG is also increasing. LPG provides about 1% energy requirement of this sector. Electricity consumption in this sector is very minimal. There is some shift in the energy consumption pattern in transport sector is observed as compared to the year 1999/2000, in which, 78.8% High Speed Diesel followed by ATF (13.4%), Motor Spirit (11.4%), LPG (0.3%) and Grid electricity (0.2%) is used (WECS,2000). 

1.1.5.4 Commercial Sector Energy Consumption 

Energy consumption in the commercial sector is observed to be increasing at an annual rate of 3% since 2000/01. This sector includes large number of other sub sectors namely the Academic (school, college, university), Health (health post, hospitals), Institutions (Private and Publics), Retail shops (essential, non essential), Hotels (Star hotels, Non star hotels, Restaurant, Cinema/Hi-vision halls, Water supply, Military and Police barrack and Others (Public lighting, Religious place etc). Total energy consumed was about 5.2 million GJ in 2008/09. The main fuels used in the commercial sector are petroleum (LPG and Kerosene), fuel-wood, and electricity. The main end-uses of the commercial sector are quite similar to that of residential sector such as cooking, heating, lighting, boiling, cooling, water pumping and electric/electronic appliances etc. The largest contribution comes from petroleum specially the LPG and Kerosene providing about 53% of the sector demand. Fuel-wood supplies about 36% of the sectoral energy consumption. Electricity is the third largest sources of energy (11%). For the last few years, it has been seen that the LPG consumption growth rate is about 22%, while consumption rate of kerosene is in decreasing trend of 9% per annum. Fuel-wood and electricity consumption is increasing by about 2.1% and 9% per annum respectively. Cooking is the largest end use in this sector consuming about 68.4% of the total followed by lighting (19.3%), boiling water (0.3%), space heating and cooling (5.3%) and other electrical services such as water pumping etc.( 6.7%) . 

1.1.5.5 Agricultural Sector Energy Consumption 

Agricultural sector uses only two types of energy sources that are electricity and petroleum. In the year 2008/09, agricultural sector consumed about 1% of the total national energy demand (3.6 Million GJ). About 95% of the total agricultural energy comes from petroleum products specially the diesel fuel. Only 5% is derived from electricity. Electricity consumption in this sector is increasing at higher rate compared to the petroleum. It is increasing by about 8% annually since 2000/01 whereas light diesel oil is increasing by about 11% annually. Average rate of change in high speed diesel consumption is around 1%. 

Current Energy System Analysis 

1.1.6 Dwindling traditional sources of energy 

Forest coverage in the country has declined from 29% in 1999 to 25 percent in 2005 (FAO, 2005). Fuel-wood extraction may not be the only cause of deforestation but deforestation is also taking place due to immigration and resettlement. With fuel-wood crisis, the consumption of agricultural residues for energy purposes has also increased resulting in falling production, encroachment of marginal land for farming, exposure to the risks of soil erosion and further degradation in crop productivity and biomass supply.  

1.1.7 Increasing imports of petroleum products 

The contribution of petroleum product and coal for the total energy supply is about 10%. However, the expense incurred to import these fuels is significant. In 2008, about 52 billion rupees has been spent for different kinds of fuel (MoE, 2009). Out of this amount more than 33 billion rupees had been spent just to import the petroleum fuel and 0.8 billion for the coal. Petroleum import was 34 percent of the merchandise exports in 2000/01 (MoF, 2007). The merchandise export of the country stands at Rs 38 billion in first 8 months of 2007/08 (MoF,2009). The country had spend 57 percent of it for importing petroleum products for this period. Due to the increase in the international prices of the petroleum products and the country’s growing dependence on it, much of the export earnings are being used for importing and it is in the increasing trend. This dependence is precarious for the country’s economy. 

Figure 12: Petroleum Products Import against Commodity Export of Nepal 

           Source: MoF, 2009 

The price of petroleum products in the world market is steadily rising, with some exceptional years. This rising of price has become inexorable since 2003. It was around US$22 in that year and reached to around US$ 150 a barrel in August 2008 which has eased down to US$ 50/barrel in November 2008. The repercussion of this phenomenon had been clearly reflected in the price of petrol and diesel in Nepal too. It can be seen in figure 1.14 from the annual average price of these fuels in the last 15 years.   

Figure 13: Annual average prices of diesel and petrol 

Source: NOC, 2010 

Energy analysts forecasted that prices of the crude oil will continue to rise in the coming years in the international petroleum markets (IEA, 2010) as shown in 1.15. Indeed, many developing, mostly least developed and mostly oil vulnerable countries are likely to suffer even more due to rising prices.  

Figure 14: Forecasted prices of crude oil in the international market

Source: IEA, 2010 

Nepal is totally dependent for imports of petroleum products for its energy requirement. In the period of 1995 to 2000, the oil import in Nepal is increased by 15.34 percent (UN, 2007).  The demand of petroleum products are ever increasing, the import percentage will also increase in the years to come. 

1.1.8 Some current facts on energy economics 

Table 1.32 compares the market price, efficiency and effective price of the major fuel types used for cooking purpose in Nepal. The effective price of the LPG is slightly less than other fuels in terms of a single Giga Joule energy.  Fuel-wood only becomes cheapest once it is available free of cost or less than NRs. 5 per kilogram. Efficiency of the fuel using devices is very important factors to decide the effective price of fuels. Because of the lower efficiency of fuel-wood using devices, its effective price is higher than other fuel-types such as LPG, electricity and kerosene. Second highest effective price of the cooking fuel is kerosene (Rs.2652/GJ) followed by Electricity (Rs. 2604/GJ) and LPG (Rs. 2395/GJ).  

Table 32: Market price, efficiency and effective price of major fuel types in Nepal 

Source: WECS estimate (2010) 

About 18 million tons of fuel wood is consumed annually in Nepal, out of which less than 1% is commercialized. Rest is collected by the users free of cost from forests or their own cultivated land. 

Calculating the annualized life cycle cost (ALCC) of using kerosene, LPG cooking stoves, and electrical cooking appliance for an average family of five persons, the increasing price in the petroleum products have completely changed the scenario of the fuel economics. 

Table 33: Monthly Life Cycle Costs of Cooking for an Average Nepali Family (NRs) 

(Based on the calculation and International Energy Initiative, 2004 and NOC, 2009) 

In 1997, the monthly life cycle cost for cooking was Rs 180 for kerosene, Rs 465 for LPG, and Rs 605 for electricity. After the price revision in March 2009, the monthly ALCC turned up to be Rs 912 for kerosene, Rs 794 for LPG, and Rs 788 for electricity respectively. With the new price revision of petroleum prices, it has become evident that Nepal has to immediately substitute petroleum products by electricity for cooking in the residential, service, and other sectors. If the crude prices go up to US dollar 150 per barrel in future, the monthly ALCC for petroleum products will be exorbitantly higher compared to that of electricity. Hence, in order to enhance the country’s supply security, it is very imperative to emphasize on development of indigenous energy resources. Besides, it is urgent to create awareness program for consumers’ switching from petroleum products to electricity especially in the urban areas where grid electricity is available. In the rural sector, it may not be possible immediately for switching to electricity because of the income disparity and the topographic terrains of the country. For rural areas, to reduce health hazards, the people should be encouraged to switch from traditional biomass energy sources to modern biomass such as biogas. They should also be encouraged to switch to energy sources such as kerosene, LPG from traditional biomass sources in the energy ladder. Finally, the ultimate objective should be to switch over to electricity in the long run.

1.1.9 Dismal situation of electricity supply 

Nepal’s installed electricity generating capacity is 689.3 MW, of which around 90 percent is of hydropower generation and the rest is of thermal generation. The hydropower supply capability in Nepal varies from month to month due to the dependence on run-ofriver systems. This supply structure is in contrast to the demand structure. The electricity demand reaches peak in winter, when the generating capability of run-of-river plant is at the minimum level. On the contrary, the generation capacity is up to the mark in summer when demand is less compared to winter. As the production of electricity is not able to meet the demand, consumers are unable to switch over to electricity from petroleum products such as kerosene and LPG and compelled to pay the rising oil prices. 

1.1.10 Problems in energy sustainability and security 

The uncertainties about the stability and security of the petroleum products within the global energy market makes difficult to the country like Nepal on energy security. Nepal requires a stable, low-cost, and secure supply of energy. However, it is difficult to arrive at precise estimates of the exact economic cost of providing and unsatisfactory as well as unreliable supply of energy. Table 1.16 provides the sensitivity analysis of ration of imports of petroleum products to commodity exports. 

Based on the projection till 2015 as shown in the Figure 1.16, if Nepal’s export earnings were projected increasing with the average annual growth rate of 11 percent (the average growth rate of goods exports from 1995 to 2005), then the country will be requiring 59 percent of export earnings for importing petroleum products in 2015 at US$50 per barrel. But if the oil price goes at around US$150 a barrel, then Nepal may not be able to sustain the oil imports with its exports earnings only. The country may need almost twice the exports earning for importing just petroleum products. That means Nepal will be needing arrangement of funding from other sources for import of petroleum products. 

Figure 15: Analysis of Percentage of Petroleum Imports to Goods Exports in 2015 

(Based on the calculation and Economic Survey, GON, 2007) 

If a sensitivity analysis is conducted for import of petroleum products against export earnings of Nepal at different levels of oil prices in the international market, the picture seems precarious.  

1.1.11 Some options for energy security and sustainability 

According to a recent report on oil vulnerability of the Asian and the Pacific countries (UN, 2007), in-between 2002 and 2005, a sample of five hundred households interviewed in China, India, Indonesia and Laos People Democratic Republic, suffered from some dramatic price increases, paying as much as 74 percent more for their energy needs. This includes 171 percent more for cooking fuels, 120 percent more for transportation, 67 percent more for electricity, and 55 percent more for lighting fuels. National vulnerability to oil price increases depends not just on oil intensity, but also on how the economy of the country is resilient. An Oil Price Vulnerability Index (OPVI) was developed for 24 Asian and the Pacific countries based on the macroeconomic indicators, the economic and energy variables (UN, 2007). Countries are grouped based on their OPVIs: 

Nepal, being in the high vulnerable group of countries, because of its poor economic performance compared to other South Asian Countries and its total dependence on imports of oil products, requires strategic options for its energy security and sustainability.  

Current Energy Policies 

Current energy sector policies are scattered in various documents and executive orders. These include policy statements of the government stated in periodic development plans, sub-sector policies, government orders and notices, and laws passed by the legislature.  

1.1.12 Periodic Development Plans 

The Fifth Plan (1975-1980) document of the government was the first sector specific policy statement in the energy sector. In the Plan, the government emphasized the need to reduce heavy dependence on traditional source of biomass and imported oil, and increase the supply of renewable energy sources including hydropower to meet the increasing demand for energy.  

Different ministries are mandated for development and management of different subsectors (Hydropower, fossil fuels, renewable energy) within energy sector. Realizing the need to establish an appropriate agency at the national level to coordinate and guide the development of energy sector, Water and Energy Commission (WEC) was established. The mandate of WEC is   “to formulate and coordinate programs for the development and conservation of water and energy resources”.  

1.1.13 Hydropower Development Policies 1992 and 2001, Water Resources Act 1992, and Electricity Act 1992 

The objectives of the 1992 Policy were to supply electricity as per the demands in urban and rural areas and meet the energy needs required for industrial development in the country. The laws passed by the legislature the same year made provisions to put the policies into practice encouraging the private sector through various fiscal and other incentives for development of hydropower in the country. The 2001 Policy in particular made policy announcements to utilize the hydropower potential to meet the domestic demands of electricity through transparent procedures to attract foreign and domestic investment, develop hydropower as an alternative to biomass and thermal energy, create rural electrification fund, control unauthorized uses of electricity and leakages, cover risks likely to occur in hydropower projects, demand side management and energy conservation. 

1.1.14 Water Resources Strategy 2002 and National Water Plan 2005 

The water resources strategy was guided by the principle of integrated water resources management. The strategy recognized that water resources development needs to be more closely integrated with sustainable social and economic development. In the hydropower sector, the strategy seeks to develop sufficient capacity to meet domestic needs at affordable prices and export of electricity. While putting into effect the targets set in the Strategy, the National Water Plan has fixed a target of hydropower generation of 700 MW by 2007 to meet the projected domestic demand at base case scenario without export. Similarly, a target of generation of 2,100 MW by 2017 and 4,000 MW by 2027 have been fixed to meet the projected domestic demand at base case scenario without export.  

1.1.15 Nepal Electricity Regulatory Commission Bill  

Nepal Government has submitted a bill on electricity regulatory body to the parliament (Constituent Assembly) for facilitating electricity production, transmission, distribution, trading, and management in a transparent way. Its other objectives are to balance supply and demand, to set electricity tariff, to develop competition in the electricity market and to protect consumer rights. With the establishment of this regulatory body, electricity market is expected to develop in a competitive environment where stakeholders’ rights are protected and electricity is made accessible, affordable and acceptable. 

1.1.16 National Electricity Crisis Resolution Action Plan 2008 

The government brought out a 38-point Electricity Crisis Resolution Action Plan in Poush 2065 (2009). The Action Plan provides for immediate, short-term and long-term programmes. The principal concessions under immediate programmes include determining a Power Purchase Agreement at flat rate for power plants up to 25 MW, 7 years income tax holiday and waiver of the provision for doing Environmental Impact Assessment (EIA) for power projects expected to go for implementation by Chaitra 2068 (2011).  Such power projects will be required to do Initial Environmental Examination (IEE). It included plans to import more power from India, build 200 MW thermal power plant and encourage power generation through captive plants by subsidizing the additional cost involved in producing power from oil, and strengthen and add transmission capacity. It will also encourage solar and wind power generation through various concessions and facilities. Emphasis has been given to encouraging efficiency through the use of low energy consumption bulbs, initiate a system of energy audit, implement a code of conduct to save energy, and raise public awareness for demand management. The concession included 80 percent subsidy for micro hydropower below I MW capacity. 

Short-term measures under the plan included building additional transmission lines to import power from India, increase power production through efficient operation of current generation facilities, control technical loss and controlling theft of electricity through cooperation of political parties, the public and local administration. 

The long-term programmes are building high capacity transmission lines between India and Nepal and large multi-purpose projects. Adopt national integrated energy policy with short, medium and long-term energy development plan. It also includes financial restructuring of the Nepal Electricity Authority (NEA). 

1.1.17 Task Force for Hydropower development  

Government of Nepal (GON) formed a task force in December 2008 to formulate programs for developing 10,000 MW in 10 years for addressing the energy crisis situation. The task force highlighted the importance of developing hydropower and provided the list of storage and run-off projects with time-line for development. The report also recommended for improvement in the institutional aspects. 

GoN has again come up with the plan of development of 25,000 MW in 20 years in the plans and programs of the Government in July 2009. The 20 year plan report has elaborated the suggestion provided by the 10 year development plan report.Task Force for Hydropower development  

Government of Nepal (GON) formed a task force in December 2008 to formulate programs for developing 10,000 MW in 10 years for addressing the energy crisis situation. The task force highlighted the importance of developing hydropower and provided the list of storage and run-off projects with time-line for development. The report also recommended for improvement in the institutional aspects. 

GoN has again come up with the plan of development of 25,000 MW in 20 years in the plans and programs of the Government in July 2009. The 20 year plan report has elaborated the suggestion provided by the 10 year development plan report. 

1.1.18 Local Self-Governance Act, 2055 (1998) 

The law related to local bodies (Village and District Development Committees and Municipalities) has empowered the local government to formulate, implement, distribute and maintain the mini and micro hydropower projects and other energy projects in their respective jurisdictions. The law requires the local bodies to prepare resource map as well as annual and periodic plans. It provides for a detailed institutional framework and mechanisms for formulation and coordination of plans including a structure for integration of the plans. The District Development Committee is required to form an Integrated Plan Formulation Committee under the chairmanship of the President of the DDC with representation of Parliamentarians representing the district, among others. 

1.1.19 Rural Energy Policy 2006 

The Rural Energy Policy 2006 has been conceptualized with a sector-wide approach. The Policy has been designed, in particular, with the following strategies: 

• Development of a coherent rural energy policy which adequately addresses the energy needs of the rural population; 
• Rural energy subsidy policy with clear objectives and criteria addressing target groups; 
• Development and enforcement of efficient and effective credit systems; 
• Incorporation of rural energy policies of ministries and institutions related to rural development; 
• Effective cross-sectoral and donor coordination of rural energy programs;  
• Adequate information campaigns and education programs; and 
• A broad stakeholder involvement to ensure the whole process of technology development to project identification, design and implementation. 

The policy specifically targets to install improved biomass technologies to meet cooking and other heating energy needs, micro hydro installation for rural electrification through off-grid power production and distribution that is capable to be grid-connected when grid is extended, solar home systems (10 peak watt and above) and white-led and photovoltaic based solar lights replacing kerosene lamps. The policy recognizes solar home system as a mainstream electrification option for many rural areas where grid and micro hydro is not an option for long time to come. 

1.1.20 Forest Sector policies and Forest Act, 1992  

The forestry sector policy has evolved through distinct phases of privatization (pre-1950), nationalization (1957) and community orientation (1970). From review of forest policies of the government as expressed in periodic plans, emphasis on protection in the initial days was replaced by a phase of scientific management of the resource. Later in the post-1970s, management of the resource was replaced by an approach of popular participation of the community. The Tenth Plan (2002-2007) emphasizes promotion of conservation and sustainable use of forest resources, development of forest productbased enterprises,adoption of participatory approaches and poverty reduction to be achieved by providing opportunities for income and employment for poor, women and disadvantaged people. 

The Master Plan for Forestry Sector implemented since 1988 aims to (i) meet the people’s basic needs for forestry products (fuel-wood, fodder, etc.) on a sustainable basis, and (ii) protect and manage forests through people’s participation. The Forest Act and Rules framed under the act are considered to be quite progressive instruments. These instruments have also laid down provisions related to private forestry. Programs like Leasehold Forestry, Hills Leasehold Forestry and Forage Development Project that help raise incomes of families in the hills below poverty line also aim to protect and conserve forests. These programs help towards managing forests for fuel-wood. The proposed Forestry Sector Policy, 2000 on the other hand is specific in addressing the problem of energy in the rural areas by focusing its emphasis on managing the sector for fuel-wood. The long-term objective of the 2000 Policy is specific in meeting the people’s basic needs for fuel-wood, timber, fodder, and other forestry products on a sustainable basis. The forestry resources will be managed and utilized in a manner which gives priority to the basic needs of the people such as fuel-wood for cooking, timber for housing, fodder for domestic animals, and medicinal plants for health. The strategies for production will be to promote commercial plantations especially in the Terai. 

1.1.21 Petroleum, Coal and Natural Gas Sub-sector Policy  

Nepal Oil Corporation, registered under the Company Act 2021, has the monopoly to sell and distribute petroleum products (POL) in the country. It purchases oil from the world market and arranges to receive POL products from the Indian Oil Corporation in exchange for the imported oil. Currently the arrangement is to import POL products from the Indian Oil on the basis of prevailing market price quoted on the 1st and 16th of each month.  

Government with a notification in the Nepal Gazette required the NOC to distribute petrol with 10 percent of ethanol from Magh 1, 2060 (January 15, 2004) and is yet to be implemented.  

The national requirement of coal is being met through import due to virtual non-existence of coal mines with economic significance. Limited amount of low grade coal is locally mined in certain areas of Nepal. Coals extracted are distributed locally for use generally in brick kilns. Under the Mines and Minerals Act, 2042, coal mines are licensed and registered for their operation.  

A limited amount of natural gas has been found in some pockets of Kathmandu Valley. Probable reserves identified so far needs further confirmation in order to be of any use for commercial exploitation. If the proven reserves can be used economically even for a limited number of years, it is worth exploring in view of total dependence on imported gas. However, the policy on natural gas is yet to be formulated.  

1.1.22 National Transport Policy 2001 

With the objective to develop a transport system that is sustainable, dependable, less expensive, safe, comfortable and self-reliant, the National Transport Policy 2001 was adopted by the government in 2001. Detailed policies to realize the above objective include, among others, developing a transport system with renewable sources such as electric and solar energy. It also emphasizes development of a transport system that is pollution free. The 2001 sectoral policy on transport system includes sections on rail transport, cable car and ropeways all with renewable energy sources.  

Current Institutional Situation  

The prevailing institutional arrangement in energy sector is broadly based upon nature and type of energy resource, legal basis of the energy organization and scale of energy generation. Accordingly, a number of institutions exist in the energy sector. They perform energy planning, development and implementation functions. Government bodies, state owned public utilities and private sector, local bodies and communities are involved in energy sub-sectors by resources – e.g. traditional, commercial and renewable. Six different ministries - Ministry of Energy (MoEn), Ministry of Forests and Soil Conservation (MoFSC), Ministry of Agriculture and Co-operatives (MoAC), Ministry of Commerce and Supplies (MoCS), Ministry of Environment, Science and Technology (MoEST), and Ministry of Industry (MoI) play different role in energy sub-sectors with several agencies attached with these ministries.  

National Planning Commission (NPC) is responsible for coordination and bringing together the sub-sectoral energy development targets into the periodic development plan. Further, Water and Energy Commission/Water and Energy Commission Secretariat (WECS), the government's advisory agency in water and energy sectors, is responsible to help prepare and facilitate implementation of necessary policy, plan and legislation pertaining to the development of water and energy, and establish coordination among national and sectoral policies on water and energy.  

The micro scale electricity and other alternate energies are planned, managed and facilitated by Alternative Energy Promotion Centre (AEPC) which comes under MoEST. In traditional and commercial energy sub-sectors, there is dominance of public monopolies (in forests resource generation/harvesting of Timber Corporation of Nepal/MoFSC; in procurement and marketing of petroleum products of Nepal Oil Corporation/MoCS; and in transmission and distribution of electricity of Nepal Electricity Authority/MoWR). 

Chapter 2: Energy Issues in Nepal 

Energy issues in Nepal are mainly concerned with technical, policy/legal, institutional, environmental and socio-economic aspects. Energy poverty is a major issue in Nepal considering the very low level of energy consumption. As energy plays an important role in economic development, energy consumption level has to be increased. The current strategy is therefore focused on reducing the energy poverty of the country by increasing energy access and affordability ensuring energy sustainability.  

General Issues 

2.1.1 Energy Classification 

At present, energy sector is classified into traditional, commercial and renewable energy. This classification is not compatible with the international standard. There is a need for reclassification of existing energy sector. 

2.1.2 Energy Poverty 

Energy poverty is a major issue in Nepal considering the very low level of energy consumption. As energy plays an important role in socio-economic development, energy consumption level has to be increased. The current strategy is, therefore, focused on the reducing the energy poverty of the country by increasing energy access and affordability. This can be achieved by producing finer form of energy in a larger scale i.e. hydropower, as well as through improving and increasing the distribution system. 

2.1.3 Integrated Energy Planning 

Number of ministries and departments are involved in energy sector (see Chapter 3). Ministries and departments involved in planning and development operate under their sectoral/sub-sectoral regulation and for their own targets. It lacks co-ordination which slows down the development of energy sector and access to energy for all in an equitable manner. 

The system and process for integrated energy planning in the existing sub-sectoral energy planning processes is lacking at present. This has resulted in lack of an integrated energy planning practices, a right energy mix framework (giving strategic priority to potential indigenous resources) and a pricing system-appropriate enough for the whole energy sector on a nationwide basis. Besides, lack of integrated energy planning both at the central and local levels has also constrained the national ability to comprehend, envision, investigate and cash internal and external market benefits offered by opportunities such as carbon trading. An institution is, therefore needed to be specified as a lead agency that is responsible for integrated energy planning to put in place the system and processes and accordingly strengthen the capability accordingly. 

Specific Issues 

Major issues identified in each energy sub-sector viz. Traditional Energy, Commercial Sector and Renewable Energy can, broadly, be divided into technical, policy/legal, institutional, environmental and socio-economical.  The major issues in these aspects of each sub-sector are briefly described below.   

2.1.4 Issues on Traditional Energy     

Superficial recognition and low priority   

The overwhelming contribution of traditional energy sources (solid biomass fuels) in total primary energy supply has only been superficially recognized in energy statistics of the country. This is because, the annual Economic Survey of MOF and other reports specific to the energy sector categorically points out that over two-third of total primary energy supply is contributed by traditional energy resources. But there is lack of proportional allocation of funds for all round development, including implementation of activities related to fuelwood supply in the forestry sector, compared to the allocations in the commercial energy and renewable energy sub-sectors. Therefore, the current allocation of development fund in the forestry sector, which has so far remained the largest contributor of primary energy (in the form of TE), faces the challenge of meeting the growing fuelwood demands (in absolute terms) from the rural households, commercial establishments and traditional industries. 

Lack of awareness  

Present TE applications are primitive, inefficient and unsustainable. Energy use in traditional forms is expected to phase out over time with improvement in the national economy. In order to promote the long term use of available/surplus indigenous biomass sources for energy, the country must be aware of the technological innovations needed in the TE sub-sector, including in-country R&D for identification of appropriate technology, for identification and introduction of technically proven and commercially viable imported technologies for the domestic, commercial and industrial sectors. Except biogas generation from animal dung (and also from human excreta mix in some places) for energy and the activities of ICS for reduction of fuel consumption (through combustion efficiency enhancement) as well as indoor smoke pollution, awareness about other forms of modern bioenergy applications is still limited.     

Declining/depleting forest resources and conflicting management objectives   

The existing forest resources in the country are declining/depleting year after year due to various reasons causing difficulties in meeting the rural energy needs for different end-uses. Besides, the management objectives of none of the managed forest today have been solely aligned for the purpose of ensuring sustainable supply of fuelwood in the country.  

TE resources and supply systems  

The country has not yet pursued any dedicated plantations of energy crops, either annual or perennial crops and grasses or trees solely for the purpose of sustainable biomass supply for energy, neither in the agriculture nor in the forestry sector. Land, which is currently under forest, agriculture and other land uses constitutes the present TE resources in the country, which means trees on forest, non-forest and other types of lands are the major TE resources.  

Biomass residues and by-products  

Currently most of the biomass fuels (i.e. fuelwood, dung and agricultural residues) are derived as residues and byproducts of trees, crops and animals, either at production site during harvesting or at processing sites as residues and by-products of agriculture, livestock and forest-based management/production systems. From the point of view of present TE supply in the domestic, commercial, industrial sectors all these management systems play a crucial role, but such systems would not be feasible for maintaining a sustained supply of biomass sources for the development of centralized bio-energy production.  

Lack of Information 

Information regarding current level of biomass residue and by-product production, uses and the surplus amount by types, from the forestry, livestock, agriculture, industry and municipal sectors is not yet available for assessing the modern bio-energy generation potentials of these sources in the country. 

Competing land use and food security 

Unregulated/unplanned development of energy crops/trees on productive agriculture and forest lands may lead to food insecurity, loss of biodiversity and soil and water erosion, due to deforestation in watersheds.       

Non-proportional distribution of TE resources 

The distribution of existing TE resources, particularly forest, is neither uniform in all physiographical regions, nor proportional to the present distribution of population in different parts of the country, which has caused difficulty in the sustainable supply of TE sources for different end uses in some regions. 

Lack of management/unsustainable harvest of TE resources 

Not all potential TE resources have been adequately identified or put under effective management. The present production system is unreliable in terms of sustained supply of specific amount of biomass for energy in the domestic, commercial and industrial sectors. The problem remains crucial in the forestry sector, as the major TE source in the country is fuelwood that is derived mostly from forests without due consideration of the sustainable production potentials of different types of forests in different physiographical zones. In most cases present fuelwood harvest exceeds the sustainable production of existing forests in the neighborhood due to lack of management and/or over exploitation.      

Lack of effort on expansion/management of TE resources 

There is lack of effort on establishment of dedicated fuelwood plantations in fuelwood deficit areas, as well as on allocation of part of existing forests solely for the purpose of management of TE production sources under scientific management systems. 

Limited awareness/knowledge of ICS  

Currently, ICS dissemination has been limited in number and confined to specific sites. Only limited number of stakeholders seemed aware of the type of ICS being promoted and their intended benefits. The knowledge about specific ICS dissemination programme, intended beneficiaries, associated incentives etc. however, is limited.  

Besides, awareness of the need for standardization of ICS for specific end-uses at different scales still remained limited/weak at the implementation level. 

Limited awareness of improved/modern bio-energy technology   

The present knowledge about biomass based energy applications remained limited only to biomass fuels based traditional energy applications in the domestic, commercial and industrial sectors.  The knowledge about proven and commercially viable improved (modern) biomass energy technologies in foreign markets still remained unfamiliar/ unacknowledged.  

High cost of improved technology  

Technology for improved TE application is available in commercial markets but has remained out of reach for a majority of TE users in the domestic and commercial sectors, because of its high cost and/or due to low economic status of the current TE users. Even the TE using rural industries remained reluctant to introduction of improved technology because of the high investment cost needed for innovation. 

Lack/insufficient effort on the use of non-wood biomass for energy 

Current effort on the use of non-wood biomass for modern energy generation is confined only to dissemination of different sizes of biogas digesters in the domestic sector, primarily for the use of cattle dung (and in some places also with human excreta mix) for biogas generation for meeting the domestic energy needs of rural farming households that maintains a minimum number of cattle heads needed for generation of biogas through specific size of digester. Regarding other non-woody residues, the only visible effort was densification of rice husk in the form of briquettes for use as a commercial fuel. But its current market price is beyond the purchasing capacity of average Nepalese for use as an alternative energy source in the domestic sector. Besides, the currently available briquette size does not match the energy needs of the households needed for diverse end-uses. 

Inadequate information/consideration of the fuelwood dependency 

Current efforts on energy development prioritize rural electrification for lighting and access to energy supply for initiating energy based economic development entrepreneurships. These efforts would not be sufficient to relieve the energy supply problems of the rural population, nor for reducing drudgery and hardship of fuelwood collection and use of women and children. A thorough study of the prevailing area specific TE demand/supply patterns, by end-uses seemed lacking. Such studies could provide a clear picture of what was the situation and what strategy would be necessary to overcome the problem. Where fuelwood was in short supply rural households were forced to look for inferior biomass for alternative fuel to overcome their immediate energy supply problem.  

2.1.4.1 Policy Issues on Traditional Energy 

Lack of a clear policy on the use of biomass  

There is lack of a clear policy and law on the use of biomass as energy source. The pressure on forest for supply of fuelwood as the only source of energy to the people in the rural areas is obvious. Forest rules do not focus on plantation for fuelwood. Conservation alone cannot be the objective in the present context. The share of traditional sources of energy will continue to dominate the energy scene of the country for many years to come.   

Access to community forest 

There is lack of access by non member community to community forests. Access by women, poor and Dalits are restricted. Limited members of the group still exercise power and influence over the resource. There is problem of inclusiveness in representation. There is issue of institutional development of user’s group. Reform is needed in this sector. 

Gap between policy and law 

Implementation of private and leasehold forestry policy is ineffective. Many policies suffer from weak implementation because of absence of timely reform in law.  

Research and Development 

There is less priority for research and development. There is virtual absence of a policy that promotes research on technology for use of kitchen wastes as a source of energy.  

Efficiency of use 

Not enough attention is given to efficiency in use of energy. Conservation of forest is closely related with efficiency in use of forest resources. By use of improved cook stoves, for example, a household can cut the consumption of sizable amount of fuelwood. Saving is conserving. Energy efficiency is equivalent to energy producing. Existing policy does not emphasize that improvement in efficiency is conservation. 

2.1.4.2 Institutional Issues on Traditional Energy

Lack of a specified institution responsible for management of different components within traditional energy sub-sector 

Public agencies and industries in forestry, agriculture and livestock do not consider energy production as a priority task of management under their specific sector and for proper utilization of the biomass residues and by-products for energy purposes. There is a lack of a public agency which is responsible for managing different components of traditional energy sub-sector.  

Lack of operational recognition to and support for planning, monitoring and facilitation of energy resources development activities at the local level  

Central level sub-sectoral institutions are dominant. The devolved bottom-up system of development has very little space in this centralized mechanism. Lack of operational recognition to and support for local bodies to involve them in planning, monitoring and facilitation of energy resources development activities at the local level has affected the quality of program/project implementation in each energy sub-sector and has negative impact on the sustainability of such initiatives.  

Lack of level playing field in fuel wood generation  

Monopoly in generation of fuel wood by public utility has hindered competitive utilization and conservation of this resource. There is lack of enabling policy and regulatory mechanism for providing level playing field to promote private sector in forest development (generation) and management.  

Lack of representation of the weak socio-economic groups in energy planning  

Socio-economic groups of women, Dalit do not have adequate and structured representation in the relevant energy organizations. They do not have representation in the energy planning and decision making process. This has created feeling of non-ownership among the excluded groups of any energy development and planning process in the country.   

Lack of integrated energy planning awareness, education and training 

Awareness of integrated energy planning and management is very low among the people. School level education does not offer curricular activity about importance and role of integrated and sustainable energy development and security in raising quality of life of the general people. Educating future generation on importance of sustainable energy development and security is critical to socially optimize the benefits of any national initiative on energy resource development. Besides, there is lack of institutions which regularly provide training to fresh trainees and upgrade and refresh the skills of existing manpower in energy sub-sectors. Lack of appropriate, regular and updated knowledge and skill of the old and new staff in the energy sector for sustainable resources management, dissemination-adoption and operation of new and efficient technology and quality monitoring has hindered accelerated extension and promotion of energy resources to benefit the larger number of people.  

2.1.4.3 Environmental Issues on Traditional Energy

Air pollution 

Though biomass is carbon neutral in terms of Green House Gas (GHG), it emits carbon monoxide and other toxic gases due to incomplete combustion in inefficient cooking devices. Use of biomass in traditional inefficient stoves causes dirty kitchen as well as indoor air pollution from ashes and smokes. This primitive technology has adverse impact on health and local environment; especially women and children. 

Environmental degradation 

Unsustainable harvesting and over exploitation of wild forest cause deforestation, soil erosion at local level and flooding in sensitive areas. Similarly, smoke emission from traditional energy use in domestic, commercial and industry sectors (brick kilns) has caused air pollution. Very often unmanaged forest fire occurs, which depletes traditional energy resources, wild life and biodiversity. 

Awareness on adverse impact 

User groups of traditional energy resources are not aware of environmental degradation and impact on climate change due to excessive burning of fuel wood, animal dung and agricultural residues in traditional inefficient stoves and devices. Many of them are not aware of existence of improved cook stoves/ gasifiers that minimize kitchen smokes and fuel consumption.  

Loss of wild life and biodiversity 

Most of energy requirement (about 90 percent of total energy consumption at base year) is met by traditional energy resources; such as fuel wood, animal dung and agricultural residues in Nepal. Over dependence on wild forest for energy will cause loss of wild life and biodiversity in due course of time. 

2.1.4.4 Social Issues on Traditional Energy 

Lack of knowledge and awareness on the adverse health impacts 

One of the major problems facing the rural areas is the lack of knowledge and awareness among people, especially the women folk on the risks and adverse health impacts associated with the use of traditional biomass fuels. The smoke and particulate matters coming out as the direct burning of the biomass fuel is harmful leading to cough, respiratory tract infections, asthma, eye infections, headache, etc. On the other hand shortage of biomass fuel is leading to switching into inferior fuel sources which could be even more harmful health-wise and less energy efficient. Due to depleting and scarce energy sources, the need to go to distant places and dangerous landscapes/forests for collecting forage, fodder and fuel wood renders women and children, who are primarily used for this purpose, prone to accidents and even death. Increased work load and indoor smoke pollution tend to make rural women quite vulnerable to several health maladies. 

Increased work load and lack of income generating programs 

The necessity to go far for collecting biomass energy and fetching water due to the scarcity of traditional biomass energy and depleting water sources adds further to the already bulky work load for women. Besides consuming a lot of their physical effort, it leaves them with a very little time to indulge in other income generating activities or even community based activities. Further, the dearth of biomass energy has brought a halt to a lot of home bound micro enterprises which economically empowers rural women. The inadequacy and ineffectiveness of social mobilization and income generating program is a hindrance to rural women who have spare time to invest in income generating activities.  

The practice of using child labor in collecting traditional biomass energy is a common practice in the rural context. More specifically, girls are involved in this activity and hence are deprived from the opportunities to go to school. This consequently perpetuates the cycle of female illiteracy and the prospect of their growth and development is thus handicapped. 

Lack of knowledge on the use of agri–residue as a source of energy  

 Nepalese economy is predominantly an agrarian economy and agri-residue forms the third largest indigenous biomass source of energy in Nepal. Despite the high potential of use of agriresidue for energy purpose, it is primarily used for fodder and compost manure preparation only. This is primarily because the technology of producing energy from agri-residue is not brought into public interest and people are ignorant about it. Promoting this technology will not only provide the rural agriculture-based population with the cheapest and readily available source of energy but will also enhance the socio-economic status of people by curtailing their expense on purchasing other energy sources. 

Lack of skilled manpower 

Lack of incentives and opportunities, the trend of migration of skilled manpower and educated elites to the urban centers is on rise thus hindering the prospect of improving traditional energy use through technological innovations. Also migration of professionals has resulted in brain drain in energy sector at different levels. 

Lack of alternative employment opportunities 

There are large populations of marginal poor who are entirely dependent on the illegal cutting down and trading of fuel wood to earn their livelihood. Unless alternative employment opportunities are provided, this activity cannot cease. Hence, to prevent deforestation and depletion of forest it is essential that the concerned agencies make provisions of a different source of generating income for these socio-economically disadvantaged populations. 

Inadequate information about private forest management and use 

The scarcity of traditional biomass energy can be compensated by encouraging the private forest developers. However, lack of information among the interested groups on the management of private forest and its use is an impasse for adopting this practice by the concerned stakeholders.

Lack of knowledge of economically valuable species 

Due to lack of knowledge on different economically valuable tree species, these are used as fuel wood which could otherwise earn substantial revenue. This ignorance is causing economic loss not only to the users but to the nation as a whole. 

Lack of awareness on stall feeding 

Due to lack of awareness on stall feeding of cattle, the practice of open and rampant grazing on non-pasture lands is still prevalent. This leads to the destruction of young plants and saplings. 

Difficulty in fuel wood procurement for rituals and ceremonial fires  

In spite of being announced secular nation in terms of religion, the Nepalese population is still dominated by Hindu majorities. Hence, the depleting firewood source is striking hard time on the availability and supply of fuel wood which is a pre-requisite for the rituals and ceremonial fires. 

2.1.4.5 Economic and Financial Issues on Traditional Energy 

Problem of valuable timber used as fuel wood  

Fuel wood is only marketed in urban areas but in rural areas it is used as free gift of nature for the daily household consumption. Due to such situation there is not only the problem of deforestation but the valuable timber is also used as fuel wood which loses huge resource of national property. 

Lack of commercialization of traditional energy resources  

Traditional energy such as fuel wood, agricultural residue and dung is not commercialized. Fuel wood is marketed in urban areas only; residue and dung are to some extent marketed in rural areas at negligible price in comparison to the value of its energy content. Economic price of fuel wood is not considered and it is considered as free gift of nature and freely accessed by the rural people for their daily livelihood. 

2.1.5 Issues on Commercial Energy 

2.1.5.1 Technical Issues 

Focus on indigenous resources  

The country is becoming alarmingly dependent on petroleum products for its energy requirement. The country has huge potential of hydropower energy resources, but harnessing of these resources is dismally poor. Hence, the country has to focus in developing the indigenous renewable energy resources such as hydropower, solar, wind and bio-energy resources rather than depending on imported petroleum products. 

Exploration, production & generation of energy resources in the country 

Though official documents show some reserves of fossil fuels such as coal, oil and natural gases in the Western Nepal, in the Southern belt and in Kathmandu valley respectively, the exploration, production and development of these reserves have not received much focus. Similarly, current development of hydropower resources is quite inadequate for meeting the country’s demand. 

Transport vehicles on efficient energy resources 

Emphasis needs to be given more on the usage of electric vehicles and public transport. Individual transport vehicles such as private cars, jeeps, and motorcycles should be replaced by mass transport. Development of electric vehicles such as railway systems along the East West Highway should come in the list of priority. Necessary emphasis and incentives in the development of the Expressway between Kathmandu and Hetauda would significantly save the consumption of petroleum products. 

Efficient and quality energy services 

Quality energy service is the right of the consumers. But the existing mechanism of quality control in the products and energy services is inadequate and weak. There is a need of a strong quality control mechanism in petroleum products and coal. Excessive load shedding is not addressed by speedy development of power plant. The adulteration in the petroleum products, supply of poor quality coal and electricity losses need to be addressed by giving social penalty to people involved. 

Energy transmission 

The transmission infrastructure is of low capacity and is overloaded. It has become the main bottleneck in the development and transmission of reliable and quality electricity. Development of oil pipeline from Raxaul to Amlekhgunj is approved but is not implemented yet. 

2.1.5.2 Policy Issues on Commercial Energy Sector 

Focus on hydropower development   

Despite the focus on hydropower development for meeting domestic needs, implementation has been weak. This has been mainly due to poor energy planning. The country is facing severe load shedding even during the wet season.Industries have been hit very hard. The whole economy has suffered. Weak implementation of one-window policy and lack of consistency or continuity of taxation policy have been identified as causes for slow rate of progress in implementing planned hydropower projects in the private sector. There is also an absence of an effective policy for encouraging the use of domestic resources for development of hydropower. 

Inappropriate energy classification 

The existing energy sector classification of traditional, commercial and renewable where hydropower is grouped under commercial is not appropriate.  

Regulation of the Oil Sector 

Petroleum products occupy an important place in the supply and distribution of energy in the country. Currently this sector has come under various influences from outsideand is not functioning as a commercial entity. There is lack of clear law for regulation of this sector. It suffers from lack of transparency in import and distributionand market-oriented pricing policy. 

Energy Security 

There is absence of a clear policy and law on storage of oil. Oil is a strategic source of energy and in view of nation’s full dependence on imports, its vulnerability is very high.  

Development of indigenous sources 

Energy independence is not a practical proposition. However, in view of the supply completely dependent on import, part of the need should be fulfilled by energy sources developed within the country. Some degree of self reliance is necessary. Technologies are available for producing ethanol and biodiesel for mixing and substituting part of the imported fuels. There is lack of an effective policy for developing alternative fuels within the country. 

Energy Efficiency 

Energy efficiency is the most effective source for reducing the supply gap, carbon emissions and reliance on expensive imports of petroleum products. There have been a number of initiatives in EE, yet it needs more serious attention. Energy efficiency can be achieved through a host of measures such as manufacture and use of energy efficient equipments, reduction in system losses, proper energy planning and management, efficient transport planning, among others. Both supply and demand side efficiencies need to be addressed. 

Energy sector reform, restructuring and governance 

There is lack of effective implementation of power sector restructuring programmes. Reforms in this sector include unbundling the power sector, creating an independent regulatory mechanism, and introducing competition in power generation. Progress has been slow partly due to delays in enabling legislation and lack of time bound roadmaps. 

Regional Cooperation 

Regional cooperation can play a critical role in ensuring energy security in a sustainable manner. Subregional power trade can be an effective way of meeting energy demand. By utilizing different peak times of neighbouring countries, regional power trade can reduce the need for building new power generation plants in each country. 

2.1.5.3 Institutional Issues on Commercial Energy Sector 

Lack of continuous policy recognition for integrated energy planning at the central level   

WECS's one key responsibility is to act as an overall energy planner, which would especially assist the NPC's periodic economic development plan pertaining to energy. With the factors such as the political expediencies and vested mercantile sub-sectoral energy interests in oil, forests, water and other natural resources sub-sectors provide impetus for the growth of unequal,  divergent and separate public institution in each energy sub-sector. Each one of these subsectoral public institutions plans and manages energy in its sub-sectors rather independently. Although WECS was established for institutionalizing an integrated energy planning process, it does not continuously receive policy recognition and support. Therefore, an integrated mechanism that links all energy sub-sectors together in terms of effective planning is clearly absent. It has been felt that an overall executive body is needed for integrated energy planning. 

Inequitable distribution of benefits from royalty 

Providing royalty solely to district where the hydropower project is located is not equitable. For instance – power generation from a hydro installed down-stream is not possible unless the water users up-stream allow the water flow. A mechanism is required to share royalty equitably in the basin/sub-basin.     

Lack of level playing field in electricity transmission and distribution 

Monopoly in transmission and distribution of electricity by public utility has hindered competition of these commodities in the market and hence in electricity generation and consumption. There is lack of enabling policy and regulatory mechanism for providing level playing field to promote private sector in electricity transmission and distribution as well. 

Lack of level playing field for oil import  

Monopoly in import of oil (petroleum products) by public utility has significantly hindered competition of petroleum commodities in the market and hence the petroleum procurement, transport and distribution are not efficient. There is lack of enabling policy and regulatory mechanism for providing level playing field to promote private sector in oil import, storage, transfer and distribution. 

Awareness of integrated energy planning and management stands low. Educating future generation on importance of sustainable energy development and security is critical to socially optimize the benefits of any national initiative on energy resource development. Besides, there is lack of institutions which regularly provide training to fresh trainees, upgrade and refresh the skills of existing manpower in energy sub-sectors. It has been found a lack of appropriate, regular and updated knowledge and skill of the old and new staff in the energy sector for sustainable resources management, dissemination-adoption and operation of new and efficient technology and quality monitoring has hindered accelerated extension and promotion of energy resources to benefit the larger number of people.  

2.1.5.4 Environmental Issues on Commercial Energy Sector

Pollution tax on fossil fuels 

Excessive use of fossil fuels (coal and petroleum products) in industries, transport, agricultural and domestic sector emits toxic emissions causing air pollution and climate change due to greenhouse gas emissions. Thus there is a need for policy on pollution taxes on petroleum products and reduction in their use. This fund can be used as a cross subsidy for the promotion of environment friendly renewable energy technologies. 

Environment impact assessment 

Time frame provided for EIA is too long. Mitigation measures to minimize the environmental impacts are not followed strictly and sometimes, the environmental aspects are not seriously considered while planning hydro power projects. Similarly, the use of waste land is not considered while installing high voltage transmission line. There is a need for simplification of EIA for small hydropower projects.  

The environmental assessments are merely taken as “add on burden” to be reckoned at the beginning of the project and despite having provisions for appraisal of these assessments once the project is constructed, it is not implemented. There is serious lag in monitoring and evaluation of post construction and operation of projects. 

Resettlement policy 

There is lack of appropriate resettlement policy at high dam sites. 

2.1.5.5 Social Issues on Commercial Energy Sector

Lack of energy reliability and security  

It is not only the commercial sector that is suffering from the lack of reliability and security in energy but it is equally true for the domestic. The concept of human development which means easy, affordable and equitable access to all forms of energy supplies and services in this context is utterly misconstrued. And this lack of energy security is increasingly threatening the social stability of a developing country like Nepal. The access to energy is determined by affordability hence energy pricing plays a deciding factor towards making energy accessible. So if energy is to be made accessible to all especially to those who have economic constraints, then either the imported fuel should be subsidized or indigenous resources should be developed and distributed at affordable rates. 

Lack of access to electricity  

Besides other energy sources, electricity plays a vital role in the development process as it creates several avenues for the social and economic growth of the people and the country. Not only at the urban level but equally at the rural level, electricity is a significant medium for enhancing the livelihood of the people by providing them with an efficient and cheaper source of energy. With access to electricity, people can work during nights, indulge in income generating activities, children and even adults can study at night. However, electricity as a source of energy is not accessible to 52% people in our country thus hindering the advances in the livelihood of people and overall socio-economic development of the community, region and country as a whole. 

Lack of strict enforcement of Social Impact Assessment and conduction of public hearing prior to any commercial energy project development

Despite the mandatory pre-requisite of Social Impact Assessment and public hearing before commencing any commercial energy project, the enforcement is still weak. 

Lack of effective mechanism to address the Resettlement and Rehabilitation issue  

Although there is Resettlement and Rehabilitation Policy for the people displaced by the energy projects, the policy is not effective in addressing this issue hence inviting dissatisfaction from the Project Affected People. 

Lack of urban planning 

The ever increasing trend of migration of people to urban centers due to geo-political reasons will not only exert population pressure in the urban areas but the lack of urban planning will also result in burgeoning squatters and slums. On the other hand this will create an imbalancedsituation in the demand and supply of energy sources thus creating energy insecurity, supply deficit, environmental deterioration and energy misappropriation and theft. 

Non-implementation of penalty system for those stealing and misappropriating energy  

Despite the provision of penalizing the culprits involved in stealing or misusing energy, as for example, electricity, the penalty system is not strictly enforced by the concerned authorities. This is not only incurring loss to the country but is encouraging the proliferation of network involved in such crime. 

2.1.5.6 Economic Issues on Commercial Energy Sector 

Lack of competitive market price in petroleum sector  

The petroleum product is solely controlled and regulated by NOC. Petroleum products are not allowed to be imported freely and marketed at competitive price by the private parties as per the liberalization policy of the government.  

Improper pricing of petroleum product  

Petroleum products prices are set by NOC that can be considered as monopoly price. Due to absence of competitive market; petroleum price are unjustified because even if the price of LPG is currently increased by rupees 200 per cylinder, NOC is claiming a loss of 70 rupees per cylinder. If compared with the energy value price of kerosene which is normally used by poor people is very much higher than LPG in terms of energy content value. 

Weak investment in hydropower  

There is huge scope of producing hydropower but due to the financial constraint of the government it cannot be materialized.  Investment in hydropower is financially beneficial but the government is unable to attract the private producers and foreign investors to invest and boost up the hydropower development. 

Lack of initiative for using local resources  

Financial institutions and banking sector are unable to use 200 billions of rupees which is equivalent to 50% of the total assets of commercial banks. As it is clear that IPPs are in profit in hydroelectricity, banking institutions with surplus funds must be attracted to invest in energy production. 

Lack of differential electricity and energy price 

Differential electricity and other commercial energy price are required to abide by the equity principle. At present the situation is reverse the kerosene price in Jumla and Humla is much higher than Kathmandu. Actually the price of kerosene in these rural areas must be cheaper than other urban areas. There is no subsidy and facility in case of commercial energy for the support of the rural poor. But there is no government control over the forest which is accessed as free.  

Affordable cost of energy services 

Affordability is most essential precondition of the energy supply services. But the issue to provide energy at affordable cost is very controversial term and is very hard to meet because NEA and NOC, the major commercial energy providers, are claiming that they are in huge loss.  

Absence of energy conservation/ efficiency  

Energy saving or energy conservation is equivalent to energy production. Huge investments  are required for electricity production. On an average, about 2000 USD is required to produce one KW of hydroelectricity, so, it is required to promote energy conservation and energy efficiency. 

2.1.6 Issues on Renewable Energy Sector 

2.1.6.1 Technical Issues 

Issues on bio-gas technology 

Energy can be produced from human excreta and other biomass, however to bring this into implementation, raising public awareness and emphasizing technological utility is not given much attention. There is a lack of subsidy on the production of biogas from household garbage. Technical knowledge on the production of biogas from the by-products of vegetable farming residues is not well known to common people. 

Issues on micro-hydro power 

There are no practices to take advantage of multiple benefits from water use. Water used for micro-hydro can also be used for water mill and irrigation which is not considered in design of micro-hydro projects. The traditional water mill can be improved to produce electricity hence attention needs to be paid on this. Systematic operation and maintenance system in micro hydro projects need to be established. There are many difficulties in conduction of survey of MH due to difficult landscape in rural areas. Study and survey on identification of MH potential area and its capacity are still very limited. Inadequate technical knowledge on the operation and maintenance of micro hydro sector is still hampering in the micro hydro power generation. 

Issues on solar energy 

The major issues are insufficient knowledge on the technology of cooking food from solar energy, its capacity and general feasibility. Sustainability of solar energy technology is another important consideration in this regard. Subsidy has been a debatable issue in this sector. 

Issues on wind energy 

Detail assessment of wind energy production is necessary before having any wind energy project in the country. High cost technology is the major reason not to have such wind energy projects. Mapping of solar, wind and modern biomass energy technology is needed as a part of resource assessment. 

Issues on other renewable energy (bio-fuel, briquette) 

There is in-adequate exploration and implementation of other viable renewable energies; such as bio-diesel, ethanol. Concept of commercially developing drumstick (biodiesel plant) as an alternative to petroleum products is also lacking. Plantation of bio-fuel plants like Khirro- Kadam is not emphasized for bio-energy. Technology development related with bio energy production is still in preliminary stage. Technical knowledge in producing bio briquette is also not matured. Briquette use is found expensive.  

2.1.6.2 Policy Issues on Renewable Energy 

Cumbersome subsidy procedures 

There are cumbersome procedures and a centralized system of subsidy delivery mechanism. The current subsidy policy is designed according to the administrative classification of districts which fails to address the requirements of the people who actually need such support. In addition, the amount of subsidy is also not appropriate. 

Credit facility 

Interest on credit for rural energy technologies is high. People for whom the credit facility has been targeted simply cannot afford. There is problem of collaterals. 

Energy Master Plan 

There is absence of information base in the district to avail the facility speedily. A few districts have master plan of energy resources developed. Many districts lack such information. 

Lack of awareness 

There is wide scale lack of awareness about the policy in the districts. Even the authorities who are supposed to supervise implementation of these programmes have been found ignorant about the details of policy provisions and delivery mechanisms. Some who had knowledge expressed reservations about efficacy of the programme. The programme suffers from interference. 

VAT facilities 

The procedure for refund of VAT is cumbersome, and in most cases unpractical. 

Research and development 

Research and development programme on renewable energy is inadequate. 

2.1.6.3 Institutional Issues on Renewable Energy 

Lack of recognition to and prioritization of indigenous water resource as the lead energy sub-sector in integrated energy planning  

Indigenous renewable energy resources like water lack effective recognition and prioritization while planning energy resources development.  Ministries and departments involved in planning and development operate under their sectoral/sub-sectoral regulation and for their own target lack co-ordination. Such a situation was a result of an institutional arrangement where divergent public agencies dominated their respective energy sub-sector and no agency is clearly specified as a lead agency that is responsible for integrated energy planning.  

Lack of capability for integrated energy planning  

The system and process for integrated energy planning in the existing sub-sectoral energy planning processes is lacking at present. This has resulted in lack of an integrated energy planning practices, a right energy mix framework (giving strategic priority to potential indigenous resources) and a pricing system-appropriate enough for the whole energy sector on a nationwide basis. Besides, lack of integrated energy planning both at the central and local levels has also constrained the national ability to comprehend, envision, investigate and cash internal and external market benefits offered by opportunities such as carbon trading. An institution is, therefore needed to be specified as a lead agency that is responsible for integrated energy planning to put in place the system and processes and accordingly strengthen the capability accordingly. 

Ineffective information dissemination through responsible institutions 

The institutions responsible to handle renewable energy related matters have weak mechanism for effective information dissemination regarding subsidies and technology adoption and updates. 

2.1.6.4 Environmental Issues 

Environment impact assessment 

There is an inadequate implementation of mitigation measures towards environmental assessment. 

Battery disposal 

There is lack of rules and regulation regarding the disposal of batteries of solar home system. Many users are not aware of negative environmental impact of lead acid batteries. 

Solid waste management 

Users are not aware of attaching toilets to biogas plants and there is no subsidy policy for it. Also there is lack of information to users that biogas can be generated from the solid waste. Similarly information dissemination is lacking for the disposal of agricultural field residues, municipal and industrial residues. 

Air pollution 

Ashes and smokes are the main sources of indoor air pollution. Similarly, burning fuel wood in brick kilns causes air pollution to the surroundings. 

2.1.6.5 Social Issues 

Inadequate information dissemination and lack of knowledge  

Exploration, development and use of other energy sources apart from the traditional biomass energy and commercial energy are still a new and emerging concept in the domestic sector. Therefore, providing knowledge and creating awareness among the people regarding investment, use, conservation and underlying opportunities in energy sector specifically renewable energy entails a thorough exercise. In order to reduce the dependence on traditional and commercial energy sources, use of renewable energy is the only alternative as a cheaper, easier and environmentally friendly technology. For this purpose, extensive information dissemination on these aspects needs to be done fervently to increase interest and gather active participation from the stakeholders and the general public. Moreover, lack of knowledge on the renewable energy technologies, is also depriving people from socio-economic, environmental and health benefits that can be reaped by using renewable energy like biogas, micro-hydro, improved cook stove, solar home systems, etc. As for example, dung cakes are a very common source of biomass producing a very inferior energy. However, the same animal residue when used in biogas plant can produce environment, health and pocket friendly energy.  

Besides providing information on renewable energy, awareness regarding the effective, optimum and efficient utilization of other traditional and commercial energy sources needs to be disseminated among people, as for example, promoting power saving CFL/LED in areas having access to electricity.  

Lack of proactive involvement and opportunities for women 

There are very few women professionals in energy sector and these handful of professionals have negligible representation in the policy, decision-making and implementation level. Major portion of energy is utilized by the domestic sector and hence women are the major role players when it comes to energy use and conservation. It is therefore imperative to actively involve and seek participation of women in energy sector both at the professional level and at grass root level. There is an apparent lack of women professionals in energy sector who  can contribute  in making policy and taking decisions. Similarly, at the grass root level, there is insignificant involvement of women in taking community level decisions. Women at the grass root level can be involved in promoting, training and using renewable energy technologies, conservation of energy and its optimum utilization and creating awareness on the harmful impacts of traditional energy use. This will not only build their capacity but also instill a sense of belonging and responsibility in the development arena.  

Lack of ownership/accessibility  

Equity being directly linked with sustainable development is a very crucial issue in the social context. Development initiatives which are lagging in terms of equal distribution of benefits and services for all may not be sustainable and call for a shift in the development paradigm. It is realized that the energy projects which do not take local development, distribution of benefits and participation of rural poor, Dalits, marginalized people and other deprived communities into consideration are not sustainable. This lack of ownership and accessibility by the local communities leads to the non-sustainability of such efforts and hinders in bringing these groups into the development mainstream. 

Rather than concentrating only on energy security, reliability and accessibility, it is equally essential to analyze the energy choices and priorities of different groups and communities to make energy projects completely socially inclusive and sustainable. Hence, the development of various model of participatory resource management process depending on the geographical set up needs to be implemented more effectively. 

Inadequate local ownership/participation  

Except in demand driven community based energy projects, the local participation in the projects developed by external investors is negligible. This has created a gap between the project owners and the local community whereby the of ownership by the community towards the project has become an issue. Energy projects developed without taking local development into account cannot be sustainable. This lack of equity leads to a state of social dissatisfaction and conflict. 

Lack of curriculum  

Energy being the engine of overall growth and development of a country, it is an issue of primary concern to every citizen and hence everyone should be acquainted with the basic concepts in energy. The teachers, students, laymen, housewives and professionals in different sectors must understand the fundamental concepts of energy as everybody is inevitably associated with energy in some way or the other. Hence, the best way to achieve this is through the introduction of curriculum on energy at all levels of educational strata. 

Lack of public awareness on policy process  

Lots of interest is emerging from the public/private investors in energy sector development. However, lack of knowledge or inadequate awareness about the policy process involved is creating certain complexities in the course and therefore is not attracting the investors to the desired extent. Similarly, unawareness about other policy processes associated with energy sector and of direct relevance to the general public and stakeholders is problematic. 

Cultural barrier  

Due to different cultural practices adopted by people and the values they adhere to, sometimes it may create difficulty in abandoning traditional energy use practices due to users’ reluctance in adopting alternative unfamiliar sources/practices against their norms and values. As for example, due to attachment of toilet to biogas plant, some people in rural areas may not accept this technology as an alternative to using the traditional biomass energy. 

2.1.6.6 Economic Issues 

Lack of income generation of poverty people  

Energy is considered as one of the major input for the development of the society. The renewable energy programs must be integrated with rural development program along with the income generating activities of the rural people to raise the income of the poverty people. 

Lack of credit and subsidy facility for the development of improved technology  

Energy efficiency is a must in all improved technology including ICS, solar home system, biogas system, wind energy etc. The development of efficient and improved technology in all energy resources and its application is lagging due to the lack of credit and subsidy facility for the development of improved technology in energy sector  

Lack of initiative to produce solar panel by the country  

There is lack of initiative to produce solar panel by the country. Solar panels are very costly and import duty is exempted by the government, which incurs a huge financial loss to the nation. But this can be curbed if solar panel can be produced in within the country.

Chapter 3:  Energy Scenarios Analysis 

While formulating the national energy strategy, three different future energy demands with respect to economic growth are assessed. These scenarios are: 

• Business As Usual (BAU) case with an average GDP growth rate of 3.9 percent 
• Reference case with an average GDP growth rate of 5.6 percent 
• Accelerated growth case with an average GDP growth rate of 8.6 percent  

Such future energy demands are analyzed considering the energy demand situation of 2004/05 as the base year. For policy analysis, reference scenario of 5.6 percent GDP growth rate is considered as South Asia’s overall economy was growing at an average growth rate of 5 percent (IMF, 2006) during the period 2001 -2005. Further, it seems possible for Nepal to move in line with South Asia's GDP growth rate in the years to come.  

BAU Scenario (Baseline Scenario) 

In this scenario, analysis of future energy demand is made, assuming the average GDP growth rate equal to 3.9 percent. Another assumption is that the share of each demand technology in the energy supply in future years will be the same and similar consumption trends will continue in future as in the base year.  

The expected final consumptions of various fuels in this scenario are presented in the table 3.1. The total energy consumption in 2030 is expected to grow to a value of 1184 million GJ from the base year value of 369 million GJ. The per capita energy consumption for 2030 is expected to stand at 29 GJ.  

Table 34: Fuel Consumption by years in BAU scenario 

Figure 3.1 shows the projected consumption of various energy sources at an interval of five years in the BAU case. In this scenario, petroleum products will be increasing at annual growth rate of 10 percent, electricity 11 percent, coal 5 percent, biogas 9 percent and the traditional biomass fuels at 4 percent respectively. 

Figure 16: Fuel Consumption Trend as per BAU Scenario

The average growth rate of total energy consumption will be 5 percent during the study horizon. The share of fuel-wood is expected to remain relatively high, surpassing the sustainable wood supply limit based upon the Forestry Sector Master Plan, 1988. 

Figure 17: Energy Mix in BAU Scenario in 2015

The share of fuels in 2015 and 2030 in this scenario is given in the Figure 3.2 and Figure 3.3. Fuel wood share of the total energy consumption will decrease from 78 percent in 2005 to 72 percent in 2015 and 60 percent in 2030.  

Likewise, the share of electricity will increase from 2 percent in 2005 to 6 percent in 2030. Petroleum products will occupy a share of 16 percent in 2015 from 9 percent in 2005 and they will grow to 23 percent in 2030 in the total energy consumption. 

Figure 18: Energy Mix in BAU Scenario in 2030

Table 35 Sectoral consumption at BAU scenario 

                                                                                                                            Unit: Million GJ 

The sectoral energy consumption pattern is shown in Table 3.2. The share of residential sector in total primary energy consumption will be 85 percent in 2015 and 73 percent in 2030. The share of commercial sector will increase from 1.4 percent in 2005 to 3.6 percent in 2015 and 10 percent in 2030 in this scenario. Industrial sector will consume 4.2 percent in 2015 and 8.1 percent in 2030. There will be a rapid increase in the energy consumption in transportation sector since demands in this sector are expected to increase rapidly.  

The peak power plant capacity requirement will be as Table 3.3.The peak power plant requirement for 2015 will be 1,300 MW and in 2030, 6,300 MW. Per capita electricity consumption reaches 521 KWh in 2030 from 67 KWh in the base year. The calculation of hydropower plant installation costs is based on NEA Corporate Plan 2005. The annual investment requirement for power plants in the period 2010-2015 will be NPR 14 billion on average, considering the base price level of 2005. 

Table 36: Peak power plant capacity at BAU scenario 

In the period 2025 -2030, the average annual investment required will be NRs 85 billion from the base price of the year 2005, which is around 6 times the annual investment requirement in 2010 – 2015. 

Reference Scenario or Interim Plan Scenario 

This scenario assumes that the average GDP growth rate will be according to interim plan i.e with an average GDP growth rate of 5.6 percent. It further assumes that the share of each demand technology in the energy supply in future years will be the same as in the base year. 

The projected final consumptions of various fuels in this scenario have been given in Table 3.4. The total energy consumption in 2030 is expected to grow to a value of 1301 million GJ from the base year value of 369 million GJ. The per capita energy consumption for 2030 will stand at 33 GJ. 

Table 37: Fuel consumption at reference scenario 

The cumulative growth rate of primary fuel consumption will be 5.2 percent. The annual growth rate of petroleum products will be 10 percent and that of electricity will be 12 percent during the study horizon. 

Figure 19: Fuel consumption trend at reference scenatio

Fuelwood will be the dominant fuel in this scenario, easily surpassing the sustainable limit throughout the analysis period. 

Figure 20: Energy mix as per reference scenario in 2015

Figure 21: Energy mix as per reference scenario in 2030

Figure 3.5andFigure 3.6 shows the primary fuel shares in 2015 and 2030. The share of fuel wood will be 72 percent in 2015 and 57 percent in 2030 respectively. Share of electricity will increase to 7 percent in 2030. The share of petroleum products will be 25 percent in 2030 compared to 9 percent in 2005. 

Table 38: Sectoral consumption at reference scenatio 

Table 3.5shows the sectoral energy consumption in this scenario. The share of residential sector decreases to 67 percent in 2030 from 90 percent in 2005. Industrial sector share of energy consumption will be 4 percent in 2015 and 11 percent in 2030. Energy consumptions in the commercial sector (service sector) will be 3.8 percent in 2015 and 13.6 percent in 2030. 

The peak power plant capacity requirement will be according to the following Table 3.6. The power plant requirement for 2030 in this case will be 7,648 MW. Per year investment in power plants in the period 2025-2030 will be 115 billion NRs in 2005 base price. 

Table 39: Peak power plant capacity at reference scenario 

Per capita electricity consumption in this scenario will be 124 KWh in 2015 and 672 KWh in 2030 respectively. As per the energy development projected in interim plan 2007-2010, per capita electricity projection for 2015 is expected to achieve 100 KWh which seems to be surpassed as projected in this scenario if the national economy grows at 5.6 percent. 

3.1.1 Energy Indicators at Reference case or Interim Plan Scenario 

Much of the current energy supply and use, based, as it is, on limited resources of biomass and fossil fuels, is deemed to be environmentally unsustainable. Combustion of fossil fuels is chiefly responsible for urban air pollution, regional acidification and the risk of human-induced climate change. Moreover, about one-third of the world’s population still relies on the use of animal power and traditional biomass fuels. Some 1.7 billion people in the world have no access to electricity. Many areas in the world have no reliable and secure energy supplies. This lack of access to modern energy services severely limits socioeconomic development — an integral part of sustainable development. Nonetheless, because of improved technology and an increased understanding of the effects and impacts of energy and energy systems, a developing country today can make the transition from an agricultural to an industrial economy with much lower costs and with less environmental damage than today’s developed countries were subjected to during their transition (IAEA, 2005). 

When choosing energy fuels and associated technologies for the production, delivery and use of energy services, it is essential to consider economic, social and environmental consequences. Measurement and assessment of current and future effects of energy use on human health, human society, air, soil and water as well as examining the sustainability of the energy use require due attention. The strategy has analyzed some energy indicators with and without policy interventions.  

Table 40: Energy indicators in reference scenario 

Years 

Energy Indicators Units 2005 2010 2015 2020 2025 2030 Final energy consumption/capita GJ/capita 15 16 18 21 25 33 Electricity/capita KWh/capita 67 87 124 191 343 672 Energy Intensity GJ/1000$ 43 42 40 38 38 39

Electricity Intensity kWh/1000$ 195 226 273 351 514 801 Electricity power utilized Per cent 0.01 0.02 0.03 0.05 0.09 0.18

Total Energy Consumption/ value 

added in Industry Sector GJ/1000$  19 21 25 32 46 76 Total Energy Used/household GJ/HH 76 81 87 96 107 124 share of non‐carbon energy in 

Primary Supply                               Per cent           0.017        0.02   0.025   0.033     0.049    0.074

Share of renewable energy in 

final total energy consumption         Per cent           0.117      0.117     0.12   0.125    0.136     0.153

(US$ 1.00 = NR 70.00) 

The above Table 3.7indicates that per capita final energy consumption is almost doubled to 33 GJ in 2030 from the value of 2005. Per capita electricity consumption is expected to grow from 67 KWh in 2005 to 672 KWh in 2030. There is general improvement in energy intensity as it decreases to 39 GJ/1000$ in 2030 from 43 GJ/1000$ in 2005. Electricity intensity increases to 801 KWh/1000$ in 2030 from 195 KWh/1000$ in the base year. The power utilization of the potential hydropower improves to 18 percent in 2030 from slightly more than 1 percent in 2005. The final energy used per household increases to 124 GJ in 2030 from 76 GJ in 2005. The share of non-carbon energy in the total primary energy is less at 7.4 percent in 2030 which was 2 percent in 2005. It indicates that most of the energy consumed are carbon based and remains so if no policy intervention is done in time. Similarly, share of renewable energy in total primary energy moves from 12 percent in 2005 to 15 percent in 2030. There is little improvement in the use of renewable energy. The ratio of net imports to total primary energy supply in physical terms increases to 28 percent in 2030 from 11 percent in 2005. It shows that the dependence on imported energy fuels is increasing. Furthermore, the GHG emitted due to energy use rises from 474 Kg per capita in 2005 to 1,432 Kg in 2030 which is almost three times from the emission value in base year 2005. Despite, having low carbon dioxide emission intensity compared to other developing countries (1,650 Kg/capita), developed countries (10,960 Kg/capita) and world average (3,890 Kg/capita) in 2002 (Winkler, 2007), Nepal is suffering from  climate change hazards and paying serious attention for climate change adaptation. 

Accelerated Growth Scenario or High Growth Scenario 

In this scenario GDP growth rate is assumed to be high, i.e. with an average GDP growth rate of 8.6 percent. Similarly, the share of each demand technology in the energy supply in future years will be the same as in the base year. 

The final consumptions of various fuels in this scenario have been given in Table 3.8. The total energy consumption in 2030 is expected to grow to a value of 1642 Million GJ from the base year value of 369 Million GJ. The per capita energy consumption for 2030 will be 40 GJ. 

The cumulative growth rate of total primary energy consumption in the period upto 2030 will be 6.2 percent. The consumption of fuelwood, which is already beyond sustainable limits, will continue to grow although its share will decrease. Fuelwood consumption will be unsustainable throughout the planning horizon. Electricity consumption will significantly grow by as much as 26 times from 2005 to 2030. 

Figure 22: Energy consumption trend at accelerated growth

Figure 3.7shows the trend of primary fuel consumption. The average growth rates of fuelwood, electricity and petroleum in the period 2005 – 2030 will be 4 percent, 14 percent and 12 percent respectively.  

Figure 23: Energy mix as per accelerated growth in 2015

Figure 3.8 andFigure 3.9show the fuel mix in this scenario in the years 2015 and 2030. The consumption of fuelwood will decrease to 71 percent in 2015 and 49 percent in 2030. The share of electricity will increase to 10 percent in 2030 and that of petroleum products will be around 3.5 times that in 2005 at 30 percent. 

Figure 24: Energy mix as per accelerated growth in 2030

The sectoral energy consumption pattern will be as per Table 3.9. The energy consumption share of residential sector will be 83 percent in 2015 and 53 percent in 2030. Likewise, the share of industrial sector in 2015 and 2030 will be respectively 5 percent and 17 percent. Commercial sector will consume 4 percent in 2015 and 21 percent in 2030 of the total energy consumptions. 

Table 42: Sectoral consumption at accelerated growth scenario 

The peak power plant capacity requirement will be as Table 3.10. The power plant requirement for 2030 in this case will be 12,053 MW. The per-year investment in the last period will be 200 billion NRs at 2005 base prices. 

Table 43: Peak power plant capacity in accelerated growth scenario 

The per capita electricity consumption increases to 548 KWh in 2025 and 1,144 KWh in 2030 respectively. 

Comparison of the energy scenarios 

The variation of future energy demand in different time horizon of the strategy period is shown in Table 3.11. WECS has estimated the total energy consumption in 2004/05 equal to about 367 Million GJ. However, the energy model prepared for assessing the future energy demand was calibrated to about 369 Million GJ for the base year 2005. In the base case, the growth of average gross domestic product of 3.9% and average growth rate of total energy consumption of 5 percent was considered. 

Table 44: Future energy demand by years 

Unit in Million GJ 

In case of medium growth scenario, the cumulative growth rate of primary fuel consumption will be 5.2 percent. The annual growth rate of petroleum products will be 10 percent and that of electricity will be 12 percent during the study horizon. Fuel wood will be the dominant fuel, surpassing the sustainable limit throughout the analysis period.  

Similarly, the cumulative growth rate of total primary energy consumption in the accelerated growth scenario will be 6.2 percent. The consumption of fuel wood, which is already beyond sustainable limits, will continue to grow, although, its share will decrease. Fuel wood consumption will be unsustainable throughout the planning horizon. Electricity consumption will significantly grow by as much as 26 times from 2005 to 2030. 

While comparing the total fuel consumption in different scenarios, there will be more than 38% energy demand in accelerated growth case in 2030 as compared to the base case. Whereas just about 9% more energy is required in medium growth scenario compared to the base case in 2030. However, there are no such big differences in total energy consumption among the three scenarios in the year 2010 and 2015. The peak power plant capacity requirement is shown in Table 3.12.The peak power plant requirement for 2015 in the base case will be 1,300 MW and in 2030, 6,300 MW. Per capita electricity consumption reaches 521 KWh in 2030 from 67 KWh in the base year. 

Table 45:  Power requirement in different scenarios by years 

Unit in MW 

The power plant requirement in the medium growth scenario (reference case) for 2030 will be 7,648 MW. Per capita electricity consumption in this scenario will be 124 KWh in 2015 and 672 KWh in 2030 respectively. Comparing with the per capita electricity of 100 KWh as projected in interim plan 2007-2010 for the year 2015, the per capita electricity surpassed with the value of 124 KWh if the national economy grows at 5.6 percent. The power plant requirement in the accelerated growth scenario for 2030 will be 12,053 MW. The per capita electricity consumption increases to 548 KWh in 2025 and 1,144 KWh in 2030 respectively. 

Strategic Interventions at Reference Scenario 

Considering the possibility of continuously attaining the 5.6% GDP growth rate, the strategic interventions are made on the reference case (5.6% GDP growth rate). The main strategic interventions are: 

1. Introduction of Clean Energy Technology at Reference Scenario 
2. Penetration of energy efficient lighting at Reference Scenario 
3. Introduction of New Transportation Technology at Reference Scenario 
4. Combined policy measures (clean energy, penetration of energy efficient lighting and New transport technology) at Reference Scenario 

3.1.2  Introduction of Clean Energy Technology at Reference Scenario 

The following are the major assumptions of this scenario. 

i)       GDP growth rate according to reference case.                                           

ii)       Traditional fuels and fossil fuels replaced by electricity and/or fossil fuels. The useful energy shares of demand technologies using fuel wood or fossil fuels will decrease at the rate of: 

• For Industrial and Commercial sectors, traditional and fossil fuels decreased by 20 percent of base year share in 2020 and 30 percent in 2030. They are replaced by electricity. 
• For Residential Urban sector, fuel wood share decreased by 50 percent of base year share in 2020 and 75 percent in 2030. It is replaced by electricity, kerosene and LPG. 
• For Residential Rural sector fuel wood share decreased by 10 percent in 2020 and 30 percent in 2030. It is replaced by electricity, kerosene and LPG.   
• For Residential Rural other demands, agri-residue share decreased by 20 percent in 2020 and 80 percent in 2030. It is replaced by kerosene.  

iii)     Traditional fuel wood stoves in residential and commercial sectors replaced by improved cook stoves (ICS) at the rate of 25 percent in 2020 and then linearly to 50 percent in 2030. 

The final consumptions of various fuels in this scenario are given in Table 3.13. The total energy consumption in 2030 is expected to grow to a value of 1026 million GJ. The per capita energy consumption for 2030 will be 26 GJ since fuels in the higher rung of energy ladder and energy efficient technologies have been utilized in this scenario. 

Table 46:  Fuel Consumption in Clean Energy Technology in Cooking at Reference Case 

Figure 3.10shows the pattern of energy consumption. Compared to reference case, there is a decrease in fuel consumption. In 2015, the total energy consumption will be 96 percent and in 2030 this will be 79 percent of the consumption in reference case. 

Figure 25: Fuel Consumption in Clean Energy Technology in Cooking at Reference Case

Fuel wood consumption will be well within sustainable limits by 2025. In this scenario per capita fuel wood consumption in 2030 will be 12 GJ which is less than sustainable per capita consumption of 13 GJ provided the forests are developed as per Forestry Master Plan, 1988. Also percentage share of fuel wood will decrease from 71 percent in 2015 to 47 percent in 2030.  

This will be mostly replaced by kerosene, LPG and electricity. The shares of LPG, electricity and biogas are raised from 3 percent, 3 percent and 0.8 percent in 2015 to 9 percent, 16 percent and 1.6 percent in 2030 respectively. 

Figure 26: Energy mix in clean Energy Technology in cooking at reference case in   

                                                                            2015 

Figure 27: Energy mix in clean energy technology in cooking at reference case in 2030

The shares of primary fuels in energy supply in 2015 and 2030 are given in Figure 3.11and Figure 3.12. It is observed that the share of Petroleum will be 15 percent in 2015 and 29 percent in 2030 of the total energy consumption. Besides, the shares of health hazardous fuels such as agri-residue and animal dung are reduced to 1 percent and 2 percent respectively. Table 47:  Sectoral Consumption in Clean Energy Technology in cooking at Reference Case 

Unit in Million GJ