Cleantech markets in Nepal

Energy situation 

The impact of inadequate power supply can be seen on Nepal’s economic and social development, Despite its huge amount of water recourses and Possibility for electricity production of 42,000 MW. Only 1 percent has been harnessed until now (Reegle 2012, cited 09.20.2016.) The sharp growth in electricity demand has affected the whole country and suffers a power cutoff up to 16 hours a day during driest month of January, February, March and April. Nepal does not have any fossil fuel reserves of its own and every year a country spends huge amount of its foreign exchange reserves for the of-the-of-the-of-importation of of of fossil fuel. The Geographical structure makes the transportation expensive and harder in the highlands, Resulting Excessive use of firewood, threatening country’s forest and at the same time Causing indoor air pollution and health hazards.

Nepal Electricity Authority (NEA) is the sole electricity producer and the Supplier owned by the state. Only 15 percent of the total population has access to electricity and 90 percent of That population lives in urban areas (Reegle 2012, cited 09.20.2016.) In rural Nepal biomass is major source of energy . Biomass fuel Consists of both woody and non-woody biomass. The former come from trees and shrubs, and the Latter from crop residue and other vegetation. Recently done air quality survey by Yale University puts Nepal in vulnerable condition , threatening to cause hazardous health harms such as lung cancer and other respiratory disease (Yale University in 2016, cited 20.09.2016.)

In December 2008, government of Nepal DECLARED “national energy crisis” . Nepal ranks among the lowest in the world in terms of net electricity generated per capita and energy intensity. World bank argued the Nepal’s energy crisis caused by years of under-investment and sharp growth in electricity demand (Reegle 2012, cited 09.20.2016.)

In short:

  • In 2008 government of Nepal DECLARED national energy crisis
  • Country suffers a power cutoff up to 16 hours a day
  • Huge amount of unused water resources for electricity production


Renewable Energy

Hydro Energy

Nepal’s possess Tremendous amount of water resource with potential of Producing 83,000 MW of electricity, Which of 42,000 MW is economically feasible . Nepal has more than 6,000 rivers covering Approximately 4.500 KM in total length (Reegle 2012, cited 10.13.2016.), The Nepal Electricity Authority (NEA) is a state-owned electric Supplier, responsible for generating, transmitting and distributing electricity Throughout the country . In the fiscal year 2014/15, the total installed capacity into Nepal Integrated Power Supply (INPS) Remained at 765 MW (ISLAND, cited 10.17.2016). Figure 1 shows That the NEA’s own generation was 42.52%, while the IPPS Remained at 23% and purchase from India Increased to 34.48%. (NEA 2015, Cited 18/10/2016)

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Expansion of the grid is slow Because of the Geographical Difficulties and NEA serves only 56% of the population (including on-grid and off-grid) (Reegle 2012, cited 10.18.2016). NEA operates with energy deficits every year, and is struggling to meet the growing energy demand sharp. NEA has no other choice than to Impose power cutoff to make a balance with unmet power demand. Government of Nepal Introduced a 38-point Electricity Crisis Resolution Action Plan in 2009 (Reegle 2012, cited 10.18.2016). Government of Nepal is supporting small hydro power projects via independent power producer by Providing different subsidy scheme. Large hydro projects needs huge amount of funds, for That government of Nepal is trying to attract foreign direct investment but instability in the political situation has hindered in process of Those large projects to get started.

Small Hydro Power

Government of Nepal set a roadmap plan for the development of SHP in the year 2011. The main objective is to utilize a country’s water resources to meet domestic electricity demand export surplus power to the the the the the neighboring countries. The plan is set for long-term, up through 2027 by Which it plans to generate 4,000 MW of power for domestic needs , expand the electricity services through national grid to cover 75% of the population (Government of Nepal, 2011, cited 19.10. 2016). Government of Nepal is giving tax exemption of 100% for the first 10 year for investment made in hydro-electricity sector.

In short:

  • Huge potential for hydro-electricity production
  • Government special effort to Increase and Improve hydro-electricity production
  • Tax exemption of 100% for the first 10 year for investment in hydro-electricity sector.

Solar Energy

Nepal Electricity Authority’s national grid expansion is slow in rural areas of the country because of the topographical hardship and transportation of imported fossil fuel is also harder. The most predominant source of energy in rural areas is firewood from forest. Solar energy is the most efficient and cost effective source of energy in such areas.

APEC in coordination with UNEP / GEF Conducted solar and wind energy resource assessment research (SWERA) in 2008, Which indicates that Nepal has potential for commercial development of solar energy. A total of 2,100 MW could be generated from grid connected PV and commercially used. The average sunshine hour is 6.8 / day nationwide, with 300 days of sunshine Approximately. Solar Water Heater (SWH), Solar Dryer (SD) and Solar Cookers (SC) are some other solar possibilities considered in Nepal. SWH  has already been fully commercialized while SD and SC are still in the infancy phase (APEC 2008, cited 10.20.2016.)

In January 2016 AEPC started replacing Kathmandu valley’s street lamps with solar ones. The total number of NEA’s powered street lamps in Kathmandu valley alone is 18,000 and replacing them with solar powered would save up to 6 megawatt of electricity (Ekantipur 24.12.2015, cited 10.20.2016.) In the past also there has been a similar project of installing solar powered street lamps but due to lack of maintenance and lack of technical human resource and absence of communities’ involvement, achievement of those projects are almost nil.

There is still a lot to explore and identify the hidden opportunities of solar energy in Nepal. Commercialization of solar energy has not been successful though government of Nepal plans to increase the access of alternative energy sources from 10% to 30% within the next 20 years (Government of Nepal, 2011, cited 10.20.2016).

In short:

  • The average sunshine hours is 6.8/day
  • Potential for the commercial development of solar energy
  • Government of Nepal is promoting and investing resources for the development of solar energy

Wind Energy

There are 40 wind measurement stations installed all over the country that runs under the department of Hydrology and Meteorology though only 29 stations are functioning properly. The extreme recorded wind speed was 46.76 m/s and the average annual energy potential is about 3.387MWh/m2 (Upreti & Shakya, 2009, cited 21.10.2016). The feasibility study done on potential wind energy by AEPC estimates generation of 3,000 MW of electricity considering installed capacity of 5 MW per square KM (APEC, 2008, cited 10.20.2016). Figure 2 shows the area covered for the Study of potential wind power in Nepal Conducted by AEPC Which Also That indicates most of the higher altitude parts of Nepal hasnt been Explored (APEC, 2008, cited 20.10.2016).

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Wind energy could be another noticeable source of energy, particularly in rural areas where national grid will not reach soon. Nepal government is planning to generate 20 MW of wind energy form of Kathmandu Valley and surrounding hills. International companies like Suzlon Energy Limited (India) and AGA Middle East Pvt. Ltd. Singapore / Hong Kong have inline with proposals in the production of 200 MW of wind energy. APEC with support from the Asian Development Bank (ADB) has installed wind-solar hybrid system of 400 watts with 150 watt solar power projects in six sites. (AEPC, cited 21/10/2016)

In order to harness wind energy, concerted efforts to survey is needed. Nepal’s topographic condition demands large number of wind stations distributed According to the altitude and locations (Upreti & Shakya, 2009, cited 21.10.2016).

In short:

  • Wind energy is another noticeable source of energy
  • Very few study has been conducted throughout the country in wind energy
  • Only some pilot projects have been done yet so far
  • Concerted efforts is needed for harnessing wind energy


In Nepal, traditional sources of energy such as firewood, agricultural residue and animal dung hold majority when it comes to necessity and supply of energy. However, inefficient use of firewood has threatened country’s forest and also to health of individuals from indoor pollution.  Following figure shows firewood as dominant source of energy covering 50% with dependency on petroleum products being second largest source of energy (Government of Nepal 2016, cited 21.10.2016).



Improved cooking stoves (ICS) biomass densification and biomass gasification are emerging technologies in Nepal. AEPC has been promoting ICS program throughout the country. ICS are getting more popular as it consumes only half the fuel wood than traditional ones. The indoor pollution has also been reduced by 30-90 percent and greenhouse gas emission reduced by about 2.5 ton of CO2 per year. FCG, Finnish Consulting Group Ltd, supported a project funded by the Nordic Development Fund. The project installed ICS in 6073 households. Center for Rural Technology, Nepal was the local partner of the project (NDF 2012, cited 21.10.2016.)


Biogas is not a new technology for Nepal. The 1992 biogas support program helped make biogas more popular in rural areas. Involvement of the private companies has increased the installation of the biogas (AEPC, cited 10.21.2016). Biogas mainly serves two purposes, one for cooking (80%) and the other electrification (20%).

Private companies has been playing vital role in the development of biogas by carrying construction / promotional activities with the Pre-Qualification (PQ) identity. Estimated number of biogas companies in Nepal is around 100 (AEPC, cited 10.21.2016.) Nepal is conducting pilot projects for urban domestic biogas plant as well. The basic concept of this technology is producing bio energy form organic waste coming out of the kitchen. This concept is now expanding in other cities of Nepal as well.

The Alternative Energy Promotion Centre (AEPC) is working to build large-scale biogas plants for managing municipal solid waste. Alternative Energy Promotion Centre (AEPC) has opened invitation for interested private and public sector organizations to place bid.


The feasibility of biofuel has been ongoing in Nepal for a while now. Recently government of Nepal has formed a team for the study of possibility of making biodiesel form jatropha seeds. Alternative Energy Promotion Centre (APEC) is supporting 11 organizations to establish 10 modern nurseries for growing jatropha. According to the study done by the Alternative Energy Promotion Centre (AEPC), there is a high potential for commercial farming of the plant in different part of country (kathmandupost 11.06.2016, cited 21.10.2016). Alternative Energy Promotion Centre (AEPC) is planning to support two private organizations to setup a biofuel-processing plants.

In short:

  • Excessive and inefficient use of firewood has threatened country’s forest and also to health of individual
  • Improved cooking stove is changing life for people living in rural areas
  • Commercialisation of bio gas is increasing throughout the nation
  • Possibility of commercial bio fuel production

Geothermal Energy

Nepal is way behind in realising and utilising the proper use of geothermal energy. Geothermal energy has been used from ancient times for space heating and bathing, but now electricity production is possible. Study and research in this Particular sector is almost none in Nepal, although there have been some efforts in identifying the sites. There are 28 localities recorded with geothermal activities in Nepal (AEPC, cited 10.21.2016). The use of geothermal energy in Nepal has been mainly for bathing purpose. Local entrepreneurs have grasped this as opportunities and turned into business  and tourist (internal and external) are attracted to such place.

Geothermal energy remains out of focus in Nepal because there is no trained manpower; energy officials have lack of knowledge about the direct use of it and government’s lack of interest in the development of it. In figure 4 we can see different geothermal springs identified_by in Nepal till date (Ranjit 2015, cited 10.21.2016.)

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In short:

  • Geothermal sites have been identified in Nepal but yet remains out of focus
  • Nepal holds possibilites in geothermal energy

Waste Management

Kathmandu valley is in the phase of rapid urbanization, with population of 2.5 million people it is growing at 4% every year and is also one of the fastest growing metropolitan city in South Asia (The World Bank 2013, cited 21.10.2016). Kathmandu valley is the highest producer of unsorted waste material and is facing the problem of solid waste management. Kathmandu Metropolitan City is responsible for collecting and transporting waste from valley to landfill sites and for doing so it utilizes huge amount of budget every year, for instance in the fiscal year 2012, Rs.443 million was utilized for Kathmandu Metropolitan City for the purpose of collecting and transporting waste to landfill sites (Khatiwada 2014, cited 10.21.2016.) Frequent disturbances in the collection of waste material has resulted increase in the pile of organic residues and making the city more malodorous than ever. The present landfill site is nearly filled up with waste and environmentalists have warned of contamination of the ground water, which can affect the locals living in those areas.

In figure 5, the unsorted solid waste from valley consists mostly of organic (63.22%) and for the inorganic waste such as plastic, paper, glass, textile, rubber and metals can be reused (Urban Development Ministry in 2015, cited 22/10 / 2016). Segregation of waste material is one major problem in urban areas.

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Nepal Investment Board is preparing to sign a Project Development Agreement (PDA) with two Nepali companies (Nepwaste and Clean Valley) to manage the Kathmandu Valley’s garbage. This would be the first time a private company managing valley’s solid waste (Ekantipur 09.21.2016, cited 10.21.2016). Nepwaste is a joint venture of Finland-based Compunication, Pöyry, Bioste and the Dutch-Nepali enterprise while the organic Village Clean Valley is a Nepali-Indian joint venture company (Nepali Times in 2015 cited 21.10.2016).

Waste to energy

Kathmandu valley consumes Significant amount of energy, 30% of electricity, 50% of petrol, 60% of LPG. The Waste-to-Biogas (WTB) system is the most prominent solution for managing municipal waste and earning revenue from the sales of biogas / bio-electricity and bio-fertilizer. Nepal needs clear policies, legislative framework, intuitional arrangements and financing mechanism in order to implement WTB (Khatiwada 2014, cited 21.10.2016.)

Kathmandu Metropolitan City has successfully generated power from the waste for the first time after years of continuous efforts. The waste-to-energy project is likely to facilitate waste management in the Kathmandu Valley. This project not only generates electricity but also plans to produce 96 kg of gas, 300 kg of bio-organic fertilizer and 13,500 liters of purified water daily from the waste collected (The Himalayan Times 26.10.2016, cited 10.29.2016.) With AEPC support from the World Bank under the Scaling up Renewable Energy Program (SREP) is working to build a market for large commercial and municipal solid waste biogas. APEC is attempting to develop market with the participation of the private sector and public organizations and applications calling for new innovative technologies that would create new opportunity in the renewable energy sector of Nepal (AEPC, 10.21.2016).

In short:

  • Kathmandu Metropolitan City produces significant amount of solid waste
  • Government is planning to build large urban biogas project
  • Private sectors are invited by government to join for urban biogas project

Water Management

Numerous freshwater rivers, lakes make Nepal rich in water recourses and yet experiences clean drinking water crisis. The Department of Water Supply and Sewerage in Nepal claim that though around 80% of the population has access to drinking water, and it is not safe. Every year Nepal faces a high number of water borne disease such diarrhea, dysentery, typhoid, cholera and gastroenteritis, affecting mostly children under age of five with an estimated 44,000 children dying every year (Suwal, cited 10.22.2016.) Untreated sewage from industry and domestic waste are the main cause for polluting surface water and are mostly in the urban areas. Lack of public awareness and education, proper sanitation are major concerns.

Government of Nepal considers providing safe drinking water and sanitations services as fundamental human needs and a basic human right, for all of its Citizens. However, the rapid increase in population has increased the water demand and placed a strain on the existing urban water supply and sanitation services. There are only five major wastewater treatment plants (WWTP) in Kathmandu valley. In table 1 we can see that most of the WWTPs are out of order or not fully functioning and in most of the case, the main reason behind the failure are technical difficulty, funding and lack of skilled human resource (Kathmandu Upatyaka Khanepani Limited 2013 cited 22.10.2016).

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Rain Water Harvesting (RWH)

Kathmandu Upatyaka Khanepani, a public company limited is responsible for the operation and management of water and wastewater services in the Valley (Kukl, cited 10.22.2016). Nepal holds 2.7% of the world’s total fresh water available but ironically water crisis has deepened in the capital in recent years. One of the government over politicized project Melamchi water project designed in 1988 to bring 170m liters of drinking water per day to Kathmandu valley has not been finished yet (Bhushal 04.09.2015, cited 22.10.2016.) Residents of Kathmandu valley are facing great hardship for the access of clean water and this will worsen in the future due to climate change and population increase.

Rainwater harvesting (RWH) has can be sustainable solution to this problem. RWH is not a new concept or technology, and Nepal receives an average annual rainfall between 1500mm to 3000mm. Rainwater harvesting is included in the National Water Plan of Nepal though government’s central planning, policy making, implementation and monitoring is insufficient (Rainfoundation, Cited 22.10.2016.) Several pilot projects of rainwater harvesting have been conducted in different parts of the country. FINNIDA (the Finnish Development Agency) has been supporting rainwater-harvesting projects in Nepal. (Thanju & Shrestha 2007, cited 22.10.2016.) There would be plenty of opportunity for the involvement of private and public sector if government of Nepal understands and plans for the development of rainwater harvesting technology. In Nepal there are few private companies who provide service of installing this technology. The business has not boomed yet as there is very few knowledge about this technology to people.

In short:

  • Nepal holds huge amount of fresh water yet it faces problem of clean drinking water
  • Due to urbanisation, water demand has been increasing rapidly
  • Nepal receives average rainfall between 1500mm to 3000mm
  • Rainwater harvesting could be sustainable solution for water crisis in Nepal
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