(/)

Micro-Hydro Village Electrification

in Nepal

Name:
Micro-Hydro
Village
Electrification
in Nepal

Country:
Nepal

Location:

Summary
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The Micro-Hydro Village programme was built Do you own this website?
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upon the national strategy launched through the messages?
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Rural Energy Development Programme and
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helped to increase the electricity access through
renewable energy sources in rural areas in the
remote villages of Nepal. The micro-hydro system
provided continuous electricity to end users in
close proximity. Through active community
mobilization and involvement and by working with
community organizations and government
agencies, the project demonstrated a successful
model for extending electricity access through (https://maps.google.com/maps?ll=28.39486,84.12401&z=3&t=m&hl=en-
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renewable sources in rural areas.
Implementer:
The

Contents Government of
Nepal through
the financial
assistance of
1. Objective
International
2. Target Group Development
3. Output Association
4. Key Features of the Case (IDA) of the
World Bank.
5. Sustainable Financing
6. Supportive Policies and Institutional
Contact:
Environment
World Bank
7. Building Local Capacity and Skills
Country Office-
8. Community Participation and Including Local Nepal
Stakeholders
1st Floor, West
9. Achieving Co-Benefits Wing, Lal
10. Affordability and Technical Issues Durbar
11. Local Champions Convention
Centre
12. Monitoring and Evaluation
13. Replicability and Scaling-up Yak and Yeti
Hotel Complex
14. Contact
15. References and Further Reading Durbar Marg

Kathmandu,
Nepal
 Tel: +977-1-
Objective 4226792

E-mail:
The Micro-Hydro Village Electrification (MHVE) is nepalpic@worldbank.org 
part of a larger national Power Development (mailto:nepalpic@worldbank.org)

Project in Nepal to improve access to (rural)

Technology:
electricity services (a non-grid connected element)
and to promote private participation in the overall Small/Pico-
hydro power
power sector, improve efficiency, and to mobilize
financing. Energy
resource:
Hydro
Target Group
Sub type:
Micro
Remote villages in Nepal which are unlikely to
Hydro (5-
receive electricity in the foreseeable future. 100 kW)

Sector:
Energy
supply
Output Hospital
Household
Commercial
The MHVE scaled up community-level
projects with a total capacity of 2.5 to 3.0 MW Service:
serving 30,000 new customers and 10 new
Communication
districts in Nepal [1]. Electricity
Lighting

Grid:
Off-Grid
MHVE supported hydroelectric facilities
ranging from 10kW to 100kW, with an Targeted
average plant size of 25kW to 30kW [1]. area:
Rural

The net benefit of the MHVE program per Geographical

household was calculated to be $8 per month
scope:
and average cost was $1.40 per month [1]. National

Project
status:
The income of communities with micro hydro Completed
units increased by 11%, and the women and project
children from these communities suffered less
Project
from respiratory problems and disease [1].
start:
2003

Micro-hydro units displace nearly 10 million

End date:
kilograms of carbon dioxide each year [1]. 2009

Implementing
approach:
Key Features of the Case Public private
partnership

Funding
Type:
The MHVE was one of the components of Nepal
Grant
Power Development Project (NPDP) launched in
2003 by International Development Association Budget
(IDA) of the World Bank. (Euro):
>100,000
The NPDP had three primary components:
creation of a Power Development Fund (PDF), the
MHVE, and transmission and distribution
improvements to the national Nepal Electricity

Authority (NEA) grid. The PDF financed private
sector development of small and medium sized
hydro schemes, mostly grid connected. The
MHVE component overlooked off-grid micro-hydro
schemes below 100kW in installed capacity. NEA
component focused on rehabilitating and
extending the national transmission and
distribution network [1].

The World Bank funding through IDA for the

project was US$ 75.6 million during 2004-2009
with a grant of US$ 5.5 million for MVHE
component only. Contribution from UNDP,
local banks and borrowers and local communities
resulted in the total project budget of US$ 133.4
million [1].

The MHVE was based on earlier UNDP scheme

called Rural Energy Development Program
(REDP).

The MHVE required that communities wishing to

build microhydro facilities donate land for the
construction of canals, penstocks, power houses,
and distribution lines voluntarily. Furthermore,
villagers were required to contribute land and
labour for civil works related to microhydro units
[1].

Nepal law doesn't require micro- hydro schemes

to undergo environmental impact assessments;
however, specific impact assessments were still
conducted under this programme, in accordance
with UNDP's REDP guidelines ensuring that the
residual flow in the de-watered section of rivers
was never less than 10 % of the dry season flow
[1].

Sustainable Financing

IDA granted US $ 5.5 million in 2003 and US$ 3.8

million in 2008 for MHVE, covering most of the
costs, and the remaining was covered through
cash and labor counterpart provided by
participating communities and the Government of
Nepal [2]. Under the REDP framework, the
programme provides support up to 50% of the
total non-local cost required for installation of
microhydro [3]. The communities were also
assisted to mobilize financial resources in the
form of grants, loans and investment from local
authorities, such as District Development
Committee (DDC) and Village Development
Committee (VDC), government line agencies and
development banks. The DDC and VDC usually
contribute about 10% of the total non-local cost in

each demonstration scheme [3]. The local
beneficiaries also provide voluntary labor and
locally available materials required for the
installation.

Supportive Policies and

Institutional Environment

MHVE was built upon earlier UNDP's successful

initiative REDP which was a joint initiative of
government of Nepal, UNDP and World Bank. It
implemented programmers through local
authorities, such as DDCs and VDCs in each
district and villages. REDP was supported for
creating a comprehensive institutional
arrangement from top to bottom level. At the
central level, Rural Energy Development Boards
(REDB) and Management Committee (MC) were
created for coordinating activities with government
line agencies. At the local government level,
District Energy Committee ensured collaboration
with all related agencies in districts for integrating
planning and management of rural energy
development initiatives. At the grassroots level,
the establishment of community organizations
(COs) provided the rural community with a
platform to launch development activities
concerning them. Moreover, creation of functional
groups (FGs) with representatives from different
ethnic group ensures equitable participation from
all levels.

Building Local Capacity

and Skills

The programme helped in local capacity building

and skills through training in the form of formal
education, practical exercises, and exchange
workshops at different levels. At the community
level, the programme provided training to end
users on how to install and operate micro hydro
system; at the district and national level, trainings
were provided to institutions and their staff on how
to setup and manage organizations to develop the
capacity necessary for the successful
implementation and completion of the system.
Additionally, income generation training for
business development and subsequent training of
actors on various issues were conducted to
achieve programme sustainability [4].
MHVE also provided extensive training in
operations and maintenance for local operators
and managers from each local community doing a
microhydro project so that they would understand

technical aspects of system operation, bill
collection, disconnecting for non-payment, record
keeping, and accounting [1]. Maintenance support
facilities and service centres within districts were
established and strengthened to provide
repayable financial support for manufacture of
turbines and generators within Nepal [1].

Community Participation
and Including Local
Stakeholders

The active participation of local people to manage

and operate their micro hydro system was
essential under MVEP. Under the framework of
REDP, community mobilization package consists
of six basic principles, namely organization
development, skill enhancement, capital
formation, technology promotion, environment
management and empowerment of women and
marginalized groups [3]. The establishment of
various functional and management groups at
national, district and community level ensured
greater participation.

Achieving Co-Benefits

The impact of project and the installation of micro-

hydro system not only provided electric power to
the households, but also improved the quality of
life of the entire village by providing opportunities
for income generation and education. Apart from
lighting, it also provided mechanical energy for
milling, husking, grinding, carpentry, spinning and
pump irrigation in the village which paid off in the
form of higher local incomes [1]. Part of MHVE
project funds was also allocated to promote
women's empowerment, skill enhancement and
income generation in a 'Community Mobilization
Fund (CMF)'. The fund offered $400,000 in total to
couple hydropower with income generation
schemes, particularly to promote non-lighting
uses of electricity such as agro-processing,
poultry farming, carpentry workshops, bakeries,
ice making, water supply etc. [5]. One of the key
features of the programme is that supports
creating an environment for rural women and
marginalized group (Dalits) towards
empowerment. The framework of REDP requires
mandatory participation of one female from each
beneficiary household in all initiatives and
inclusion of Dalits in functional groups to build
their self-confidence, capacity and to integrate
them in the decision making process [3].
Emphasis is made to increase their capability
through training and exposure visits. Their
involvement in activities such as cleaning houses,

train road construction, water taps, maintenance,
pit latrine construction and plantation of trees help
to develop ownership of the infrastructure as well
as bringing them into mainstream development
process [3].

Affordability and Technical

Issues

Tariffs for micro-hydro units were set by each

Microhydro Functional Group, and were based on
loan repayments, operation and maintenance
costs, depreciation, and provision of a reserve
fund for maintenance. Only schemes expected to
yield average economic return of 10.9 % for the
program as a whole, or individual returns ranging
from 10 % to more than 12 %, were supported [1].
By using functional group for tariff collection and
by providing them extensive training in operations
and maintenance, the project ensured smooth
operation of the system.

However, establishing meters and developing

tariff structure are some of the most cited issues
of micro-hydro systems in Nepal. Since in rural
areas, electricity consumption is very low, energy
based tariff structure does not yield high revenue
and operational costs associated with meters,
meter reading, account keeping and collection
could be at times higher than the revenue
generated [6]. Usually household metering
equipment is generally not installed and
household pay according to the number of light
bulbs, a cut off device that limits consumption to
100W or based on their social status [5].

Local Champions

At the district level, the District Energy Committee

and at the local level, the Community
Organizations (Cos) and Functional Groups (FGs)
played important roles in the design, execution,
operation and maintenance of the project.

Monitoring and Evaluation

According to Sovacool et al, [5] To improve

accountability, the program was formally
institutionalized at the lowest level of governance
and local groups like Village Development
Committees, COs, and FGs, who met regularly
(monthly) to maintain and manage each plant. At
the village level, gender-based COs ensured that
women felt free to participate in micro-hydro
decisions. National line agencies and the donors

also had a significant role to play by developing
guidelines and setting standards. The requirement
of the scheme to undergo environmental impact
assessments also helped to maintain a certain
standard. By displaying details of cash flows and
purchase amounts open to public scrutiny, the
programme ensured transparency and offered
better options for monitoring and evaluation.

Replicability and Scaling-

up

MVEP itself was based on earlier UNDP's

successful REDP scheme. REDP developed a
community driven microhydro development in
Nepal with basic principles involving community
and its female and marginalized groups in
decision making, planning, designing, operating
and maintaining their micro hydro systems. The
same model was replicated to other villages and
scaled up in terms of generation capacity, and its
application to various uses and sectors.

Contact

World Bank Country Office- Nepal

1st Floor, West Wing, Lal Durbar Convention

Centre

Yak and Yeti Hotel Complex

Durbar Marg

Kathmandu, Nepal

Tel: +977-1-4226792

E-mail: nepalpic@worldbank.org
(mailto:nepalpic@worldbank.org)

References and Further

Reading

[1] Sovacool, B.K., Dhakal, S., Gippner, O.,

Bambawale, M. (2011). Rural Energy
Development in the roof of the world: Lessons
from micro hydro village electrification in Nepal.
Energy Governance Case Study #7. Available
online at http://www.spp.nus.edu.sg/docs/energy-
case/%238-Nepal.pdf
[2] World Bank. IDA at work: Micro hydro lights
the way for villages. Available online at
http://web.worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/IDA/0,,contentMDK:22332062~menuPK:4754051~pagePK:51236175~


[3] Rural Energy Development Programme as in

http://www.rerl.org.np/phase1/concept.html

[4] Clemens, E., Rijal, K., Takada, M. (2010).

Capacity development for scaling up
decentralized energy access programmes.
Lessons from Nepal on its role, costs, and
financing. United Nations Development,
Alternative Energy Promotion Centre, and
Practical Action

[5] Sovacool, B.K., Bambawale, M. J., Gippner,

O., Dhakhal, S. (2011). Electrification in the
mountain kingdom: the implications of the Nepal
Power Development Project (NPDP). Energy for
Sustainable Development, 15(3), 254-265.

[6] Mini Hydro Applications for Serving Electricity

in Rural Nepal – Innovations. Available online at
http://www.energyanddevelopment.com/issue0102.htm.

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