The residential sector is the biggest consumer of energy in Nepal as it generates demand for energy.
Many pieces of research and articles on the energy sector claim that the world will require 50% more energy in 2050 than what is being produced today. Even more stressing is the fact that much of that growth will come from renewables and clean energy technologies as estimated by international agencies like the U.S. Energy Information Administration (EIA), The World Bank, International Energy Agency (IEA), and the International Renewable Energy Agency.
Digging deeper into this, within South Asia, the governments of several South Asian countries including India, Pakistan, Sri Lanka, Bhutan, Nepal, and the Maldives are looking into alternative energy options such as solar, wind, hydro, and biomass since the rapid population growth, and economic development in these countries have increased the energy demand.
Given the paramount importance of the energy sector and its changing dimensions, this article will particularly focus on understanding the energy scenario in Nepal, challenges faced by the sector, and policy recommendations for tackling the same.
Energy scenario in Nepal
A report on ‘Energy Trade in South Asia’ states that more than 85% of the domestic energy needs in Nepal are met through traditional fuels which are inefficient and can cause significant negative health impacts to the users due to indoor air pollution. Although the number is down to 69% currently, there is still a dominant use of traditional energy resources such as biomass, and fossil fuel that has also led to low levels of electric power consumption rate of only 177 kWh per annum in 2018 against a global average of 3132.15 kWh. Thus, there is an increased pressure to move towards the consumption of commercial fuels instead.
Likewise, Nepal is also highly dependent upon hydroelectricity to meet its electricity requirements, which indicates that the power generation in Nepal is propelled by hydro energy. Currently, there is intra-regional energy trade between India and Nepal but it is limited to the purchase and sale of electricity and petroleum products.
In line with this, as per a report published by the Central Bureau of Statistics (CBS, Nepal) in 2019, the gasoline consumption of Nepali people had almost doubled in the last five years, which is to say that Nepali people consumed 90% more fuel than they did five years ago. Because of this, the country’s petroleum demand has been surging by 10% annually despite the regular supply of electricity, leading to an accelerating trade deficit while also causing environmental consequences.
Considering all this, although sustainable development and the move towards renewable energy have become a priority for most Nepali people over the years, it still has a huge untapped potential mainly because of the lag in the actual production, supply, and consumption of the energy.
Challenges to renewable energy in Nepal
While the whole of South Asia is harnessing energy supply and security as the major impediments, Nepal is still struggling on coming to terms with the concept of renewable energy. In the case of Nepal, hydropower and merely installing a simple solar panel on the roof are currently viewed as forms of renewable energy that are being adopted by the urban Nepali population. On the other hand, energy and electricity are still a distant dream for most rural Nepalis.
Likewise, the lack of understanding, capacity, and policies related to renewable energy at the local levels stand as another impediment. The root of the problem here is the fallacy that central planning can solve society’s issues without taking into account the local, distributed knowledge on the matter and capacitating them. In the case of Nepal, the move to a federal structure was expected to strengthen local communities and divide responsibilities in all three tiers of the government but most of the local bodies are still under-staffed and simply lack the knowledge on renewable energy which prevents them from forming or advocating for its policies at their respective communities. Because of this, a conducive and legal framework, and policies on the energy sector are still lacking. The process of approval for both hydro and non-hydro energy sectors is lengthy. Additionally, there are no concessions given on chargers, batteries, inverters, etc for solar, and other clean energy possibilities have not been explored.
Moving on, a panel discussion titled ‘Understanding the demand of renewable energy in Nepal’ in 2019 shed light on many other challenges, the most magnificent being the lack of technical knowledge amongst industry experts and the inability to inform consumers about clean energy. As per the insights from the discussion, the residential sector is the biggest consumer of energy in Nepal as it generates demand for energy. To address this demand, the government manufactured and approved technologies like standard electric stoves and inductions. However, it failed to inform the consumers about clean energy, the reasons behind using it, and thus, it failed to develop consumer confidence.
Possible options
Some options for increasing the discourse on and practices of renewable energy in Nepal are:
- Exploring options for energy mix other than the currently widely adopted hydro and solar only
- Giving consumers the right incentive to move towards renewables
- Carefully consider the application of energy-conscious design practices and energy efficiency measures to reduce the power requirements of the building
- Prioritizing export-oriented hydro projects to become an energy provider
- Developing an agency/institution which facilitates all renewable energy interventions and encourages competitiveness and collaboration
Concluding remarks
Renewable energy has steadily made headway in the race for energy generation in Nepal. Although it is still struggling due to poor planning coupled with lack of capacity, commitment, and many other disruptions, it is necessary to ingrain the concept in our collective psyche. While doing this, it is not only crucial to harness the changes occurring around renewable energy currently for the short term, but also to make fundamental changes to adjust to upheaval. Only then can a noteworthy development be hoped for.
Today, in the wake of the coronavirus pandemic and accelerating number of cases, the domestic, as well as international energy markets, have been challenged. World Economic Forum (WEF) reports that energy demand for fossil fuels came to a breaking point due to COVID-19 and its subsequent lockdowns in countries like the US, India, and so on. Instead, their renewable energy consumption increased by nearly 40% and 45% respectively, indicating that incentives, policies, and innovations towards renewables have not gone in vain. This is why in the post-COVID-19 world, Nepal also needs to vouch for new strategies which are more likely to chime with people’s existing attitudes and renewed interest towards clean energy consumption.
Nasala Maharjan is a Bachelor's in Business Administration (BBA Honors) graduate from Kathmandu University with a major in Finance. She is mostly interested in researching and writing about economic development and contemporary issues in Nepal. She joined Nepal Economic Forum (NEF) as a Research Fellow in 2019 and is currently a beed at beed management.