Technical support for the reform and radical improvement of the subsidy administration on one hand, and technical support to strengthened innovation and promotion of products and services that have more impact on GESI and poverty, on the other hand, are envisaged to be the main directions of the Solar Energy strategy. The third intervention area is environment, where large-scale sustainable used lead acid battery management is mandatory.

World market prices of solar technology are falling. Even more important is the fact that Light Emitting Diodes (LED) lighting technology has become available and has matured. LEDs yield the same volume of light with half the power when compared to earlier generation energy saving lamps and light quality has become acceptable. This means that SHS can be configured to have half the size of PV panel for the same level of comfort. The objective is that these two factors have an effect on decreasing sales prices in Nepal. To capitalise on this, the strategy must also be to reduce the size of subsidised SHS, which will make available an additional amount of subsidy funding for the smallest units. This will result in additional subsidy resources being made available for the poorest sections of the society. It is also expected that further cost savings can be achieved through continuous productivity gains, economy of scale effects and reduced overheads. A strategy to build up price pressure and competition is to be designed to foster the outlined trend. The Technical Support Component is envisaged to assist implementation of the strategy by leading the development of more efficient administrative processes in the large volume segments (SHS and SSHS).

The solar energy market is large and expanding. Less than 250,000 installed systems at present means a market saturation of well below 10%. In addition, total installed capacity of about nine MWp, of which about two thirds installed through AEPC/ Energy Sector Assistance Programme (ESAP), indicates that a lot remains to be done under a strategy of “Energy for All”. The prevailing subsidy disbursement mechanism has become the main constraint to accelerated market penetration and increased sales. Therefore, innovation is required to make sales registration, subsidy eligibility checking and installation verification prompt and easy. A technical solution is envisaged that largely automates the process and that makes immediate subsidy release possible. Major Research and Development (R&D), possible adaptive support is needed for this, with successive considerable investment in the technology.

While the removal of the administrative bottleneck of the subsidy disbursement mechanism is a mandatory step for the growth of sales volume, it may at the same time cause another challenge. Solar lighting systems are a fast and easy product when compared to biogas and community electrification. For this reason, and because demand is potentially high, the solar sector may tend to absorb available subsidy at a rate that results in insufficient resources for other technologies that have longer gestation times. This issue will be addressed in the operational modalities of the CREF.

Battery Management is a separate topic largely within the solar energy component. By the time of beginning the NRREP, there will already be more than 100,000 batteries that will need to be collected and recycled in a better way than is currently the case. KfW has carried out some preparatory work for establishment of a recycling system, on which the NRREP will build.

Environmentally responsible SHS deployment requires that the issue of recycling of lead-acid batteries at the end of their life be effectively addressed. Clean and safe recycling of an estimated 10,000 tonnes of batteries per year in the future requires a modern industrial recycling plant, as prevailing manual methods are not an acceptable alternative.

Other solar energy uses require support for piloting of emerging and future products and systems. In particular, there does not appear to be a standardised design of a small and simple solar pump for drinking water purposes. As such a product has a big potential in easing the burden of women and girls, its development and promotion is to be prioritised. NRREP will make available the technical support necessary at two levels: a) By providing technical inputs for adaptive R&D, leading to a marketable product, and b) by supporting orientation and training of AEPC and RSC staff to build capacity in awareness raising in the villages, site identification and installation, and O&M tasks. Collaboration with the “rural drinking water industry” will be an important element in the way forward.

SSHS and Solar Tuki are concepts that require revisiting and enhanced promotion, as there has not been marked success in numbers so far3. Both are dedicated to serve the large market of the poorer parts of rural society. Technical support will address the barriers that may be in the way of larger scale dissemination.

Large-scale grid-connected PV systems are not considered to be in the realm of NRREP or AEPC, as it falls under the MoE and NEA. On the other hand, several-kWp PV arrays may be the source of power for small community electrification, and the approach deserves support as and when it is competitive with other RETs.



Qualification and Evaluation of SOLAR Companies to Participate in Dissemination of Solar Home System, Small Solar Home System, Institutional Solar Photovoltaic System, Solar Photovoltaic Pumping System and Thermal Systems under AEPCNRREP Subsidy Program.


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