Phases of Implementation

• The design and implementation of a national subsidy policy for renewable energy.
• Interim Rural Energy Fund ((I)REF) established to manage the ESAP subsidy fund.
• ((I)REF) developed into a full-fledged¬† REF with contributions from Nepal, DANIDA, Norway & KfW of Germany.
• Subsidy policy revised in 2006 and mechanism developed for periodic review.
• Preplanning for¬† Strategic Development / Organisational Development Plan for AEPC.
• AEPC secured support from Norway, The World Bank, UNDP, The Netherlands, KfW & The European Commission.
• Awareness and capacity building activities of stakeholder organisations successfully carried out.
• Improved / restructured Human Resource, Logistics & Communication System at AEPC.

• 150 local district based organisations (NGOs, CBOs and GOs), seven national level NGOs and the UN World Food Programme were involved in ESAP‚Äôs improved cook stoves programme. ¬†
• 213,000 ICSs dissemninated to households in 33 mid-hill districts directly benefitting¬† a million rural people.
• 2,500 ICS promoter/builder jobs created
• Visible development in the Biomass sector:
  
  • Sustainable ICS dissemination strategy developed
  • Local¬† capacity enhanced
  • Institutional growth in the sector
  • Technical Review Process now standard within AEPC
  • Institutionalised training curriculum for capacity building

1. Establishment of local support structures:
   
   • The programme first established four Micro-hydro Area Centres covering the sixteen hill districts of Nepal which have now broadened their scope to become Regional Renewable Energy Service Centres covering all ESAP Component activities
   • The programme supported the establishment of the 20 district level micro-hydro owners‚Äô networks which are governed by a central federation
   • ESAP established partnerships with the Nepal Trust, USC-Nepal, the Global Environmental Facility, WWF Nepal, and Tourism for Rural Poverty Alleviation in promoting micro-hydro development.
2. Reinforcement of the national framework:
   
   • ESAP has developed a number of reference works detailing standards and¬† and guidelines for all aspects of micro-hydro projects from operating procedures to social mobilization strategies.¬† These have become the standards and procedures followed by the majority of micro-hydropower projects in Nepal. There is also a demand for this documentation from overseas organisations working in the hydro-power sector.
   • ESAP has helped to establish a vibrant private sector in micro-hydropower with 54 organizations directly involved in survey, design, manufacture and installation. There is also a growing export market for micro-hydro turbines. A series of capacity building activities carried out by the programme has strengthened operational effectiveness in the sector.
   • The concept of the ‚Äúmini-grid‚Äù has been effectively established at national level along with the ‚Äúcarpet‚Äù identification approach for planning micro-hydro development. Project identification adopting the ‚Äúcarpet‚Äù approach has helped to create a demand for rural electrification.
3. Supporting new and existing micro-hydro projects:
   
   • Micro hydropower schemes generating the equivilant of 4000 kW of energy have been identified and verified for susbidy approval
   • Additional projects equivalent to 2500 kW to bring electrification to 185,000 people in 40,000 rural households are ready for assessment.
   • Projects equivalent to 1.8 MW have electrified about 17,000 households.
   • ESAP has established functioning support networks of NGOs, CBOs, and private sector organizations at both national and local level.
   • The quality of micro-hydro installations has imporved and there are better defined end-use applications.
   • The capacity of the sector to handle project implementation has increased threefold ‚Äì close to 3MW in a year.
   • Jobs have been created for 300 engineers in the micro-hydro sector.
   • Jobs have been created for 200 engineers in manufacturing and installation companies.
   • The living conditions in rural communities have improved due to access to electricity, particularly in the areas of education and health.
   • There is better access to technology such as computers and televsion.

• ESAP has been successful in establishing a national framework for the dissemination of solar energy technology. During phase 1 a total of 69,411 solar home systems (SHS) were installed, bettering the programme target of 40,000. The programme has also established guildlines for adminstering solar energy subsidies and put in place quality assurance and monitoring systems for solar energy projects.
• There are now more than 40 private companies working in the solar PV energy sector thanks to the capactiy building activities of ESAP. In order to ensure the availability of skilled labour, two training programmes were custom-designed for the private sector leading to the qualifications Solar Electric Technician Level 1 and Level 2.¬† More than 600 level 1 and around 100 level 2 technicians have been trained and certified by the Centre for Technical Education and Vocational Training (CTEVT).
• A study carried out by the Danish Embassy for a battery recovery scheme will be used to inform programme activitiy in ESAP Phase 2.
• After the finalisation of the Nepal Interim Photovoltaic Quality Assurance (NIPQA), ESAP worked to establish a solar energy test station (SETS) to ensure that solar panels, batteries, charge controllers and lamps comply with quality standards. The SETS is now fully functional and plays a pivotal role in the quality assurance of solar PV components.

KKREUO Organisational Structure

Before KKREP/DANIDA(1999)

• Very limited infrastructure for the distribution of electricity in rural areas
• Only the Mahendranagar, Dhanagadi and Tikapur areas had access to 33/11 kV systems with a total output of 13.5 MVA
• In two districts only about 11,000 consumers had electricity access
• The 33/11 kV systems were overloaded so opportunities for new consumers were limited

After KKREP/DANIDA (2008)

• Massive infrastructure development to improve electricity distribution
• Grid extensions at Lalpur, Attaria and Lamki were added, each with a 3 MVA, 33/11 kV system
• New sub-stations were added in Choumala, Joshipur, Jhalari and Sripur, generating a total of¬† 10.5 MVA
• Over 73 km of 33 kV line, 424 km of 11 kV line and 1386 km of LV line have been laid by the programme
• KKREP added over 50,000 consumers making a total of over 112,000 ‚Äì 10 times more than before the project ;
• Despite the low capacity of the grid (132/33 kV system) there are no reports of system overloading and new extensions should be possible up to 2012.

• The IREF subsidy policy and delivery mechanism were established in December 2000, with subsidies being disbursed from April 2001. The IREF is administered by AEPC. By the end of Phase 1, the IREF had grown to more than 75 million DKK as against an original target of 35 million DKK.
• The IREF has instutionalised the effective monitoring of subsidised projects, to ensure efficient and transparent subsidy delivery.¬† It has also initiated the use of a standard contract document for contractors and developers in the rural energy sector. IREF has signed formal MoUs with two commercial banks in a bid to widen the investment network for rural energy projects.The Mini Grid Support Programme and Solar Energy Support Programme play a vital role in assessing requests for subsidy and making recommendations to the IREF.
• The overall level of subsidy available in accessible areas of the country has been reduced ‚Äì a requirment of the the Subsidy Policy 2000. Subsidy available to SHS projects however, has been increased due to the provisions in the¬† Revised Subsidy Policy 2006. Provisions to reduce SHS subsidies have been abolished.
• AEPC carried out several successful capacity building activities for banks financing rural energy projects.

Important lessons learned during phase 1

1. A local support structure is crucial for the long-term sustainability of the programme and the prompt and effective delivery of energy services to rural communities.
2. Responsibility for promoting and disseminating Improved Cook Stoves must be transferred to local partner organizations to create local ownership of the programme.
3. More effort needs to be put into choosing the right promoters for the successful dissemination of ICS, as there is a large demand for ICS technology.
4. Coordination at all levels (local government, line agencies, implementing partners, users and promoters) is crucial for the sustainability and market growth of ICS technology.
5. Quality monitoring is important for the success of the ICS component. Promoters who build high quality stoves are in huge demand both inside and outside their communities.
6. Credit is as equally as important as subsidy.
7. End user promotion will only be effective if demand assessment surveys have been carried out and the tools and equipment needed to generate electricity are in place.
8. The potential exists for hydropower projects to generate up to 500kW of electricity for much the same cost as for 100kW.
9. The involvement of local government in project implementation is important, especially in resolving water rights issues.
10. The development and implementation of Quality Assurance mechanisms has been difficult, but they are in place. A long-term commitment to quality control is needed.
11. There are problems in ensuring the quality and availability of after-sales service.
12. Addressing crosscutting issues such as poverty, gender equality, and the environment has been difficult, as has linking the programme to credit and income generation schemes.
13. There has been effective collaboration with the private sector although the programme has faced implementation difficulties due to conflicts of priority and interest. The flexibility offered by the private sector should be offset against the inherent risks.

1. We will provide assistance in developing, adopting and implementing a coherent rural energy policy and continue to strengthen the capacity of the Alternative Energy Promotion Centre.
2. We will continue to develop and promote cleaner and more energy efficient biomass energy technologies for cooking and heating in rural areas by ensuring the effective dissemination of the latest biomass energy solutions. We will disseminate ICS technology to more than 500,000 rural households.
3. We will invest in and promote Solar Home Systems of around 36Wp which can power lights and operate small appliances. We will also support new solutions such as small solar powered lamps (Solar Tuki). By the end of ESAP Phase 2, 150,000 households will be served by Solar Home Systems and some 250,000 households by Solar Tuki Systems.
4. We will invest in Micro and Mini Hydro Power installations of up to 1 MW in rural areas which are not on the national grid. ESAP Phase 2 aims to generate the equivalent of 5.35MW of electricity to benefit 150,000 rural households across the country.

• The development of a coherent rural energy policy which adequately addresses the energy needs of the rural population and the rural energy objectives of the government. A cornerstone of the policy will be public / private partnerships (PPP);
• The development of a well funded rural energy subsidy policy with a clear set of objectives and criteria;
• In partnership with local banks and credit institutions, to set up effective credit systems to lead the way from subsidy based to credit based programming;
• The incorporation of rural energy policies into the policies of ministries and institutions working in all areas of rural development;
• Ensuring cross-sectoral and donor coordination on all rural energy programmes and in the provision of rural energy services;
• Information campaigns and educational programmes;
• Supporting the development and sustainability of the rural energy technologies market by building the capacity of end-users, promoters, service providers, institutions and agencies;
• The development of quality standards for the rural energy sector including systems for monitoring the quality of hardware and the quality and reliability off services;
• Carrying out Social Impact Assessments on rural energy programmes and acting on the results.
• Ensuring broad stakeholder involvement throughout the process; from technology development to project identification, design and implementation;
• Institutional strengthening of the rural energy sector
• Ensuring transparency through rigorous monitoring, public performance auditing and effective information dissemination.

• Ensure regulatory and institutional arrangements are in place
• Source quality-assured income-level appropriate technological solutions
• Make available credit facilities to promote investment