Proceedings Report: Understanding the Supply of Renewable Energy

DIALOGUE SERIES ON RENEWABLE ENERGY SERIES II: Understanding the Supply of Renewable Energy Proceedings Report 15 May, 2019
 Hotel Himalaya

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Moderator: SANDIP SHAH Managing Director, Dolma Himalayan Energy Speakers: ABHISHEK ADHIKARY Project Manager, U=lity Scale Grid-=ed Solar Project, Nepal Electricity Authority ANJAL NIRAULA Chief Execu=ve Officer, Gham Power Nepal Private Limited

The session focused on the renewable energy sector of Nepal and highlighted discussions on its capacity to produce and supply renewable energy across borders. It also focused on the incentives and interests

ITNUMA SUBBA Chief Execu=ve Officer, Energy Development Council KUSHAL GURUNG Founder & CEO, WindPower Nepal Private Limited

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Abhishek Adhikary Project Manager, ULlity Scale Grid-Led Solar Project, Nepal Electricity Authority Abhishek Adhikary underscored the economics involved in all forms of renewable energy. From a u=lity perspec=ve, an op=mum mix of hydro and other renewables is possible, but he believes that there are technical constraints and issue of cost compe==veness involved in the dynamics of the mix. For instance, there are problems of intermiQency involved in the mix of wind and solar, as solar is only available for certain hours of the day. If diesel power is added to the mix, the cost increases and impacts its cost compe==veness. In this context, he stressed upon the no=on that solar energy should not compete with or be used as a subtrac=on of hydropower energy – it should rather be used as a supplement.

Furthermore, innova=ons in the field of renewables are using a push strategy where an appropriate distribu=on system is lacking. He believes that a reliable distribu=on system is required to address this issue. One solu=on to address this inefficiency would be to use smart meters, as well as net-metering aVer the pilot phase. Therefore, moving forward, innova=ons in renewables should happen only aVer making sure new technology works rather than simply supplying it through a push strategy.

Coming to the pricing of renewables in Nepal, the lag lies in comparing our policies and pricing with that of India’s market. Even with the possibility and poten=al of crea=ng hundreds and thousands of megawaQs, without compe==veness, the cost, =me and poten=al involved in it go unmatched.

Considering this, he stressed upon the need for a separate agency that can monitor the pegging of policies and finding the modality to minimize costs and enhance compe==veness. On the policy front, the agency must be capable of formula=ng policies and ensuring feasibility in the subsidy provision to domes=c entrepreneurs while also aQrac=ng interna=onal investors. Further, the agency should not look at solar energy sector from a hydro perspec=ve, but streamline the difficul=es associated with the facilita=on of solar energy genera=on and ways to enhance its compe==veness.

Lastly, another major issue that he highlighted was about the condi=on of transmission lines. Much emphasis is given to the genera=on side of hydro and solar, and the size of the plant. However construc=ng transmission lines requires the acquisi=on of public land which is a more difficult task than construc=ng the actual hydro plant. Thus, there is a need for addressing these issues and move ahead proac=vely in the renewable sector.

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Anjal Niraula Chief ExecuLve Officer, Gham Power Nepal Private Limited Anjal Niraula has been working in both the on-grid and off-grid markets. He believes that the drive behind switching to different forms of energy is increasing, which is a posi=ve move for off-grid energy.

Since off-grid space is different from solar technology, he emphasized upon the elements that drive the off-grid design i.e. geography, market linkages and the resources that are available. In light of this statement, he emphasized that these drivers are to be kept in mind for determining cost and revenue.

Also, in today’s legal framework where there are no subsidies involved in the off-grid typology, the financial challenges are abundant. There are minimal incen=ves when impor=ng solar panels and hardly any financial support for rooVop projects. However, there is s=ll a need to remain compe==ve by implemen=ng strategies of seeking customers for off-grid areas. For urban consumers, off-grid areas should serve their mo=ve of reducing current energy bill with a different source of energy and conversely, for exis=ng off-grid customers, it should increase their revenue. This serves as the most economical way of iden=fying the target market for off-grid areas.

Further, Nepal is a price-sensi=ve market where cheaper and low-efficiency foreign products can easily flood in even if there is a tradeoff with quality. Thus, he highlighted that the companies should try to think of ways to incen=vize high-grade equipment as the transi=on is towards energy service models, where there are standards and quality control checks in place. Moreover, to improve stability and increase renewable energy penetra=on, baQery technology inclusion in the off-grid and on-grid projects is another area that can be priori=zed, given its reliability and price stability.

He stressed on the technological advantages of pursuing distributed solar energy and peer-to-peer exchanges taking place in different parts of the world. He is op=mis=c about the poten=al of solar, biogas and other renewable energies for Nepal; rather than coming up with only large scale projects where there are varied price mechanisms and lack of exper=se in execu=on, he believes that the way to the future is by adop=ng technological innova=ons in small scale projects.

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Itnuma Subba Chief ExecuLve OďŹƒcer, Energy Development Council Reec=ng on a study (which is yet to be published) done by Energy Development Council (EDC) with a Norwegian consul=ng company, Itnuma Subba stated that Nepal has a theore=cal poten=al of genera=ng 400,000 MW of electricity. While these huge numbers have been crea=ng headlines lately, she also men=oned that EDC and Alterna=ve Energy Promo=on Centre (AEPC) have come to an agreement on the assessment of solar sectors in Nepal, but they have not been very ac=ve on the wind energy sector.

While discussing the maQer of trans-border supply of electricity, she stated that EDC is more focused on enhancing domes=c market ďŹ rst then on trans-border power trade. Since it is highly complicated to install a transmission line and given that 3000 MW of electricity is being produced next year, she believes that domes=c electricity driven market should be priori=zed. If only Nepal can generate enough electricity demanded to run electric vehicles, it can have sustainable and cost produc=ve future. A recent study done for the last power investment summit showed that the electric power sta=on can have 8000 MW of electricity usage. Hence, proper planning and proceedings should be done accordingly.

Addressing a similar issue, she also stressed on the use of cleaner energy. Nepal has been using a lot of other energy like diesel and petrol in huge amount. As Nepal has immense poten=al in hydro, the use of petrol and diesel should be reduced and more focus must be on suitable use of clean energy. Not only is the use of petrol and diesel neglec=ng climate change movement, but it is also costlier than cleaner energies in the long run.

Towards the end, she vouched for the promo=on of the use of electric vehicles. EDC has been advoca=ng the use of electric vehicles, but she believes that advoca=ng alone will not provide fruicul results. Hence, EDC is yearning to increase the tax on the use of petroleum induced vehicles to 200% with an expecta=on that people would be obliged to buy electric vehicles.

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Kushal Gurung Founder & CEO, WindPower Nepal Private Limited Kushal Gurung shared that there is a dis=nct categoriza=on between hydro and alterna=ve energy in Nepal, which creates hurdles for the non-hydro renewable energies. However, over the years, there has been a shiV towards solar and wind energy. He believes that there is more investment in solar and other non-hydro energy sources as suitable provisions are in place.

Likewise, earlier, the growth and development of the wind energy sector was impossible due to the narrow roads. However, through innova=on and technology, five wind turbines have been installed making the genera=on process more effec=ve. He pointed out that the evolu=on of technology in the renewable energy sector has constantly developed, which has fueled his op=mism even further. Any investor, especially from the private sector, making risk and return assessment would be appealed by this.

Furthermore, the evolu=on of energy storage technology has also supplemented hydropower with baQeries and inverters. The biggest issue for energy storage came in the form of cost and environmental impact, which are being tackled through this progression in storage technology. Also, recognizing the guidelines needed within the sector, he stressed that the focus should be more on sustainability and not just on cost and liability. For example, the need for standards for baQery-use on grids is lacking, along with the lack of guidelines for the disposal of the baQeries used for solar and wind energy storage.

In the context of Nepal being an energy provider, he believes that Nepal must export in the regional market as the current projects have already surpassed the local demands. He explained that if only 1% of the land mass in Mustang is used for solar energy, Nepal would be able to generate 3,000 MW of power. Therefore, supply is not an issue, the suppressed demand is a challenge. Moreover, expor=ng energy will allow Nepal to focus on cuhng down on its current trade deficit. However, it requires efficient planning and strategic trade agreements to make this energy commercially viable.

Lastly, he indicated that the major problem this sector faces revolved around the lack of conducive and legal framework and policies. The process for approval was already lengthy for both hydro and non-hydro sectors and there are no concessions given on materials – chargers, baQeries and inverters – needed for solar. This served as an excess duty and not tax, which is an addi=onal charge. This led him to stress the need for financial engineering to make regula=ons tailored to independent energy forms rather than generalizing all of them as renewables.

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Sandip Shah Managing Director, Dolma Himalayan Climate Fund Moderated by Sandip Shah, the session highlighted the possibility of an op=mum mix of hydro and other renewables, as well as the issues facing the renewable sector from the u=lity perspec=ve. To conclude, Sandip Shah reiterated some of the reasons for the setback in renewable energy sector; the major issues being, the unfair price comparison with other countries, difficulty in distribu=on of energy due to the worsening condi=on and lack of transmission lines, dependence on subsidies and ignorance towards the interconnec=on between a distribu=on plan and value chain.

The session stressed that given the poten=al of Nepal in solar energy and other forms of renewables, the focus should be on increasing the reliability of the supply chain. There is an urgency.

Key Points • Legal and regulatory frameworks are instrumental in increasing efficiency of the supply side ini=a=ves. There is a need for an agency, which facilitates all renewable energy interven=ons and encourages compe==veness and collabora=on. The focus should be on crea=ng an energy mix that is economical and environmentally sound.

• The supply side must consider a holis=c planning method, from the genera=on of renewable energy to its transmission and distribu=on.

• The demand for renewable energy is significantly low compared to its genera=on. The challenge is to unleash the suppressed demand.

• Expor=ng renewable energy from Nepal is possible and that must be our primary focus.

• It is important to realize that we are beQer at execu=ng small scale projects than large projects, which have more restric=ons.

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Photos from the Dialogue