At a time the majority of the population spends several hours a day fetching firewood to cook food for the family, energy security remains an unimaginable concept for Nepal. Countries around the world are taking giant leaps in terms of economic development, and their need for power has been growing proportionally to fuel their growth. Unfortunately for Nepal, roughly 85 percent of the energy that the country consumes goes into household cooking. Half the country is still without electricity, and the other half suffers from long load-shedding hours throughout the year. Given that energy is such an irreplaceable requirement for any economy, how are we to push for economic growth if there is no energy?
Different bodies in Nepal have been working in different ways to mitigate the current energy crisis. The Alternative Energy Promotion Center (AEPC), in collaboration with various donor agencies, has been working on disseminating various clean technologies to the rural population. While off-grid solutions such as small solar home systems are a quick way to power up villages, these distributed solutions often turn out to be uneconomical, mainly due to scale. However, some institutions are starting to focus more on larger centralized systems using mini- and micro grids, which in theory will bring the costs down significantly. Nepal Electricity Authority (NEA), on the other hand, has been focused more on developing medium and large scale hydro plants.
It has the monopoly over the generation (mostly), transmission and distribution of electricity in the country. Given its status, NEA is responsible for keeping track of the worsening spread between the supply and demand. Even with an electrification rate of only about 55 percent, if the demand is growing at almost 100 MW per year, adding 500 MW in 5 years or 1,000 MW in 10 years is clearly not going to reduce the energy shortage, as it will only be sufficient to balance the increase in load. In other words, the current rate of increase in hydropower capacity is clearly not sufficient. If we assume higher energy appetite per capita as the economy grows, the situation is even worse!
Energy security does not mean having too much of one source—hydro-energy in our case—but rather an array of different sources that can complement one another to deliver a smooth, uninterrupted power supply. Diversification is a crucial criterion for energy security. Unfortunately, Nepal is yet to realize this fact. Most of the hydro plants in existence or those being planned are of the low-cost, run-of-river (ROR) type, i.e. plants that use river water and do not have reservoirs to store water, and so have little control over their generation. These ROR-type hydro plants put us at high risk in case of a prolonged dry season or drought. The country of Malawi, for example, which also relies almost entirely on hydro, has had to suffer severe consequences due to droughts in the past. Generation will be high as long as there is abundant water in the rivers, but how will these plants be able to provide power in the dry season when the water levels are low? Adding more ROR-type hydro plants will be of little help in that case.
The word “reliability” is virtually non-existent in the energy industry in Nepal today. Narrowing down the massive gap between the current supply and demand has been the goal till date, but reliability should be another important goal. The table alongside highlights how even the resource-rich countries have diversified their supply portfolio in order to achieve energy security. China, India and the US have large fossil fuel reserves, but only a portion of their supply comes from those resources. Brazil is richer than Nepal in natural water resources and yet only 71 percent of its total capacity is hydro. In case of Nepal, more than 92 percent of the total capacity is hydro and diesel plants account for the remaining 8 percent. Given how the country’s main focus has been on hydro today, these numbers will tilt even further towards hydropower in the days to come.
Large-scale hydro may be one of the cheapest forms of energy resources available for Nepal, but there are certain economic costs that people generally tend to overlook. The cheapest does not necessarily mean the best. If we assume no delay, which is a strong assumption for Nepal, such hydro plants take 5-6 years to build. The economic impact of long load-shedding hours is already extreme, so waiting at least half a decade more in such a condition to see a large hydro plant get built could be devastating for the economy. Moreover, these plants demand large plots of suitable land, which often cannot be secured without significant infrastructure expenditure. Most such large hydro resources are located in remote parts of the country, so developing a large hydro plant far away from the load would mean substantial increases in transmission and/or road construction cost. Large hydro has also been linked to several instances of floods, landslides and earthquakes. Furthermore, large hydro stakeholders in Nepal have had to confront various socio-political hurdles on a regular basis during their project cycle. All these attributes of hydropower should also be taken into consideration before deciding to label it as the “best” option available.
It is only natural for us to opt for hydro, which is the biggest energy resource for Nepal. But total reliance on just one resource could have dire consequences, especially for a struggling economy such as Nepal. One way to mitigate the high risk, financial or otherwise, of large hydro plants is to develop an extensive international transmission network, linking Nepal with its neighbors that rely on a variety of non-hydro resources such as coal, nuclear, oil and gas. This will allow Nepal to import power from other countries during the dry season, while selling excess power to them during monsoon. The rest of South Asia has been experiencing very high economic growth, which means that they will be able to absorb large amounts of Nepal’s electricity exports with ease. It is true that a few international transmission lines are in the pipeline, but Nepal should consider including countries other than India in this equation. But again, more transmission lines mean higher costs.
Energy is the building block of any economy, so reliability should be a top priority for policymakers. Given the abundance of non-hydro resources such as wind, solar and biomass, Nepal may even be able to tap into these resources at a relatively low cost. Sadly, they are yet to appeal our policymakers and the sole power utility. If the country is willing to spend a significant portion of its national annual budget on petroleum imports (about 25 percent in FY 2011/12) or to develop large diesel plants that have very high operating costs, why not consider building an extensive high-power transmission network, which will pave the way for the development of more generation plants, or push for non-hydro renewable resources that are much cheaper than diesel?
The author is MD of Danphe Energy Pvt. Ltd., a research oriented renewable energy company providing quality solar and wind products
Source : Republica