SUSTAINABLE INNOVATION PROJECT – THE ECONOMIC AND SOCIAL ASPECTS

OF ENERGY PROJECT IN NEPALSeminar presentationDate:17th April 2012

Hanna Nopanen, Prabin Khadka, Wahaj Kazi Athar, HuiZhong Zhang, Rabindra Dhungana

Content Study of Location Present scenario of the site Necessary development of infrastructure Investment Maintenance cost and maintenance related issue Technological assist Logistics involved Promising policies of RE in Nepal Government´s role Outcome of the project

Location under study Dadeldhura districts- lies in the Mahakali

zone, far western region of Nepal. Dadeldhura is district headquarter. Covers an area of 1,538 square km Population of 126, 162 25 village development committee The majority of inhabitants are Hindu Rural and remote area

Trditional life style and superistition The main occupation is agriculture. People goes to work abroad Hindu religion Brahmin, chhetri Doteli culture Education difference according to gender Level of education poor but nowadays

awareness is increasing Governed by the Nepal goverment. The VDCs,

Municipality,DDCs are the responsible body.

Present scenario of the site

Very low energy consumption per capita per annum

No extension of national power grid Firewood are the major of sources of energy for

cooking purposes and kerosene and animal waste for lightning purpose

Use of water mills for the agro-processing activities

Use of solar energy but very inefficient just for drying grains and boiling water

Importantly, people looking for the sustainable form of alternative source of energy

Necessary development of infrastructure

Need to capacitate the locals about the know how of the technology and its benefits

Identify the local partners as such service providers, manufacturers (R & M), financial co-operatives for fund mobilizing and quality assurance organization.

Need to train the few personnel's about the technology and its working mechanism for the sustainability of the technology

Capacity building program for the entrepreneurship development at micro level and matching fund for the investments for the same entrepreneurship development

Promising policies for RE in Nepal

The overall goal of this policy is to contribute to rural poverty reduction and environmental conservation by ensuring access to clean, reliable and appropriate energy in the rural areas.

The capacity of the local bodies will be improved for playing a leadership role in rural energy project planning, implementation, monitoring and evaluation at the local level and involvement of cooperatives, user groups, NGOs, private sector will be increased.

Economic activities will be implemented in integrated way for increasing energy consumption capacity at rural level by development of Micro Hydro, Biogas, Solar Energy Systems, etc.

Subsidy arrangement for the government of Nepal to promote the RE in rural part of the country

Investments and profitability

Wind Solar Hydro

How to get investments?• Potential sources of funding

• Private investors• Small scale via internet (shareholders),

local ownership• Large scale companies operating in the

area / global• Ownership, operations

• Role of subsidies – needed but not necessarily sustainable

• International, government• What is the beneficial choice for optimal

functionality?• Balance between benefit for local people

and benefit to investors

Cost structure for wind power Mid-sized turbine (850 kW-1500kW)

Turbine ~75-80 % Foundation 1-6 % Electric installation 1-9 % Grid connection 2-9 % (150 – 200 k€/km) Consultancy 1-3 % Land 1-3 % Financial costs 1-3 % Road construction 1-3 % (200-300 k€/km)

Total costs 750-1100 €/kW (on land) for wind power in general

Costs of solar power Lifespan 25 yrs or more for panels (~40)

5-15 for batteries Photovoltaic potential in Nepal 3,6-5,9

kWh/m2 in a day, 300 days of sun in a year

Investment costs per peak Watts

Hydro power Hydro potential of 83,000 MW

(theoretical) Expensive to build, cheap to use Profitable if costs less than 400 €/MWh

produced in a year Investment costs appr. 2000-3000 €/kW

If use 5000 h / year

On profitability… Large scale more profitable than small

Co-operation? Long lifespan required to meet costs Suitability of each form of production must be

considered Solar easiest to apply Large potential of hydro, but not so easy to apply Wind problematic – some areas profitable, some are not Security of supply Profitability of project has to be quaranteed – otherwise

problems in all phases Large initial investments (1 MW wind turbine ~1,5

million €) Popularity has steadily decreased initial investment costs

How to make it worth while?

Co-operation Local, national, neighbour countries Private and governmental

NGOs? Planning before acting

What is needed, where is it needed? Starting with the easiest investments and

working onwards from there Solar systems already in use both in areas of the grid

network (support) and in rural areas Steps in the dark

Risk analysis

Maintenance of machinary

The total maintenance cost varies with increasing amount of preventive maintenance!Optimum level of preventive maintenance at minimum total maintenance cost!

O&M costs

Possible to obtain standard contracts covering a considerable portion of the WT’s total lifespan.Particularly influenced by turbine age.

O&M costs – Wind Turbines

O&M costs – Solar panels• The solar pv panels need almost negligible maintenance

• lifespan of over 40 years.

• the efficiency of solar panels doesn’t reduce much even after 20 years.

• should get the photovoltaic system serviced once every 5 years and ensure that the panels remain clean.

O&M costs –Hydropower• They have higher operating costs and typically shorter operating lives (about 25 years)•Maintenance costs are only minimal when looking at some other sources of energy production.

•The plant life can be extended by relatively cheap maintenance and the periodic replacement of equipment (replacement of turbine runners, rewinding generators, etc).

•Typically a hydro plant in service for 40 - 50 years can have its operating life doubled.

Prepaid electricity planAdvantages of prepaid electricity plan

•Residents can pay a certain number of kilowatt hours depends on their using amount.

•Prepaid electricity gives residents control over how much money they spend. So long as residents take attention on how many electricity supply credits they have then don’t have to worry about disconnections.

•There is no default since unpaid or overdue pay.

•Electricity supplier can more quickly than postpaid to get back their investment costs and/or decrease the budget.

•No necessary to post the bill monthly, thus saving human and other resources input.

Role of Governing and Monitoring bodies

GOVERNMENT• Identification of policy, strategies and regulatory frameworks on

bioenergy to enhance proactiveness, and minimizing the risks of bioenergy development for small-scale producers.

• Regional cooperation and quality assurance.

LOCAL AND PRIVATE SECTOR• UN, NGO’s and local private investors• Establishment of a regional bio-energy network to promote

ecological information sharing on bio-energy-related technology, investments, and environmental ecological issues.

Outcomes of the project

Energy supplies to the masses. Creating livelihood. Creating entrepreneurship. Foster Public Private Partnerships that will

promote development in investments. Improving standard of living. Mitigating climate change.

International recognition. Incentives for further development. Capacity building for policy-makers and practitioners. Local economy boost. Reduction of dependence on conventional energy sources. Waste management simplified (economically feasible to treat). Fewer health impacts related (no ash or smoke). Forests preservation. Integration of SD.

Thank you for your interest!Any questions?