This article was written by Dipti Vaghela, originally published in Energy Insight Volume 5 publication of the People, Energy, & Environment Development Association based in Nepal.
Micro hydropower (MHP) development in Nepal over the last 30 years has inspired the sector’s development across south and southeast (S/SE) Asia. From transitioning watermills to pico hydro, to the development of the T-12 crossflow turbine, impactful productive end use, and projects financed by banks, Nepal has been the home of the earliest technical and institutional progress advancing MHP.
Recent years in fact reflect the same – Nepal continues to pave the path in developing expertise to address present-day MHP challenges, being able to leverage on its decades of hindsight. Let’s take a closer look!
Interconnection to the central grid
As the central grid in all countries expands, many MHP communities across S/SE Asia face a dilemma – what happens to the MHP project after the grid arrives? In cases where electricity from the central grid is reliable, grant-funded community-owned projects have been abandoned, and self-financed projects are at risk of losing investment. To resolve this, in 2017 Nepal became the third country in the region to interconnect existing community MHP to the central grid. Nepal’s effort is unique because it was led by government and the utility, namely the Alternate Energy Promotion Centre (AEPC) and the Nepal Electricity Authority (NEA). In finalizing a national policy for MHP interconnection, decisionmakers took time to study the progress in Indonesia and Sri Lanka. They also keenly requested the services of local, long-experienced private sector pioneers, such as Mr. Surendra Mathema and other members of the Nepal Micro Hydropower Developers Association (NMHDA). The collaborative effort has resulted in an increasing number of MHP power purchase agreements commissioned in a remarkably short period of time.
Interconnection of MHP Clusters
Project-to-project interconnection is rarely discussed in the mainstream mini-grid dialogue. However, among MHP practitioners across S/SE Asia clustered-interconnection is expressed as a great need. Because MHP projects typically have a finite power output limit, MHP communities with increasing population and loads face issues in generating enough electricity from the MHP plant. To resolve this, the AEPC with its Renewable Energy for Rural Livelihoods (RERL) initiative supported by the UNDP have overcome technical and institutional challenges to successfully develop three interconnected MHP clusters, each interconnecting two to six projects -- where excess electricity from larger plants is used by nearby MHP communities facing shortage. Practitioners in Pakistan, Malaysia, Myanmar, and the Philippines, where there are dense numbers of MHP projects, now look to Nepal for practical knowhow on interconnecting MHP clusters.
MHP Ownership and Governance
Nepal’s hindsight experience in different forms of MHP ownership and governance has led to recent insight and new paths for developing MHP projects. Firstly, with so many existing MHP communities, beneficiaries have started to organize themselves into consumer groups. Such a group is being facilitated by People, Environment, & Energy Development Association (PEEDA) to meet the group’s request to form an MHP consumers association. The association would serve as a vehicle for strengthening MHP sustainability, including increased productive end use and facilitating interconnection in clusters or to the central grid. Secondly, through Winrock Myanmar’s MHP stakeholder exchange supported by the Wisions Initiative, participatory research shows that shifting from user-based group management to cooperatives or small public limited companies can increase the longevity of MHP projects.
Applying this insight regionally, the same conclusion is being noted in MHP experiences of India, Pakistan, Myanmar, Malaysia, Indonesia, and the Philippines. This learning is critical because most community-based MHP projects globally are grant-funded, and therefore rely on user-group based ownership and management. While gaps in technology design, socio-technical issues in operation and maintenance, and/or poor conditions of the watersheds are dominant culprits of MHP failure, Nepal’s hindsight reflections reveal that MHP projects that are run as cooperative or public enterprises inherently have increased due diligence that prevents MHP failure. If there is failure, the enterprise-based MHP is economically more resilient and able to return to normal operation in shorter periods because they do not rely on grant or user-group financial inputs that typically require much time to collect, e.g. door-to-door donation collection for MHP repair. In fact, regional practitioners are now eager to learn from Nepal on how to transition existing user-group managed MHP projects into self-sustained enterprises.
Debt Financing for MHP
MHP practitioners in the region that have achieved project financial viability eager to access debt to develop additional MHP projects. However, in most of S/SE Asia contexts there is a large awareness gap between domestic banks and the MHP sector. MHP developers require financing that does not have high collateral requirement, affordable interest rates, and payback periods of 8-10 years. Due to various reason in each country, local banks are not able to enable such financing. However, over the last several years with support from Energising Development, Practical Action, and other partners of the AEPC, Nepal has demonstrated lending to the MHP sector with the establishment of the Micro Hydro Debt Fund (MHDF) and the Central Renewable Energy Fund (CERF). While Nepal’s lending to MHP is still developing, the MHDF and CERF are a mere dream for practitioners in Myanmar, Indonesia, and Malaysia. Therefore, Nepal’s progress and expertise in enabling debt financing for MHP provide critical inspiration and insight to the S/SE Asia region.
Enhancing the Value of Local Technology Development
One of the key advantages of MHP is that the technology can be locally developed, spurring the creation of local jobs, skillsets, and technology-based enterprises. In fact, in Nepal, Indonesia, and Sri Lanka, there is an entire local eco-system of masons, electricians, electronic suppliers, civil engineers, turbine manufactures, and plant operators that has resulted from decades of MHP development. Many suppliers now export regionally or globally, and individual experts have become consultants for energy access programs in other countries. In Nepal the work of the NMHDA and PEEDA continue to promote and advance technology development. NMHDA conducts technical trainings for different levels of stakeholders, having established a new training center on the outskirts of Kathmandu. PEEDA is working with the University of Bristol on an action research project to identify how local manufacturing can further advance. Nepal’s focus on local skills building and advancing local expertise is one of a few shining examples in the region where the government and international development partners have actively chosen to support local developed technology and local technical practitioners. Practitioners in Pakistan, Myanmar, Malaysia, and Philippines seek similar developments to acknowledge and advance local technology.
Local Level Energy Planning with GIS Tools
With Nepal’s constitutional mandate that energy planning must happen at the municipal level, AEPC and RERL with international partners have started to develop a GIS-based tool to assist local decision makers and communities in conducting informed and analysis-based energy planning. Energy planning based on ground realities and local perspectives are sought after across S/SE Asia contexts, where energy planning is currently based on the myth of a cost-effective, reliable, climate resilient, and equitable central grid for rural electrification. Although local actors know that decentralized renewable energy (DRE) solutions have greater merit than the central grid, they do not have data-based arguments to even enter the debate. In certain countries, national governments have an affinity for DRE but lack data and processes to connect the macro and micro planning. Where GIS-based tools have been developed, they are limited to solar and wind due to lack of GIS tools that can accurately map small-scale hydro and biomass resources. Nepal’s AEPC and RERL are working to address these gaps by creating an easy-to-use, reliable, GIS-based tool that local level energy planners can utilize to visualize the current reach and reliability of the central grid, existing DRE mini-grids, locations of un-electrified villages, and the availability of DRE national resource. The effort will make it possible for local decisionmakers to develop well-coordinated, ground-truth based, electricity plans, inclusive of all available DRE. Various practitioners in the S/SE Asia region have embarked on similar paths but with little or no resource and hence progressing very slowly. They seek inspiration from Nepal’s progress in developing cost effective, fast, and reliable DRE solutions for energy access.
Effective Multi-Stakeholder Coordination
The multi-disciplinary advancements that Nepal has developed for the small-scale hydropower sector can be attributed to the synergy achieved between multi-stakeholders, including national and municipal government, private sector, academia, donors, civil society, and NGOs. AEPC’s role as an effective coordinating agency has proven to be invaluable in preventing parallel and uncoordinated efforts, and instead nurturing the practice of open dialogue, collaborative decision making, and iterative reflections of the outcomes. In most countries of S/E Asia it is just the opposite. There are dismal gaps and lack of coordination between international and local stakeholders, among multi-stakeholders (e.g. donors do not engage with local practitioners), among the multitude of international donors, among ministries and different levels of government, and in some countries among the various NGOs. Nepal’s multi-actor achievements provide much hope and learning for those us that see the impact of any rural electrification effort ultimately depends on inclusive and well-coordinated multi-stakeholder processes.
Recent years in fact reflect the same – Nepal continues to pave the path in developing expertise to address present-day MHP challenges, being able to leverage on its decades of hindsight. Let’s take a closer look!
Interconnection to the central grid
As the central grid in all countries expands, many MHP communities across S/SE Asia face a dilemma – what happens to the MHP project after the grid arrives? In cases where electricity from the central grid is reliable, grant-funded community-owned projects have been abandoned, and self-financed projects are at risk of losing investment. To resolve this, in 2017 Nepal became the third country in the region to interconnect existing community MHP to the central grid. Nepal’s effort is unique because it was led by government and the utility, namely the Alternate Energy Promotion Centre (AEPC) and the Nepal Electricity Authority (NEA). In finalizing a national policy for MHP interconnection, decisionmakers took time to study the progress in Indonesia and Sri Lanka. They also keenly requested the services of local, long-experienced private sector pioneers, such as Mr. Surendra Mathema and other members of the Nepal Micro Hydropower Developers Association (NMHDA). The collaborative effort has resulted in an increasing number of MHP power purchase agreements commissioned in a remarkably short period of time.
Interconnection of MHP Clusters
Project-to-project interconnection is rarely discussed in the mainstream mini-grid dialogue. However, among MHP practitioners across S/SE Asia clustered-interconnection is expressed as a great need. Because MHP projects typically have a finite power output limit, MHP communities with increasing population and loads face issues in generating enough electricity from the MHP plant. To resolve this, the AEPC with its Renewable Energy for Rural Livelihoods (RERL) initiative supported by the UNDP have overcome technical and institutional challenges to successfully develop three interconnected MHP clusters, each interconnecting two to six projects -- where excess electricity from larger plants is used by nearby MHP communities facing shortage. Practitioners in Pakistan, Malaysia, Myanmar, and the Philippines, where there are dense numbers of MHP projects, now look to Nepal for practical knowhow on interconnecting MHP clusters.
MHP Ownership and Governance
Nepal’s hindsight experience in different forms of MHP ownership and governance has led to recent insight and new paths for developing MHP projects. Firstly, with so many existing MHP communities, beneficiaries have started to organize themselves into consumer groups. Such a group is being facilitated by People, Environment, & Energy Development Association (PEEDA) to meet the group’s request to form an MHP consumers association. The association would serve as a vehicle for strengthening MHP sustainability, including increased productive end use and facilitating interconnection in clusters or to the central grid. Secondly, through Winrock Myanmar’s MHP stakeholder exchange supported by the Wisions Initiative, participatory research shows that shifting from user-based group management to cooperatives or small public limited companies can increase the longevity of MHP projects.
Applying this insight regionally, the same conclusion is being noted in MHP experiences of India, Pakistan, Myanmar, Malaysia, Indonesia, and the Philippines. This learning is critical because most community-based MHP projects globally are grant-funded, and therefore rely on user-group based ownership and management. While gaps in technology design, socio-technical issues in operation and maintenance, and/or poor conditions of the watersheds are dominant culprits of MHP failure, Nepal’s hindsight reflections reveal that MHP projects that are run as cooperative or public enterprises inherently have increased due diligence that prevents MHP failure. If there is failure, the enterprise-based MHP is economically more resilient and able to return to normal operation in shorter periods because they do not rely on grant or user-group financial inputs that typically require much time to collect, e.g. door-to-door donation collection for MHP repair. In fact, regional practitioners are now eager to learn from Nepal on how to transition existing user-group managed MHP projects into self-sustained enterprises.
Debt Financing for MHP
MHP practitioners in the region that have achieved project financial viability eager to access debt to develop additional MHP projects. However, in most of S/SE Asia contexts there is a large awareness gap between domestic banks and the MHP sector. MHP developers require financing that does not have high collateral requirement, affordable interest rates, and payback periods of 8-10 years. Due to various reason in each country, local banks are not able to enable such financing. However, over the last several years with support from Energising Development, Practical Action, and other partners of the AEPC, Nepal has demonstrated lending to the MHP sector with the establishment of the Micro Hydro Debt Fund (MHDF) and the Central Renewable Energy Fund (CERF). While Nepal’s lending to MHP is still developing, the MHDF and CERF are a mere dream for practitioners in Myanmar, Indonesia, and Malaysia. Therefore, Nepal’s progress and expertise in enabling debt financing for MHP provide critical inspiration and insight to the S/SE Asia region.
Enhancing the Value of Local Technology Development
One of the key advantages of MHP is that the technology can be locally developed, spurring the creation of local jobs, skillsets, and technology-based enterprises. In fact, in Nepal, Indonesia, and Sri Lanka, there is an entire local eco-system of masons, electricians, electronic suppliers, civil engineers, turbine manufactures, and plant operators that has resulted from decades of MHP development. Many suppliers now export regionally or globally, and individual experts have become consultants for energy access programs in other countries. In Nepal the work of the NMHDA and PEEDA continue to promote and advance technology development. NMHDA conducts technical trainings for different levels of stakeholders, having established a new training center on the outskirts of Kathmandu. PEEDA is working with the University of Bristol on an action research project to identify how local manufacturing can further advance. Nepal’s focus on local skills building and advancing local expertise is one of a few shining examples in the region where the government and international development partners have actively chosen to support local developed technology and local technical practitioners. Practitioners in Pakistan, Myanmar, Malaysia, and Philippines seek similar developments to acknowledge and advance local technology.
Local Level Energy Planning with GIS Tools
With Nepal’s constitutional mandate that energy planning must happen at the municipal level, AEPC and RERL with international partners have started to develop a GIS-based tool to assist local decision makers and communities in conducting informed and analysis-based energy planning. Energy planning based on ground realities and local perspectives are sought after across S/SE Asia contexts, where energy planning is currently based on the myth of a cost-effective, reliable, climate resilient, and equitable central grid for rural electrification. Although local actors know that decentralized renewable energy (DRE) solutions have greater merit than the central grid, they do not have data-based arguments to even enter the debate. In certain countries, national governments have an affinity for DRE but lack data and processes to connect the macro and micro planning. Where GIS-based tools have been developed, they are limited to solar and wind due to lack of GIS tools that can accurately map small-scale hydro and biomass resources. Nepal’s AEPC and RERL are working to address these gaps by creating an easy-to-use, reliable, GIS-based tool that local level energy planners can utilize to visualize the current reach and reliability of the central grid, existing DRE mini-grids, locations of un-electrified villages, and the availability of DRE national resource. The effort will make it possible for local decisionmakers to develop well-coordinated, ground-truth based, electricity plans, inclusive of all available DRE. Various practitioners in the S/SE Asia region have embarked on similar paths but with little or no resource and hence progressing very slowly. They seek inspiration from Nepal’s progress in developing cost effective, fast, and reliable DRE solutions for energy access.
Effective Multi-Stakeholder Coordination
The multi-disciplinary advancements that Nepal has developed for the small-scale hydropower sector can be attributed to the synergy achieved between multi-stakeholders, including national and municipal government, private sector, academia, donors, civil society, and NGOs. AEPC’s role as an effective coordinating agency has proven to be invaluable in preventing parallel and uncoordinated efforts, and instead nurturing the practice of open dialogue, collaborative decision making, and iterative reflections of the outcomes. In most countries of S/E Asia it is just the opposite. There are dismal gaps and lack of coordination between international and local stakeholders, among multi-stakeholders (e.g. donors do not engage with local practitioners), among the multitude of international donors, among ministries and different levels of government, and in some countries among the various NGOs. Nepal’s multi-actor achievements provide much hope and learning for those us that see the impact of any rural electrification effort ultimately depends on inclusive and well-coordinated multi-stakeholder processes.
