Micro-hydropower: A promising decentralized renewable technology and its impact on rural livelihoods

Abstract

Nepal, one of the poorest countries in the world, is characterized by very low per capita energy consumption. Due to lack of access to other commercial sources of energy, the country relies heavily on traditional biomass energy sources including firewood, agricultural residues, and animal dung. In recent years, Nepal's government has initiated the production and distribution of several renewable energy technologies in order to solve the energy problem in rural areas as well as to provide clean and sustainable energy for rural households. Among several renewable technologies, micro-hydropower (MHP) has been one of the most promising and commonly adopted decentralized (off-grids) technologies in Nepal. Improved health, environment, and agriculture are some of the major benefits to the users. It reduces drudgery for women by increasing access to modern agro-processing mills in rural areas, and can save enough time that can be used for other household activities. Similarly, electric lights in rural households extended the day providing additional hours for evening reading to students. In addition, it provides economic benefit to the country through reduced deforestation. Thus, MHP technology provides a renewable, sustainable and clean source of energy to poor rural households in Nepal.

Full text

Scientific Research and Essays Vol. 6(6), pp. 1240-1248, 18 March, 2011
Available online at http://www.academicjournals.org/SRE
ISSN 1992-2248 © 2011 Academic Journals
Full Length Research Paper
Micro-hydropower: A promising decentralized
renewable technology and its impact on rural
livelihoods
Gurung Anup1, Bryceson Ian2 and Oh Sang-Eun1*
1Department of Biological Environment, Kangwon National University (KNU), 192-1 Hyoja-dong, Chuncheon, Gangwon-
do 200-701, Republic of Korea.
2Department of International Environment and Development Studies, Noragric, Norwegian University of Life Sciences, P.
O. Box 5003, 1432 Aas, Norway.
Accepted 5 October, 2010
Nepal, one of the poorest countries in the world, is characterized by very low per capita energy
consumption. Due to lack of access to other commercial sources of energy, the country relies heavily
on traditional biomass energy sources including firewood, agricultural residues, and animal dung. In
recent years, Nepal’s government has initiated the production and distribution of several renewable
energy technologies in order to solve the energy problem in rural areas as well as to provide clean and
sustainable energy for rural households. Among several renewable technologies, micro-hydropower
(MHP) has been one of the most promising and commonly adopted decentralized (off-grids)
technologies in Nepal. Improved health, environment, and agriculture are some of the major benefits to
the users. It reduces drudgery for women by increasing access to modern agro-processing mills in
rural areas, and can save enough time that can be used for other household activities. Similarly, electric
lights in rural households extended the day providing additional hours for evening reading to students.
In addition, it provides economic benefit to the country through reduced deforestation. Thus, MHP
technology provides a renewable, sustainable and clean source of energy to poor rural households in
Nepal.
Key words: Micro-hydropower, renewable energy, rural electrification, sustainable.
INTRODUCTION
Per capita energy consumption is one of the major
indicators of economic development, since energy is a
critical component for all economic activities (Barnes and
Floor, 1996; Pokharel, 2007). Thus, an efficient provision
of energy plays pivotal role to progress the socio-
economic conditions and technological aspects of a
nation (IEA, 2002; Sihag et al., 2004). It is no doubt that
poor supply of affordable and reliable energy services
impede economic development. Nepal, one of the
poorest countries with a low per capita income (US$ 447),
is characterized by low energy consumption and is
*Corresponding author. E-mail: ohsangeun@kangwon.ac.kr.
Tel: +82-33-250-6449. Fax: +82-33-241-6640.
among the lowest per capita energy consumption
countries in the world reflecting the low level of develop-
ment and prosperity (ADB, 2009; Katuwal and Bohara,
2009).
Nepal has no proven deposits of petroleum products or
natural gas, and hence the only native supply of com-
mercial energy is electricity (Pokharel, 2003). Nepal has a
huge potential of hydroelectricity. Although hydro-power is
considered as a major advantage for Nepal, its deve-
lopment has been extremely challenging and sluggish
due to extensive lists of barriers including financial con-
straints, lack of technological capabilities, organizational
and managerial weaknesses, difficulty in country’s geo-
logical and topographical setting, and political instability
(Pandey, 2009; Sangroula, 2009). Consequently, Nepal
has a very low electricity consumption rate averaging 87

Anup et al. 1241
Figure 1. Energy consumption by fuel type in Nepal (2008/09).
kWh/year-person and so far only 40% of the population
has access to electricity (Mainali and Silveira, 2010; NEA,
2008).
Nepal’s rural electrification (RE) status is miserable and
loopy although RE started more than 40 years ago (Karki,
2004; Mainali and Silveira, 2010). More than 80% of the
Nepalese live in rural areas and have merely an access
to electricity through national gridline (Ghimere, 2008).
Energy requirements in Nepal are supplied by three main
sources: Traditional, commercial and renewable. Nepal’s
energy sector is very small, inefficient, unreliable, and
hugely dominated by traditional biomass energy sources
including firewood, agricultural residues, and animal dung
(Dhungel, 2009).
Figure 1 shows the distribution of energy consumption
in Nepal by various fuel types in the year 2008/09, in
which 87.1% of the country’s energy demand had been
met through traditional sources whereas commercial
(petroleum, coal, and electricity) and renewable energy
sources (Micro-Hydro, Solar PV, and biogas) contributed
to 12.2 and 0.7%, respectively (MOF, 2010). Of the total
energy consumed in the country, firewood is the largest
energy sources in Nepal providing 77% of the total
energy demand in the year 2008/09 followed by
agricultural residues (4%) and animal dung (6%) (WECS,
2010). As shown in Figure 2, about 89.1% of the energy
was consumed in the residential sector followed by
transport, industrial, commercial, agricultural and other
uses (WECS, 2010). Due to lack of access to enough
commercial and renewable energy sources, Nepal relies
heavily on traditional sources for meeting their energy
demand. Firewood is the main source of traditional
energy, which met about 99% of the residential energy
consumed in Nepal. Thus, using these insufficient
traditional energy, basic energy needs can hardly be met
and contribute to maintaining the cycle of poverty in rural
household of Nepal.
The heavy reliance on traditional biomass for energy
results in a poor quality of life, makes local resources
scarce, reduces agricultural productivity since nutrient
rich agricultural residues are transferred from the farm to
the fireplace, and damages the fragile hill ecosystem (IEA,
2002; Koirala, 2007). Similarly, the task of collecting
firewood imposes drudgery for rural women and children
(Mahat, 2004). In addition, use of traditional biomass as
energy in rudimentary cook-stoves releases carbon
dioxide and products of incomplete combustion including
mixture of gases (carbon monoxide, nitrogen compounds,
and methane) and volatile organic compounds (IEA,
2002; Warwick and Doig, 2004; WDR, 2010). Thus, in
order to replace ineffective traditional energy sources as
well as to solve the energy problems especially in rural
households, Nepal’s government is impelled to develop
affordable, reliable, clean, and sustainable energy mainly
through the utilization of renewable sources.
Keeping the rural energy sector on the forefront, the
Government of Nepal (GoN) initiated the production and
distribution of small-scale renewable energy technologies
(RETs) throughout the country by exploiting locally
available energy sources (Koirala, 2007; Wegstein, 2010).
Among several other RETs, micro-hydropower (MHP) has
turned into one of the most viable and promising
indigenous technologies to satisfy RE because of their
simple design, simple manufacturing processes, low price
per kilo watt, easy maintenance, and no dam has to be
built (Fulford et al., 2000; Greacen, 2004; Koirala, 2007).
Being decentralized, the harnessing of small hydro-
resources can be implemented and managed at the local
level, thereby making MHP scheme as a robust
technology to improve rural economic through self

1242 Sci. Res. Essays
Figure 2. Sectoral energy consumption in Nepal (2008/09).
reliance and by the use of available local natural
resources (Rijal, 2000).
In developing countries, rural areas were electrified
using decentralized RETs such as MHP, wind, solar
photovoltaic (PV), geothermal, and are competitive with
electricity delivered via the national grid (Lhendup, 2008;
Mahapatra et al., 2009). Moreover, MHP has been one of
the most successful models for the production of clean,
environmental friendly and cost effective energy in Nepal
(Fulford et al., 2000). However, limited studies were
carried out regarding rural energy supply and
consumption patterns through MHP in Nepal. This study
attempted to fill the gap by assessing the impacts of MHP
to the rural households in Nepal by conducting a case
study; and also, in this paper we highlighted the benefits
of MHP and discuss its future challenges in the context of
Nepal.
RESEARCH METHODOLOGY AND PROCEDURES
Study area
Sikles village was selected for a field study in order to analyze the
decentralized RE scenario, particularly in relation to the role of MHP
in providing rural energy. A MHP plant was installed in Sikles in
1994 with an output capacity of 100 kW under the Alternative
Energy Programme (AEP) established by the Annapurna Con-
servation Area Project (ACAP). This MHP plant uses water from the
nearby river Ngacchakhola, which is about 2 h walking distances
from the village. This paper also assesses the socio-economic
conditions of the village impacted by t he MHP plant. Sikles is
located on the southern belt of the Annapurna Conservation Area. It
lies in the Parche Village Development Committee (VDC) of Kaski
and is situated about 24 km northwest of Pokhara, the
headquarters of Kaski District, Gandaki Zone and the Western
Development of Region. It lies between 1,100 to 3,331 m above
sea level. Altogether there are 360 households in the village with
more than 4,000 inhabitants. Sikles is a traditional and largest
Gurung village in which more than 81% of the households are
occupied by Gurung people and the remaining households belong
to occupational castes (Dalit) such as Kami and Damai. The village
includes six traditional neighborhoods: Ghairi-Thar, Sava-Thar, Koi-
Thar, Dhaprang-Thar, Lama-Thar, and Harpu-Thar.
A mixture of data collection methods were employed during the
fieldwork from August 20 – October 20, 2008. These include an in-
depth household interview, a key informant opinion, and a focus
group discussion (the MHP plant site was also visited and plant
operation was observed).
In-depth household interview
A structured questionnaire was designed to get qualitative, multi-
aspect information of the village. A total of 213 households were
randomly selected. Either the head of the household or another
family member were interviewed. The questionnaire was cate-
gorized into four sections: Section 1 (demographic structure: Caste,
gender, family member, occupation, etc.), section 2 (agriculture:
Type of land ownership, cropping pattern, livestock, etc.), section 3
(socio-economic: Annual income, education, health and s anitation,
etc.) and section 4 (sources of energy, consumption of firewood,
access to electricity, domestic electricity usage patterns, etc.).
Key informant interview
Four persons were selected (the MHP manager, mill owner, a staff
from ACAP, and a school teacher) on the basis of previous
experience of working in the area. During the survey, a face to face
interview was carried out and the Gurung language was used as a
medium of communication.
Focus group discussion
Focus group discussions were carried out during the study period:
One in Sikles and one in Pokhara in order to get range of
opinions/views on the research topic fr om different levels. In Sikles,
during the focus group discussion, people with different background,

Anup et al. 1243
Table 1. Sources of fund for Sikles MHP plant.
Sources of
funding
Amount in US$ Percentage Type of fund
USAID 60,878 50 Grant
ACAP 20,739 17 Contribution
ADB/N 20,739 17 Soft loan
Community 20,070 16 Village contribution as labor
age factor, and both men and women were included. Whereas in
Pokhara, scholars from Sikles (both studying and working in
Pokhara) were gathered to discuss about the current status of
Sikles MHP and its impacts on the society.
RESULTS AND DISCUSSION
Project cost and financial structure of Sikles MHP
plant
The cost of MHP projects is site specific and varies
greatly depending on the remoteness of the site. Thus,
the total installation cost of MHP projects is influenced by
several parameters such as (1) Site selection; (2)
Accessibility from the road; (3) Size of the individual
project, and (4) Physical features of its major components
including civil works, generating equipments and
electrical transmission lines (Khennas and Barnett, 2000;
Mainali and Silveira, 2010). In developing countries like
Sri Lanka, Peru and Nepal, the initial installation cost of
MHP plant range between US$1,000 to US$ 2,000 per
kW for community built projects (Greacen, 2004).
However, there was a variation in the average cost per
kW in Nepal during the past years. For example, the
average cost per kW was less than US$1,000 in the early
1980s, whereas it surpassed US$2,000 in the late 1990s
and finally accounted US$2,500 per kW in the plants
installed in the early 2000 (Mainali and Silveira, 2010;
Rijal, 2000). However, the installed per kW cost of Sikles
MHP plant was cheap in comparison to other MHP plants
in Nepal, and cost US$ 1,188 per kW. The total budget
estimated for the completion of the Sikles MHP plant was
US$121,755. Table 1 shows the sources of the fund
available from different donors’ for Sikles MHP plant. A
grant from United States Agency of International
Development (USAID) is the major source of financing for
the MHP plant. Villagers pay a very low tariff on a per
watt basis, which is US$ 0.007/watt of electricity used per
month. This tariff is very cheap in comparison to the
electricity provided via national grid, which is
US$0.995/unit (WECS, 2010).
Improvement in health status
Traditionally, kerosene and firewood are used for cooking,
heating, and lighting by most of the rural households in
Nepal, often supplemented by agricultural residues and
animal dung. Using traditional sources of energy are not
as effective in terms of the health condition since burning
of these fuels results in indoor air pollution. Uses of the
traditional energy sources produce obnoxious smoke,
particulate matters, hydrocarbons, nitrogen oxides, and
also contain other toxic compounds that pollute the
kitchen environment and cause several respiratory
diseases (Warwick and Doig, 2004). In Sikles, rudi-
mentary open fire cooking stoves were used for firewood
burning, whereas poorly ventilated kitchen room is also
shared for most of the daily activities and social
gatherings, since there is no separate room for cooking
and other purposes. Firewood, which is the principal
causes of indoor air pollution, is the main source of
energy used for households in Sikles. Households in
Sikles mainly suffered from vision and respiratory
problems during the past years.
The grid connection in the village has improved the
general health conditions significantly as MHP provides
clean and smoke free energy unlike firewood. The use of
kerosene lanterns for lighting completely stopped, and
the use of firewood reduced significantly in the village.
The connection of electricity in the households reduced
indoor air pollution and hence reduces the incidence of
vision and several respiratory diseases. According to
Kanagawa and Nakata (2008), access to electricity
upgrades health centers by enabling the storage of
vaccines and medicines in refrigerators. However, the
Sikles hospital does not make full use of its access to
electricity, since it cannot afford the installation of electric
appliances as the government support of rural areas is
limited. The general sanitation condition around the
households also improved significantly. The trend of
using nearby fields or dark places as a latrine was
completely controlled once the village is electrified. Thus,
an improved sanitation level is another benefit of MHP in
Sikles.
Agricultural status and generation of employment
Nepal is predominantly an agricultural country, where
more than 80% of the households dependent in
agriculture. Agriculture is the main source of subsistence
in Sikles, supplemented by animal husbandry. The higher
part of the village is covered by dense forest. The middle

1244 Sci. Res. Essays
Figure 3. Animal drawn implement for agriculture (Traditional).
Figure 4. Using hand to plant paddy (labor intensive and time consuming).
and lower slopes are terraced and categorized as Khet
(irrigated land: mainly rice) and Bari (non-irrigated land:
Maize, millet, wheat, and barley). Many researchers have
reported that MHP not only provides lighting for rural
communities but also helps to accelerate rural economic
development if the power is integrated with agricultural
production and other income generating business
(Blanco et al., 2008; Kirubi et al., 2009; Rai, 2000).
However, households still follow traditional methods of
farming in Sikles, which is labor intensive and
unproductive. Farmers relied exclusively on human labor
and animal drawn implement using the traditional tools
such as wooden plough, spade, hoe, sickle etc. (Figures
3 and 4). Tenancy and share cropping system are
commonly followed in Sikles. Except few households
(Kami and Damai), most of the households possess both
Khet and Bari. In Sikles, blacksmiths (Kami) are the
primary suppliers of manual and animal drawn implement

for the small and marginal farmers. All the tools used by
the farmers are made and repaired by the blacksmiths in
the village. In addition, blacksmiths maintain their living
by working as a labor in the Gurung’s households.
Due to traditional farming systems, the production is
very less in comparison to their labor in the field;
consequently the production is not sufficient to sustain
their family that is, their production hardly sufficed for 5-6
months. The main reason behind this low productivity is
that farmers apply only organic farmyard manure in the
fields and do not have access to improved seeds,
chemical fertilizer, insecticides, pesticides, etc. In addition,
none of the farmers have knowledge about agricultural
schemes and cropping pattern as well. Due to the lack of
access to resources, low productivity, lack of
infrastructure, and market opportunities as well as
unavailability of the other employment opportunities,
majority of the farmers in the village are compelled to
engage in different activities other than agriculture. From
this study, it was observed that poor peasants in rural
households in Nepal still live with economically vulnerable
life. Because of such miserable status, a trend of
abandoning agricultural land is increasing in Sikles.
According to Khanal and Wanatabe (2006), more than 49
and 37% of productive Khet and Bari were abandoned in
Sikles and Parche in the late 2000. This trend is further
excavated by better employment opportunities of abroad
employment, where most households in the village are
empty of young people. In recent years, due to abroad
employment only old and sick parents and dependent
children with women are left in the village. Thus,
installation of MHP plant did not improve the agricultural
productivity in the village.
Besides agriculture, households practice several
activities for subsistence in the village. People in Sikles
are proficient in traditional technologies like alcohol
fermentation, weaving clothes and sacks from the wild
nettle plant, and weaving various bamboo products, such
as wooden threshers. Few households earn a little
amount by selling these items in the village. Pastoralism
is another important asset for the villagers from whom
they can earn money by selling meat, milk, and dairy
products. Besides being agro-pastoralists, young villagers
historically were involved in either British or Indian armies.
Villagers give much priority to join army other than
agricultural activities, since they get a high salary and
pension after retirement. In recent years, most of the
youth had been travelled abroad especially to the Arab
countries and Malaysia for better opportunities of
employment. It costs around US$1,328 to 1,992 for
villagers to join these countries. However, due to low
level of skill they can only earn US$199 to 664 per month.
The average family members in each households is 6-7,
out of which 2-3 use to be engage in abroad employment.
There is a wide variation in annual households income
depending on the size of the family members involved in
abroad employment. In this contest, remittances played a
Anup et al. 1245
vital role in Sikles, since households economics are often
highly influenced by family remittances. Remittance signi-
ficantly affects the household’s income, local resource
use, investment decision and access to supplementary
services in rural parts of developing countries (Kramer et
al., 2009).
Owing access to electricity, rural households can create
jobs such as running agro-processing (grain milling, oil
expelling, husking), cottage industries, timber sawing,
and wood furniture at a community level, which ultimately
accelerate rural economic development. In Sikles, micro-
hydro based electricity is mainly used for lighting rather
than commencing commercial enterprises. However,
some households have used electricity to run some
business enterprises such as agro-processing mills,
furniture, and bakery shop. There are two agro-pro-
cessing mills, one furniture shop, and one bakery shop in
the name of business enterprises.
Workload reduction
One of the most significant benefits of MHP in Sikles is
the reduction of workload for women and children
because the majority of the household demands are
fulfilled by women since their husbands and other young
men in the households travel abroad for employment.
Before the village was electrified, women and children in
Sikles had to spend most of their time for collecting
firewood and milling purposes. In addition, women in
Sikles have several responsibilities such as livestock
caring, fodder collection for livestock, cooking food, etc.
Owing access to electricity reduces drudgery for women
and children, and has been able to spend their saved
time in more productive works such as education and
other income generating activities.Women in Sikles had
to spend 9-10 h to grind their foods in traditional Ghatta.
Similarly, children had to spend 8-9 h to collect one bhari
(25-30 kg) of firewood. Prior to the installation of MHP in
the village, women have accessed to modern agro-
professing mills and can grind their foods in less than
hour. They do not have to travel to the traditional water
mill or “Ghatta” for grinding purposes, which is ineffective
and time consuming. Likewise, owing access to electricity
reduces the consumption of firewood significantly in the
village. In average 50-60 bhari/year of firewood was used
by each household in Sikles before village electrification.
This figure reduced to more than half after having access
to electricity in their homes (Table 2). Thus, women have
benefitted the most from the installation of the MHP plant
in the village.
Women empowerment
According to Acharya (2008), a rural community must
secure reliable access to resources, infrastructure

1246 Sci. Res. Essays
Table 2. Fuel used for cooking and lighting before and after the installation of the MHP in Sikles.
Category Before After Change Percentage change
Firewood (bhari/month) 12 3 9 75
Agriculture residue (bhari/month) 2 0.5 1.5 75
Animal dung (kg/month) 1 0 1 100
Kerosene (l/month) 2.5 0 2.5 100
development, wide market for agriculture, and inclusive
social development, in order to achieve the overall rural
development. However, in Nepal rural households have
low access to education, health, communication,
electricity, road, and other resources in comparison to
urban population. In addition, in the rural parts of the
country, women and other disadvantages group like Kami,
Damai, have very low access on basic human
requirements (Acharya, 2008). In Sikles, the society is
characterized by a patriarchal system. Thus, women and
girls lag behind men in many aspects such as: disparities
in education, poor health, especially in the realm of
reproductive health, gender-based violence, limitation on
the rights of women to own and inherit property, low
access to labor markets, employment and productive
assets, lack of fair representation in decision making, etc.
In addition, Kami and Damai are the most unprivileged
and marginalized group, and are never allowed to enter
into Gurung houses in Sikles. These two groups have
limited access to natural resources and other assets in
the village.
However, after the village is electrified, evening
informal education classes were conducted voluntarily by
ACAP in the village. Illiterate women were highly
encouraged to participate in this programme. Later
communal buildings were built and used for the evening
education class. In the communal building Kami and
Damai are also allowed to attend the evening class.
Since the installation of electricity in the village reduces
the time for several household activities significantly,
women have enough time to attend in social activities
and other income generating activities such as winning
wool etc. Mother’s groups were formed within the village
and became active on wide range of community welfare
activities such as health, education, income generating
activities, etc.
Gabling is totally banned in the village, and drinking is
also controlled up to some extent. In recent years, the
household income of Dalit people also increased
significantly due to abroad employment, since mothers’
group arranged effective loan system to the poor Dalit
families in the village. In addition, mothers’ group use to
raise fund by organizing different functions in the village
and provide financial support to the Village Electrification
Community (VEC) for repairing electric poles. According
to key informant, mothers’ group gave financial support to
the VEC for replacing wooden poles with steel ones in
the village.
Other benefits from MHP Plant in Sikles
Traditionally, education has not been part of the culture of
the people in Sikles. However, the availability of a quality
education plays a pivotal role in influencing the economic
well-being of rural areas (Kirubi et al., 2009). Before the
village is electrified, the number of students in the school
was used to be very few and hardly one or two students
will pass the school leaving certificate (SLC) from the
village school. In addition, number of girls and Dalit
students could be counted on finger.
Electricity can directly influence the education level in
the rural community (Zahnd and Kimber, 2009). The
Sikles community has greatly benefitted from the
connection of clean, bright and affordable electricity.
Having electric lights in their homes, school children can
get more time for evening study, and free from traditional
ineffective and health hazardous kerosene lamps such as
Tuki and Panas.
The primary reason for the depletion and deforestation
of natural forests in Nepal is the heavy dependency on
firewood, because firewood is the main source of energy
for cooking, heating, and lighting in Nepal. However,
village electrification has brought significant improvement
of environment in Sikles. After having electric lights in the
households, the consumption pattern of firewood reduced
significantly. Moreover, the concept of plantation in barren
land and private forests emerged in the village.
The village electrification increased the access to radio
and television at their homes in the village. Prior to
installation of MHP, the communication system of the
village was improved. Villager can receive and make call
to their relatives, those working abroad from the village.
Introduction of radio and televisions in the households
have brought many positive social changes through
advertisements such as people are aware about using
condoms to prevent sexually transmitted diseases (STD),
Acquired immune deficiency syndrome (AIDS), child
trafficking, social exclusion, etc.
Challenges and future of MHP technology in Nepal
Nepal is bestowed with water resources where more than
6,000 perennial rivers and rivulets flow with an annual
average water runoff of 225 billion meter cube thereby
providing huge hydropower potential (Sangroula, 2009). It
is estimated that Nepal has a total theoretical hydropower
potential of 82 GW of which 42 GW is technically and

economically feasible (Ghimere, 2008). However, the
development of hydroelectricity has been extremely
challenging in Nepal. Hydropower sector is confronted
with number of issues and constraints such as high costs
and inadequate funding, low power utilization and
incomes, inconsistency in subsidy policy, unhealthy
competition and weak marketing strategies, inappropriate
feasibility studies, lack of technical back-stopping and
monitoring, poor installation and faulty equipments,
natural disasters, tradeoff between the quality of the civil
works, etc. (Khennas and Barnett, 2000; Rijal, 2000).
Consequently, by the end of fiscal year (FY) 2008/09,
only 661 MW of electricity has been generated in Nepal
and more than half of the population lives without
electricity (MOF, 2010).
The consumer of electricity from decentralized MHP is
the poor resident (poor peasants, tenants, landless and
other disadvantages group) of remote rural areas, and
are in the bottom section of the economic pyramid. These
people are economically vulnerable and do not have
penetration into the market economy. In order to
maximize energy delivery services and delivery efficiency
in rural areas, and to enhance the opportunity for low
income rural households to get connected with electricity
improvements in financial mechanism coupled with local
involvement of the private sector is very important in
Nepal. Because the subsidies provided by the govern-
ment do not cover the total project budget. In addition,
subsidies provided by the GoN are finite resources
allocated from tight government budgets. Thus, the
formation of local markets for specific technologies and
simple credit access is vital for securing affordable and
sustainable energy services in rural Nepal households.
However, private developers and investors are
reluctant to invest in MHP sectors due to longer pay back
period, and also there is no security of their investment if
the project is failed. In rural market, majority of the
customers are from the poor and it is always a
challenging task to do business with the poor (Mainali
and Silveira, 2010). According to Pokharel (2003), the
subsidies were given to the MHP sectors for the first time
in 1985 as part of the RE, but, the GoN withdrew the
subsidies policy in 1986 due to lack of budget and again
reintroduced in 1988. So, such inconsistency in
governmental policies in subsidy discouraged private
entrepreneurs to invest in installing the MHP schemes in
Nepal as there was less probability of returning their
investment from the schemes. In recent years,
government instability is one of the major impediments for
expanding development works in all sectors in Nepal.
Given the economic status of rural households, the
MHP projects are still having difficulty in achieving
financial sustainability, since micro-hydro based electricity
is only primarily used for lighting system. Therefore,
supplying improved energy services in rural areas do not
necessarily improve the rural economic of the poor
households. In order to make the MHP technology more
Anup et al. 1247
financially viable, end-use possibilities must be optimized
by supplying electricity to a profitable cash generating
enterprises in rural areas. Moreover, the end-use of
micro-hydro based electricity should not be narrowed,
which is mainly used for lighting purposes that ultimately
reduces the opportunities of rural economic development.
In the future, the MHP technology should be promoted
as its role in securing livelihoods in poor households by
developing small-scale enterprises, rather than promoting
as energy programme (Khennas and Barnett, 2000). In
rural areas, the choice of energy technology is influenced
by several actors and factors including the prevailing
policy and implementing agencies, supply companies,
dealers and financing institutions and household’s income
(Reddy and Srinivas, 2009). Thus, the successful
management of MHP projects requires a corporate
structure that minimizes political interference and efficient
access to credit by providing clearly stated objectives of
strengthening the rural economic system related to
affordability, profitability, sustainability, coverage, and the
quality of the service to be provided in rural Nepal
households.
In Nepal, the cost of RE through national gridline is
very costly (US$3,037- 4,971/km) whereas, the
installation of new MHP plants only cost US$1,330-
2,000/kW in Nepal, and promotion of new MHP projects
proved to be cheapest than extending national gridline to
rural households (Karki, 2004; Pokharel, 2003).
Furthermore, the MHP technology can be operated up to
50 years with little maintenance (Paish, 2002). Thus,
MHP technology can be one of the successful models for
promoting and disseminating RETs in rural households to
secure affordable, clean, reliable and sustainable energy
Conclusions
In recent years, Nepal’s government has given priority to
accelerate the coverage of RE by defining the specific
policies to promote electrification rate countrywide mainly
through the utilization of RETs. MHP, one of the most
successful models of RETs in Nepal, has proved to be
successful in improving the socio-economic status of its
consumers through the multiple benefits it provides at a
household, community, and the country. Awareness about
the benefits of micro-hydro based electricity has
increased among the rural households followed by
increasing demand for modern energy technologies in
rural parts of Nepal.
Improvement in health, education, environment, and
agriculture are some of the pronounced local benefits
from MHP projects in rural households. Access to
electricity reduces drudgery for women in rural areas
allowing them to have enough time to be involved in other
household related activities including income-generation
and social and community developmental activities.
Similarly, electric lights in rural households extend the
day providing additional hours for evening reading

1248 Sci. Res. Essays
and also, reduced drudgery for children in Nepal.
ACKNOWLEDGEMENT
This work was supported by the Department of
International Environment and Developmental Studies,
NORAGRIC (Norwegian University of Life Sciences) and
the Agriculture and Life Sciences Research Institute at
Kangwon National University.
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