Devendra Adhikari

Mini-Grid Development in Nepal

Development is a difficult mission accomplished. It is not possible overnight. Development seems even more challenging in developing countries like Nepal. There are, however, few sectors that have proven that Nepal can do its development. One of these sectors is the micro-hydropower. The path of development was, however, not smooth. Sustaining development outcomes are even more challenging. 

Nepal has a good story to tell about to the world. It is about on micro-hydropower. Turbines manufactured in Nepal have reached not only to the almost all hilly and mountainous regions in Nepal but also in difficult terrain in outside the country. Generally those turbine mills reached to underdeveloped, remote and inaccessible areas that would, sometimes, require several days of walk to reach there. 

Nepal is a country with full of mountains and hills. Access to electricity was limited not only to the mountains and hills but also in the plains in Tarai. Water turbine mills were initially promoted to process agriculture products to enhance agricultural economy. Electricity generation became popular through adding generator on the existing turbine mill during the late eighties. Electrifying rural houses with adding generators on the existing turbine mills became popular after the government started providing subsidy to electricity generation components after 1985. 

The Agriculture Development Bank put a solid foundation for electrifying off-grid areas in Nepal. The bank provided subsidy on electrification components integrating with its loan to turbine mills used for processing of agriculture products. The terms “mini-grid or off-grid” were even not in practice during those days. It was popularly said “water turbine” and “electrification”. 

The Government established Alternative Energy Promotion Centre (AEPC) in 1996. The AEPC implemented various energy programmes based on the plans and programmes of the government. These government plans and programmes were supported by the development agencies. Energy Sector Assistance Programme (ESAP) was one of programmes executed by the AEPC. 

The Government of Denmark initiated the ESAP in 1999. Support to Micro-hydropower was one of the components in the ESAP. The programme adopted a unique model of rural electrification where the rural communities were put in front of for constructing, owning, and managing the micro-hydropower plants. 

The demand driven model adopted by the programme was successful in achieving the results. The role of the non-government organizations was instrumental especially in enhancing awareness and creating more demands. Private sector companies were responsible for surveying, designing, manufacturing and installation works. The government promulgated policies – mainly the subsidy policy and its delivery mechanism. Rural Energy Fund (REF) was created as an institutional mechanism to channel the subsidy funds. 

During the programme period of 13 years, a total of 639 rural communities completed their own micro-hydropower plants that electrified around 85,000 rural households. Additional 662 schemes were ready to commence their construction for electrifying additional 181,000 households by the end of the programme. The ready to commence projects were developed later within the National Rural and Renewable Energy framework, where the Government took the leadership of program implementation. 

Nepal is considered as one of the best examples in the field of micro-hydropower development. This sector is able to draw global attentions. Nepal can share its best practices, and lesions learnt on how un-electrified rural communities could be capacitated to own, build and run their own mini-grid system.


Adhikari served as a manager for the program for 13 years in Nepal is contacted in