Promotion of Small Hydropower In Nepal

Sridhar Devkota, Project Manager Small Hydropower Promotion Project, SHPP-GTZ

1. Nepal
Location:
Latitude 26022 N to 30027N Longitude 8004 E to 88012E Sandwiched in between two big countries China and India.

Area = 147,181 Sq. Km Population = 23.1 Million ( 2001 Census) Literacy rate = 54% GNI per Capita = US$340 (WB 2007) Life Expectancy
Male = 63 years Female = 64 years
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1. Nepal
Religion
Hindu = 82% Buddhist = 11% Others = 7%

.contd.

Major River Basins

Koshi Gandaki Karnali Mahakali

Average Annual Precipitation = 1700mm (May September)

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1. Nepal

.contd.

Estimated Total Annual Average run-off for the countries 600 perennial river = 200billion m3 Estimated water storage potential = 88billion m3 Estimated theoretically potential hydropower = 83000MW Estimated Technically viable Hydropower = 43000 MW Present Status of Energy
Hydro Installed capacity 555MW (GoN 400MW, IPP155MW) Thermal Installed Capacity 54MW (GoN)

Electricity Access to people 42% of Population

2. Hydropower Policy
No license required up to 3MW capacity projects. Implementation of projects on BOOT basis Encourage to develop Storage and multi purpose projects, public private partnership approach Mobilization of internal capital market for investment Electricity Export Encouragement of community /cooperatives / local bodies Foreign investment on HP generation/ transmission and distribution Private sector establishment shall not be nationalized during license period Exchange facilities to foreign investors, can repatriate the amount in foreign currency at the prevailing rate
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3. License Royalty
Installed Capacity Royalty Up to 1MW 1MW 5MW 5MW 100MW 625 US$ 125 US$/MW Period

yearly Yearly Yearly Yearly

100MW 500MW 12500 US$ 500MW - Above 25000 US$

4. Power Purchase Agreement

Year Wet season (May Dec) Dry Season (Jan April)
Income Tax

1
$ 0,05/ kWh $0.0 875/ kWh -

10

3% esc

6% esc

9% esc

12% esc

15% esc

18% esc

21% esc

24% esc

27% esc

20%

esc = escalation

5. Small Hydropower Promotion Project (SHPP)

1. Objectives:
German Technical Cooperation (GTZ) started Small Hydropower Promotion Project (SHPP) in 2001 with the aim that private entrepreneur participate in the development of Small Hydropower Sector Facilitate the establishment of a market for SHP leading to investments and associated economic activities in rural areas,

6. Services of SHPP
1. Technical and logistic support to hydropower projects in Nepal within the range of 100 kW to 10 MW for: developers, rural communities, NGOs, lending institutions, consultants, contractors and other service providers 2. Catalyst and facilitator to bring all the players of SH sector together for successful implementation of small hydro projects. 3. Assists in rural electrification programs
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6. Services of SHPP contd

4. Review feasibility studies & design and assist in construction supervision of SHP. i.e., support IPPs and contribute in human resources development in the sector 5. Provide relevant information to all involved in SHP, e.g., equipment market, risk mitigation measures etc. 6. Provide a forum for improving communication amongst different actors involved in SH sector such as developers, financiers, consultants etc. 7. Inputs to policy makers on a need basis, e.g. Task Force Test new technology in Nepalese context Private sector generally hesitant to try new technology unless proven.
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7. Achievements

.contd

1. Introduction to T15 Cross flow turbine - ~10% higher efficiency than other cross flow turbines SHPP purchased license (Euro 40,000) and has provided fabrication drawings to various micro-hydropower manufactures in the country. A number of manufacturers have started manufacturing T15 Turbines

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7. Achievements
2. Synchonization

.contd

Synchronization of isolated mini/microhydropower plants into the grid Establishment of mini-grid End use diversification in isolated plants and introduction to energy efficiency e.g., efficient lighting.

3. IPPs becoming capable in the sector 4. Improved communication amongst sector actors through seminars, workshops and training 5. Organizational Development Training for Rural Electric Comminutes
Over 295 rural community members trained in distribution of electricity

6. Backstopping support to Microhydropower sector through ESAP, Danida & AEPC, GoVN

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7. Achievements
< 100kW 270 projects >100 kW 100 projects Site Verification 110 Projects

.contd

Feasibility Study report Review / Assessment

Construction Supervision technical support

Piluwa 3 MW Sunkoshi 2.6 MW Sange 0.183 MW Baramchi 0.98 MW Rairang 0.5 MW Riddhi Khola 2.4MW Sisne 0.75 MW Chaku 1.5 MW Thoppal 1.65 MW Feme 0.995 MW Pati 0.996 MW Phawa 5 MW Seti II 0.979 MW Handi Khola 0.991 MW Mardi Khola 3.1 MW Mailung Khola 5 MW

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7. Achievements

.contd

Projects initiation has made possible the investment by private sector and financial institutions on Small Hydropower Sector reached to:
45M EURO loan dispersed to 37 Power Stations whose total worth is 67M EURO. Further Investment on new projects are in the process.

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8. Stake Holders Interactive Meet

A. Finance & Insurance
1. Project Finance & Risk Management 2. Discussion on Financial Analysis of Hydropower Projects 3. Power Development Fund and Financing of Small Hydropower 4. Issues Pertaining to Insurance of Small Hydropower Project

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8. Stake Holders Interactive Meet ..contd

B. Technical
1. Model Contract for SHP Civil Works Construction Contract Introduction and Industry Discussion Forum 2. Sedimentation Problems on Hydropower Projects and Silting Problems of Existing Hydropower Plants in Nepal 3. Water Conveyance Systems in Small Hydropower Development, 4. Interconnection Manual and Interconnection Agreement for Small Hydropower Plants
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8. Stake Holders Interactive Meet ..contd

5. Issues Pertaining to Insurance of Small hydropower Projects 6. Opportunities in Hydropower Investment in Nepal, 7. Grid Connection of Micro/Small Hydropower Plants, 8. Use of New Technology for Penstock Pipe on Small Hydropower Plants Glass Reinforced Pipe (GRP)

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8. Stake Holders Interactive Meet ..contd

C. Rural Electricity Entity (REEs)
1. Community Participation in Electricity Distribution System 2. Experience of Community Based Rural Ectrification 3. Organization and Staff Development Training Program NEA Training Centre, Kharipati,Bhaktapur 4. Orientation on Micro Hydropower for GTZ-FSRP Technical Staff 5. Organization and Staff Development Training Program for REEs, Kathmandu 6. Organization and Staff Development Training Program for REEs, Birgunj,

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8. Stake Holders Interactive Meet ..contd DGIS Activities- Support to REEs

1. Organizational Development / Financial Management Training 2. Training for Trainers / electrical safety 3. End Use Promotion, 4. Financial Planning / Accounting 5. House wiring Training

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8. Stake Holders Interactive Meet ..contd

C. Experience Sharing and Others
1. Sharing of Experience on Leased out Small Hydropower by NEA 2. Achievements and Challenges of Piluwakhola Small Hydropower Project (3 MW), Experience Sharing 3. Operational Experiences of Small Hydropower IPPs in Nepal 4. Media Training, Pokhara, Nepalgunj, Biratnagar, Chitawan - to Energy Journalists
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9. Hydropower Investment Mart

Objectives:
A. Symposium
-To arrange Common plat farm to get together Policy Makers, Entrepreneur, Investors, Regulatory Bodies, Power Purchaser, Financial Institutions, Insurance Agencies, Independent Power Producers, Contractors, Consultants, Suppliers -To interface to be well acquainted with investment opportunities in Small Hydropower -To create environment for the interested to network and talk business with various players to finalize implementation of hydropower projects

B. Exposition
- To set up respective pavilion of interested off takers, developers, Financial Institutions, Independent Power Producers, Manufacturers, Developers, Contractors, Suppliers, sponsors to show their Vision Mission, present work and future plan
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10. Publication
1. Mini Hydropower Design Aids, 2006

1. Organizational and Staff Development Training for Rural Electric Entities, 2007

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11. Activities
Capacity Building of rural Electric Entities Technology Pilot project on connecting isolated mini hydro to the national grid
Two NEA owned isolated mini-hydropower stations are successfully connected to the grid

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11. Activities

..contd

Implication of grid connecting micro/mini hydro - As a result of government subsidy and aggressive promotion strategy large number of micro-hydropower plants are being installed. During the current 10th Five Year Plan, the target is to achieve 2 MW of Micro-hydro installed capacity/year If such MHP can be synchronized with the grid, NEA could just buy the electrical energy generated (i.e., standard PPA) and need not compensate the plant owner. Thus, a resource that is about to be wasted is optimally used
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Thank you!!!

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