Renewable energy markets in rural electrification: Country case Nepal

Abstract

This paper discusses and analyzes renewable energy (RE) based rural electrification supply models, economics behind rural electrification, market drivers and market distribution in the rural areas of Nepal. Markets for RE technologies are emerging in Nepal as a consequence of increasing rural electrification in the country. Two promising technologies are in evidence — solar home systems (SHS) and micro hydro. The availability of abundant renewable resources, lack of fossil fuels and difficult geographical terrain for grid extensions contribute to the advantages of RE-based decentralized rural electrification in Nepal. The distributional analysis shows increasing extensive growth and decreasing intensive growth of off-grid rural electrification thus indicating market expansion with uneven penetration among the rural people. Solar PV technology is still not within the reach of the economic poor. Access to credit and cumbersome subsidy delivery mechanism have been perceived as the major factors affecting the expansion of rural electrification by the stakeholders, requiring innovations in these areas so that a large rural population can have access to electrification.