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Financing off-grid rural electrification: Country case Nepal
KTH, School of Industrial Engineering and Management (ITM), Energy Technology, Energy and Climate Studies, ECS.
KTH, School of Industrial Engineering and Management (ITM), Energy Technology, Energy and Climate Studies, ECS.ORCID iD: 0000-0001-7123-1824
2011 (English)In: Energy, ISSN 0360-5442, E-ISSN 1873-6785, Vol. 36, no 4, 2194-2201 p.Article in journal (Refereed) Published
Abstract [en]

More than 61% of the total population of Nepal has no access to electricity. The majority is poor and live in rural areas. In recent years, rural electrification has had high priority in government policies, and micro hydro and solar PV have been the most commonly adopted off-grid technologies. The financial mix in the off-grid rural electrification is generally characterized by subsidy, equity and credit. In this paper, we analyze how rural electrification has been funded and the impact of subsidy policies on the renewable energy market, focusing on the projects implemented under the ‘subsidy policy 2000’. Our study is based on official data obtained from authorities in Nepal and a survey carried out among private supply and installation companies, NGOs and financial institutions. The study shows that awareness levels in adopting RE-technologies and willingness of people to access and pay for electricity have increased significantly. However, there is a huge financial gap between the cost of electrification and the affordability. Bridging this gap is a crucial issue that needs to be addressed for the smooth expansion of rural electrification in the country.

Place, publisher, year, edition, pages
2011. Vol. 36, no 4, 2194-2201 p.
Keyword [en]
Rural electrification, Off-grid, Financing, Subsidy, Credit, Equity
National Category
Social Sciences
Research subject
SRA - Energy
Identifiers
URN: urn:nbn:se:kth:diva-33189DOI: 10.1016/j.energy.2010.07.004ISI: 000289605900042Scopus ID: 2-s2.0-79952815334OAI: oai:DiVA.org:kth-33189DiVA: diva2:413889
Funder
StandUp
Note
5th Conference on Sustainable Development of Energy Water And Environment Systems, 29 Sept - 03 Oct 2009, Dubrovnik, Croatia. QC 20110502Available from: 2011-04-29 Created: 2011-04-29 Last updated: 2017-12-11Bibliographically approved
In thesis
1. Renewable Energy Market for Rural Electrification in Developing Countries: Country Case Nepal
Open this publication in new window or tab >>Renewable Energy Market for Rural Electrification in Developing Countries: Country Case Nepal
2011 (English)Licentiate thesis, comprehensive summary (Other academic)
Abstract [en]

The availability of abundant renewable resources, lack of fossil fuels and difficult geographical terrain for grid line extensions contribute to the advantages of renewable based decentralized rural electrification in Ne-pal. Solar home system (SHS) and micro-hydro are the most commonly adopted off-grid renewable energy technologies in the country. This dis-sertation examines the market of renewable energy based rural electrifi-cation within prevailing policy and programmes framework. The study verifies whether the market has been able to serve the poor in Nepal. It also captures the perception of various stakeholders (e.g. private sup-ply/installation companies, NGOs, financial institutions and the donor‘s programme) regarding the business, financing issues and the role of gov-ernment policy on the market development. In addition, the study dis-cusses and analyses renewable based rural electrification supply models, the economics behind rural electrification, market drivers and market distribution in the rural areas of Nepal.

The financial mix in the off-grid rural electrification is generally charac-terized by subsidy, equity and credit. The study shows that awareness about renewable energy technologies and willingness to pay for electricity access has increased considerably. However, there is a huge financial gap between the cost of electrification and affordability among the poor. The distribution analysis shows there is significant increment in the extensive growth but decrease in the intensive growth rate of rural electrification thus indicating market expansion with uneven penetration among the ru-ral people. Solar PV technology is still not in the reach of the economic poor. Access to credit and cumbersome subsidy delivery mechanisms have been perceived as the major factors affecting the expansion of rural electrification by the stakeholders, requiring innovation in the credit and subsidy delivery system so that a larger rural population can be given ac-cess to electrification.

 

Place, publisher, year, edition, pages
Stockholm: KTH Royal Institute of Technology, 2011. xiv, 89 p.
Series
TRITA-ECS, 2011-01
Keyword
renewable energy, rural electrification, off-grid, financing, subsidy, credit, equity, market, extensive growth, intensive growth
National Category
Social Sciences Interdisciplinary Social Sciences
Identifiers
urn:nbn:se:kth:diva-33201 (URN)978-91-7415-982-0 (ISBN)
Presentation
2011-05-23, Sal M263, KTH, Brinellvägen 68, Stockholm, 15:00 (English)
Opponent
Supervisors
Note
QC 20110502Available from: 2011-05-02 Created: 2011-04-29 Last updated: 2011-11-15Bibliographically approved
2. Sustainability of rural energy access in developing countries
Open this publication in new window or tab >>Sustainability of rural energy access in developing countries
2014 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

The importance of access to modern energy has been well understood by governments and donor agencies in many developing countries, and significant effort has been made in recent years to address energy access challenges. However, despite these efforts, the International Energy Agency (IEA) has predicted that the energy access problem will remain unresolved by 2030. Therefore, adequate and appropriate action is needed to resolve this problem more quickly. This dissertation analyses policies and their impacts and will help researchers and policy makers in developing countries to (i) understand the impact of policies in the formation of a renewable energy (RE) market, (ii) consider the determinants of technological choices when promoting access to energy services and, (iii) better appreciate the sustainability performance of rural energy. For the purpose of analysis, several country cases from Asia and Sub-Saharan Africa region were carried out as these are the two main regions where the energy access problem are most acute.

To understand the impact of policies in the formation of RE based rural electrification market, a case study was conducted in Nepal. The study has shown that rural electrification has been expanding as a consequence of market-oriented policies. When it comes to selection of electrification path-ways, different technological alternatives are analysed in Afghanistan and Nepal, taking levelized cost of electricity (LCOE) as the means to select cost effective options. The analysis has presented best-fit conditions for these various technological pathways in the two countries and verified whether they are following the appropriate and cost effective course in their efforts to expand rural electrification. For understanding the determinants of cooking fuel choices and to analyse policy implications in the transition of large populations from traditional to modern fuels, fuel choices are modelled in the case of China. Choices are modelled (using MESSAGE–ACCESS mod-el) with standard economic variables such as income, technology costs and fuel prices, along with some unique variable such as inconvenience costs. Future access scenarios are designed considering different policy options to accelerate the transition.

Sustainability is one of the key concerns in terms of energy access. This dissertation introduces methods for evaluating (i) the sustainability performance of energy technologies and (ii) the status and progress of developing countries in providing sustainable energy access. Different sets of sustainability indicators are considered for the rural energy sector and aggregated to form a single composite index. The energy technology sustainability index (ETSI) is used for assessing the performance of different energy technological systems in the case of India. The analysis reveals that mature technologies such as biomass gasifiers, biogas and micro hydro have relatively better sustainability performance among the options considered, while solar and wind, though showing fairly good improvement in sustainability performance, still have difficulties competing with more mature and conventional technologies without policy support. The Energy Sustainability Index (ESI) has been applied to China, India, South Africa, Sri-Lanka, Bangladesh and Ghana between 1990 and 2010 to evaluate the status and progress made by these countries in rural energy sustainability. The analysis suggests that South Africa’s rural energy sustainability index is highest followed by China, Sri Lanka, India, Bangladesh and Ghana respectively. The rural energy sustainability has improved relatively over time in all countries except Ghana.

The dissertation shows that policies are helping the rapid expansion of the RE market though with uneven penetration in rural Nepal. Access to credit and cumbersome subsidy delivery mechanism are perceived as the major factors affecting the expansion of rural electrification, requiring innovation. The electrification pathways taken by Nepal seem functional and moving in the right direction but some flaws in the delivery mechanisms require attention. Meanwhile in Afghanistan, pathways are not well defined and the country lacks a clear-cut national policy framework for the expansion of rural electrification. The analysis on fuel transition shows that even a fast developing country such as China will continue to have serious problems guaranteeing the access to solid fuels for cooking for one third of its rural population by 2030. The problem could be more severe in poorer nations. There-fore, further policy intervention addressing the high implicit discount rate of the poorer section of the population, reducing the upfront cost of more efficient technology (stoves) or the costs of cleaner fuels with subsidies must be considered to promote energy transition.

Overall, this dissertation has analysed key issues in the global discussion about sustainable energy access. The methods for sustainability assessment suggested have been specially designed for rural settings in developing countries and are instrumental to assess the performance of rural energy technologies and track the progress of sustainable energy access efforts among rural households.

Place, publisher, year, edition, pages
Stockholm: KTH Royal Institute of Technology, 2014. xxii, 150 p.
Series
Trita-ECS. Report, 14:01
Keyword
Energy Access, Rural electrification, Rural energy, Household, Renewable energy, Off-grid, Mini-grid, Grid, Pathways, Fuel choice, Indicator, Sustainability index
National Category
Energy Systems
Research subject
Energy Technology
Identifiers
urn:nbn:se:kth:diva-140949 (URN)978-91-7595-003-7 (ISBN)
Public defence
2014-03-07, F3, Lindstedtsvägen 26, KTH, Stockholm, 13:00 (English)
Opponent
Supervisors
Note

QC 20140210

Available from: 2014-02-10 Created: 2014-02-04 Last updated: 2014-02-28Bibliographically approved

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