Nepal has one of the lowest per capita incomes in the world at around US$340, and more than 30 percent of its population lives below the national poverty line. Only about 15 percent of rural households have access to electricity. As a result, most Nepalis satisfy their energy needs by burning wood or other biomass, damaging both the environment and human health. Connecting dispersed villages in difficult terrain to the power grid is prohibitively expensive. It is also beyond the government’s current capacity, since the power grid is already under increasing strain, with power outages of up to 16 hours a day during the dry season.
Rural electrification through micro-hydro is a credible option for Nepal since the country has exploited only 2 percent of its considerable potential. Furthermore, micro-hydro provides round-the-clock electricity generation in close proximity to end-users, with no need for expensive storage or power lines. The IDA-financed Nepal Power Development Project, launched in 2003, featured a Micro-Hydro Village Electrification component. Communities formed Micro-Hydro Functional Groups to execute the work, including responsibility for supervising contractors. The project built upon the national strategy launched through the Rural Energy Development Program in 1996, which successfully increased rural access to renewable energy sources and formed a solid foundation for scaling up impact.
Steady expansion of community-managed micro-hydro systems provided coverage to about 40,000 households in 40 of 51 target districts with potential for this form of power generation. These systems energize sustainable rural development by creating jobs, protecting the environment, and lighting up households for the first time.
Highlights:
- Taking a good idea to scale. Building on a government pilot effort that grew from 5 districts in 1996 to 10 in 1998 and 15 in 2000, this IDA-financed project expanded the momentum to 25 districts in 2003 and 40 districts in 2007. In June 2009, IDA approved additional financing that will double participating rural households by 2012.
- Energizing small business. While electricity was primarily used for lighting, surplus daylight generation was available for milling, husking, grinding, carpentry, spinning, and pump irrigation that paid off in higher local incomes.
- Reducing environmental stress. Micro-hydro replacement of biomass burning has created a trend away from deforestation and toward lower carbon emissions.
- Creating healthier households. Clean electricity allows families to replace wood fires for cooking and lighting in traditional houses without proper ventilation, benefiting women and children in particular.
IDA support for the Micro-Hydro Village Electrification Program came through grants of US$5.5 million in 2003 and US$3.8 million in 2008, covering most of the costs. The remainder comes from cash and labor counterpart provided by participating communities and the Government of Nepal. IDA supports efforts to apply what has been learned thus far to extend micro-hydro applications and improve sustainability.
Multiple initiatives by international donors have created an enabling environment. Since 1996, the United Nations Development Programme has made important contributions to micro-hydro development in Nepal through the Rural Energy Development Program. The Danish International Development Agency is supporting rural electrification through entrepreneurial development of micro-hydro schemes by the Energy Sector Management Assistance Program. Finally, the U.S. Agency for International Development is promoting private investments in hydropower, including micro-hydro; and the Asian Development Bank is expanding rural electrification.
In June 2009, IDA approved an additional US$12 million to extend implementation through 2012, benefiting an additional 36,000 households. IDA will continue to support micro-hydro rural electrification, applying what is learned to refine the effort and improve sustainability.
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