Institutional Strengthening of the Rural Energy Sector (ISRES)
This component follows on from ESAP Phase 1 and will promote coordination and cooperation in the sector, so that a set of coherent rural energy policies may be established. ESAP Phase 2 will prepare the rural energy sector for the adoption of a Sector Wide Approach (SWAp) to rural energy programming. It will also provide direct funding assistance to help improve the transparency and accountability of those operating in the sector. It will support the strengthening of the government institutions involved in rural energy supply, assist with donor coordination, and continue to build the capacity of AEPC.

Rural Energy Investment/Rural Energy Fund (REI/REF)
This component will improve access to affordable renewable energy solutions in rural areas of Nepal. A Rural Energy Fund (REF) created under this component has replaced the financing mechanism created for providing subsidies to poor households in Phase I. By mobilizing additional resources, the fund hopes to expand its capital. It will work with local financial institutions to promote access to private loan financing for renewable rural energy solutions.

Technical Assistance
ESAP Phase 2 will provide technical support to biomass, solar and mini-grid projects which are being financed by either the REF or by end-users. The three programme components are:

Biomass Energy Support Programme (BESP)
Solar Energy Support Programme (SSP)
Mini-Grid Support Programme (MGSP)