Alternative Energy Promotion Centre (AEPC) has received a grant from Asian Development Bank (ADB) to implement the South Asia Sub-regional Economic Cooperation (SASEC), Power System Expansion Project. The executing agency for the SASEC Off-grid Component is the Ministry of Energy, Water Resources and Irrigation whilst the implementing agency is the AEPC and implemented by Project Implementation Unit (PIU). AEPC supports Government of Nepal to improve inclusive electricity access, renewable energy (RE) development, regional cooperation and strengthening sector governance. The Government of Nepal has enacted Rural Energy Policy 2006, Renewable Energy Subsidy Policy 2016 and Renewable Energy Subsidy Delivery Mechanism 2016, to contribute to the national objectives of access to clean and sustainable energy. The enabling measures, such as targeted grants (subsidies) and exemption of RE projects from certain licensing requirements have been set up.

The SASEC-Power System Expansion Project will contribute to Nepal’s energy development objectives by (i) scaling up both on-grid and off-grid RE supply, (ii) facilitating cross-border power exchange, (iii) increasing access to RE in rural areas and (iv) building capacity for on-grid and off-grid power sector development. The off-grid component of SASEC-Power System Expansion Project is being implemented by AEPC that is intended to increase the access to renewable energy for improving the livelihoods of people and create employment opportunities especially in rural areas. This will improve income and prosperity of rural communities by utilizing the renewable energy, mainly in sectors of rural enterprise, education, health and agriculture. The project is consistent with the ADB Country Partnership Strategy which focuses on:

(i)Improving inclusive electricity access;

(ii)RE development;

(iii)Regional cooperation; and

(iv)Strengthening sector governance.

For the project there is provision of (a) a credit line of $ 5 million from ADB’s Special Funds to user communities/developers for mini-hydro power plants and (b) $11.2 million grant from the Strategic Climate Fund (SCF) administered by ADB.

The other substantial part of the project is to provide support to overall enhancement of capacity by implementing the capacity development of programme for AEPC. The physical investments will be reinforced and supplemented by capacity building support to AEPC, including project management support, preparation support for distribution system/rural electrification master plan and feasibility study of utility level wind farm, and parallel livelihood development activities in the project area.