Rural energy development - an integrated approach in Nepal

Table of Contents
Project 1: Community-Based Economic Development Project (CBED) Project 2:Community-Based Integrated Energy Planning Project (CBIEP) Discussion Comparisons between the projects Distribution of benefits Conclusions Three key lessons to ensure that energy remains accessible to all Download the original article Contents: Boiling Point 45: Low-cost electrification for household energy

Boiling Point
Issue 45 (2000) Low-cost electrification for household energy
Article	Rural energy development - an integrated approach in Nepal
Author	C. McMenemy, M. Williamson?, F. Vitez

Développement de l’énergie rurale au Népal: une approche intégrée

Cet article passe en revue l’expérience de deux récents projets énergétiques de développement au Népal. Les deux projets ont pour objectif la réduction de la pauvreté dans des zones physiquement isolées et économiquement marginalisées. Selon cet article, les effets des projets sont optimums si les besoins énergétiques de base sont intégrés avec des objectifs productifs. Afin de minimiser les risques, un effort substantiel doit être accordé aux institutions locales et régionales.

This article discusses two case studies in Nepal (Figure 1)

the Community Based Economic Development Project – CBED in Jumla
the Community-Based Integrated Energy Planning Project – CBIEP in Lamjung

These projects focused mainly on the development of communityowned micro-hydro power systems (MHP- see Figure 2), which can be used for lighting, but could also be used for mechanical end-uses. (Two of the more common end uses are grinding and oil expelling.)

[top] [end]Project 1: Community-Based Economic Development Project (CBED)

CBED is a medium-sized development project run by the Centre for International Studies and Cooperation, a Canadian INGO based out of Montreal. The project is being conducted in three Districts in Western Development Zone of Nepal over a period of six years (1995-2001) with a budget of US$5 million. This paper focuses only on the MHP initiatives in one District, Jumla (Figure 3), which is one of the poorest areas in the country where;

Figure 1: Map of Nepal

The majority of the population are poor farmers.
The average household income is Rs. 40,000 per year (£365 or $590)
Both assets and income are distributed relatively equitably

The goal of the CBED project is to ‘build and strengthen Community Based Organisations (CBOs) so that they can develop as viable economic institutions, capable of effectively managing natural resources, improving socio-economic conditions in their communities and interacting productively with local elected officials and government agencies at the district level.'

The strategy is to form organisations such as NGOs or co-operatives that can provide a link between the users and the state. To date, the project has generally been successful – the production and sales of cash crops has increased; MHPs have been built and are operating reasonably well; and numerous workshops have been held with the state and local officials; and it is wellreceived among villagers.

[top] [end]Project 2:Community-Based Integrated Energy Planning Project (CBIEP)

The CBIEP was conducted by the Lamjung Electricity Development Company (LEDCO) in the District of Lamjung, Nepal. LEDCO is a private Nepalese company, owned by a group of investors from Lamjung District.

Figure 2: 10kW micro-hydro power system

The social and economic conditions in Lamjung are relatively better than in Jumla (Figure 4):

The district is fairly wealthy due to its proximity with the road, existence of army pensions and a reasonably developed infrastructure (e.g. phones, some irrigation).
The literacy rate is 42%.
On average people have more land per household and a large number of people are able to grow enough food for their own consumption.

The goal of the project was to implement MHP systems so that the plantsa range of renewable energy systems that could support themselves financially. Therefore, the project sought to develop an energy strategy that was integrated with local economic development objectives.

The specific goals of the project were:

Short-term: through participatory planning, develop an energy management strategy for two Village Development Committees (VDCs) – Kolki and Ilampokhari
Long-term: improve the ability of communities to plan for the sustainable use of local energy resources.

The project sought to achieve these goals through the establishment of Village Energy and Environment Committees (VEECs) that would serve:

as intermediaries between the community, the state and manufacturers;
centres of local knowledge about energy;
long-term decision-making bodies

[top] [end]Discussion

Micro-hydro infrastructure has three main aims:

providing for basic needs;
improving economic and agricultural productivity;
improving human capabilities through the developing of new businesses/markets

The number of failed rural energy projects is evidence that the provision of energy infrastructure alone is not enough to bring about these aims. The questions still facing us – as implementers, planners and technologists – is; how does energy infrastructure fulfil development objectives? How do we ensure that development is positive for the greatest number?

Figure 4

Decentralised energy development does offer rural areas benefits:

the only way to reach many remote areas
environmental benefits and long-term sustainability through the use of renewable resources
scale is often more appropriate to local needs – 100 to 150W per household, and, with the introduction of affordable energy efficient lighting systems, future household power demand will be considerably less than this
the rural sector provides security from markets biased in favour of urban areas
decentralised decision making – use of local knowledge – freedom and flexibility in the hours and types of energy use, payment systems; – the development of local organisations adds value in itself – i.e. it builds social capital.

f{v{table:border="1"|row:valign="top"}v The effectiveness of local institutions is cruicial in determining:

The size of the benefits;
How they are distributed.

Of course, decentralisation also face obstacles:

financial risk and lack of capital
lack of local experience (technical and managerial)
collective action problems (fairness and accountability)

So, the practical challenge is first making MHP systems run, and second, ensuring that they run well.

The costs facing an MHP plant suggests that there is a breakeven point where productive enduses generate enough money that the cost of domestic – or basic needs – applications drop to a level where they are affordable for all. It is likely that certain enduses have different impacts for different groups (Table 1).

Table 1: Impact of certain end-uses on different groups

[top] [end]Comparisons between the projects

The project are similar in that they sought to implement energy through community-based energy strategies, but they are different in:

Energy was only one aspect of the CBED project, whereas it was the main goal of the CBIEP project
the CBIEP looked at a broader range of energy technologies, whereas CBED only focused on MHP electrification as an energy strategy.

[top] [end]Distribution of benefits

The point is to ask how effective these projects have been in creating benefits and new opportunities. A good place to start was to ask people what they think!

In the CBED project, people were asked how electricity had fit into their development objectives, as well as the benefits and drawbacks of electrification systems, as shown in Table 2.

Table 2: CBED project; the role of electricityof electricity in development objectives, benefits and drawbacks

Similarly, in the CBIEP project, people were asked to identify their specific development objectives (Table 3). Energy strategies were subsequently developed around this feedback.

Table 3: CBIEP project; Development objectives and strategy

Subsequently, people were asked how much they would be willing to pay for four measures needed in order to get an idea of the likely distribution of benefits (Table 4).

Table 4: Willingness to pay for services

to make a lump-sum payment for energy services (e.g. for installation or repair)
for lighting
for grinding
for oil expelling

Not surprisingly, willingness to pay was always related to household income. Also;

people with more income spend slightly more on energy,
poor people spend a much higher of percentage of their income on energy services

This trend is likely to become more pronounced with increasing levels of development. If there was a greater range of services, it is likely that either the prices would be set above what poor people could afford, or richer people would have greater access to services.

The second aspect of the study analysed how benefits distributed with the household, as shown in Table 5.

Table 5: Benefits of electrification; distribution within households

[top] [end]Conclusions

Judging by these findings, there are three broad statements can be made:

energy does offer benefits to the whole community – rich/poor and men/women – and there is great potential to realise positive development centred upon energy intensification
there is a risk that benefits will be appropriated by richer households, for the simple reason that rich households have the money to spend.
before we can talk about distribution and equity, we also need to ensure that systems do indeed function. In remote areas and low-income areas, this is still a major challenge.

[top] [end]Three key lessons to ensure that energy remains accessible to all

Decentralisation means that communities will have to assume financial responsibility – when something breaks, it is up to the community to find the money to replace it. This has implications:
Because everyone has to pool together, the participation of poor households may be limited

- clearly, users will only contribute what the poorest can afford.
- households may divert money from other essential areas – e.g. education – due to social pressure. The solution is to ensure that MHPs have other areas for income generation:
- productive end uses should exist which will generate economic linkages between energy and MHP. Of course, this also maximises the breath of the development impacts of the system.
- the implementation strategy and the organisational structure will determinewill determine whether the system will function well. Where linkages are generated, it is more likely that systems will be used for some sort of income generation, although it is not possible from this data to say who will benefit.

The introduction of MHP is often technically new and challenging in remote rural regions. Often people do not know how to fix or manage the systems so the most educated, which is usually the most wealthy, have the say in decision-making. Less educated people – the poor and women – are limited in their participation because they cannot read or write. If the women are omitted from decision-making and the poor contribute a greater amount of their income to energy services, then it is fairly obvious who will suffer. The solution to this is to provide training to the greatest number of people – i.e. generate human capital. This ensures that everyone has a say in decision-making and that everyone understands the operation of plants.
While decentralisation does offer the benefits of economic efficiency and appropriateness, it also offers an opportunity for opportunism – for example, outright pilfering of funds. The only solution to this is to ensure that linkages and enforcement mechanisms exist between the state and local organisations.

[top] [end]Download the original article

Rural energy development - an integrated approach in Nepal by C. McMenemy, M. Williamson and F. Vitez (96 KB)

[top] [end]Contents: Boiling Point 45: Low-cost electrification for household energy

Low-cost electrification - the need for access to energy services - Rural energy development - an integrated approach in Nepal - Gaining ground in community micro-hydro power development in Kenya - Tariffs for rural grid electrification - Fuel for lighting - an expensive commodity - Demand side management for rural Nepal - Micro-privatising rural power distribution - mass produced community development in Orissa, India - Electricity for the Urban Poor - Windpower - Small is beautiful - Management of sustainable photovoltaic solar energy in the semi-arid region of the State of Pernambuco, Brazil - Rural electrification in Nepal - Experiences of an integrative social contextual approach - From candles to compact fluorescents - Consumer response to mobile solar water heating in the low-income sector, South Africa - Clay Grate Development in Chibau Khera

Categories: Boiling Point 45| Electrification| Rural| Nepal| Lighting

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