Kulman Ghising needs Ram Prasad Dhital, Executive Director of Alternative Energy Promotion Center, to end load-shedding forever
These days I can’t go out without everyone feeling sorry for me. You see, I work in the solar business and life has not been good ever since Kulman Ghising, Managing Director of the Nepal Electricity Authority, ended load shedding (forced blackouts).
Over the years, sales of ‘solar package,’ the combination of solar panels, inverter and batteries that customers installed to manage the load-shedding periods, dominated the market. The Alternative Energy Promotion Centre (AEPC), the government’s lead agency on renewable energy, actively promoted such sales through subsidies and grants.
With load-shedding looking like it would continue, forever, the market for solar grew rapidly.
Companies reoriented from rural sales, which were about off-grid energy access solutions, to urban markets, which were about load-shedding solutions. New large firms entered the business as wholesalers and retailers. AEPC began offering credit based subsidies. Government provided tax rebates. Donors continued to pump in money.
Business was good. In Kathmandu alone, approximately 100,000 households have installed solar systems totalling an estimated 20 MW. The market potential was easily in the hundreds of MWs. It was said that when mothers looked for husbands for their daughters, they wanted doctors, engineers or guys in the solar business.
Then Ghising arrived and ended load-shedding. And all hell broke loose.
The solar market collapsed overnight. An estimated Rs 150 crores of solar equipment is currently lying idle in warehouses across Nepal. Companies are struggling to cover costs, keep staff and avoid bankruptcies. In these hard times for the solar business, I’m just glad that I am already married because right now, no mother would want me—a guy in the solar business—as a husband for her daughter.
The solar business collapsed not because Ghising ended load-shedding. Instead, it represents a colossal failure of Nepal’s distributed renewable energy policy.
A correction first: it is wrong to say “a colossal failure of Nepal’s distributed renewable energy policy.”
Nepal has never had a distributed renewable energy policy—it has only had a subsidy distribution policy.
Nepal’s entire approach to renewable energy has been around subsidy distribution. The subsidy distribution processes created an eco-system that favored retail and trading, killing innovation in technology adoption, deployment, financing and business models. The overhang of subsidies reduced the distributed renewable energy sector into a complex web of political interference, patronage, corruption, deceit and conspiracy.
The combination of subsidies and tax breaks for solar products along with a domestic technology certification process intended to ensure quality control for delivery of subsidies and tax breaks has been a lethal combination with catastrophic results.
Intended to make renewable energy affordable, it has instead defrauded Nepalis by US $20 million on average annually, not to mention lost government tax revenues. Intended to promote quality products, it has instead robbed Nepalis of a decade of exciting technical innovation from around the world. Intended to create a fair market place, it has instead created a complex set of trade barriers that favor those with influence over others.
The greatest tragedy is this: at a time of reliable grid electricity when distributed renewable energy technologies in Nepal should have been at its peak poised for take-off, it is instead a sector in despair.
No country has been able to grow its solar (or distributed renewable energy) portfolio without reliable electricity on the grid. Nepal will be no exception. The best time for solar and distributed renewable technologies is not behind us—it is only beginning with the end of load-shedding.
If Ghising intends to end load-shedding not just for a fraction of Nepalis, not just for some sectors, but for all Nepalis, across all sectors and forever, he needs the support of distributed renewable energy technologies to make it happen.
There is an estimated 60 MW of distributed solar roof-top systems across the country. With the end of load-shedding, these systems are now completely stranded because of how they were designed.
If redesigned for a load-shedding free context, they could deliver approximately 96 million units of electricity and save approximately Rs 100 crore spent in electricity imports from India annually. Why haven’t Ghising and Ram Prasad Dhital, Executive Director of Alternative Energy Promotion Center (AEPC), spoken yet?
Distributed renewable energy technologies, along with energy storage, are not frontier technologies anymore. They have crossed an inflection point in terms of quality, durability and bankability. Today these technologies can be confidently deployed in mass with the confidence that they will work. Their integration within the grid has been demonstrated. In the context of Nepal, distributed renewable technologies can integrate effectively with the grid by helping to expand access and make the grid more robust.
The worst advice that Nepal ever got was to link renewable energy and rural areas. AEPC was nurtured under this approach. Distributed renewable energy technologies thus became intertwined with rural areas, which in due course created a distinction between electricity from the grid and distributed renewable energy technologies.
In the case of both rural off-grid areas as well as “solar packages” in urban areas to end load-shedding, distributed renewable energy technologies came to be regarded as interim solutions—something that helped you for a while until “real and reliable” electricity arrived from the grid. AEPC not only failed to challenge this outdated and incorrect narrative; it reinforced it with a lousy concoction of policies, subsidies and technology certification processes.
If designed, deployed and financed correctly, distributed renewable energy technologies, like roof-top solar, can deliver comparable grid quality power consistently and reliably. Distributed renewable energy technologies are as much the grid as the grid itself.
For Ghising, the challenge in continuing with zero load-shedding won’t be in supply side alone. New power plants will come. New transmission lines with be built. India will export more whenever needed.
The main challenge will be on the distribution side: the messy network from the substations through the feeders and into the meters. This part of the system is leaky, suffers from high losses, lacks adequate records and has no accountability. It is a system in dire need of investment and modernization. No utility in the world has built a sustainable electricity business without fixing its distribution system—NEA will not be the first, Ghising’s magical powers notwithstanding.
Distribution reforms can be done the hard way—one customer, one meter, one line at a time. But the political and social resistance will be immense. Most power utilities, at least in developing countries, have been unable to overcome this pressure and languish in a failed status-quo. It will take us at least three generation of Ghisings to even make a dent.
This is where distributed renewable energy technologies could help by simply bypassing the resistance to distribution reforms. The integration of distributed renewable energy technologies into the grid automatically ushers in the modernization of the grid’s distribution segment.
The integration of distributed renewable technologies into the grid does two things simultaneously that Ghising needs to keep Nepal load shedding free: it gives him new sources of supply and it unlocks the modernization of the distribution segment.
If I were Ghising, I would send Dhital a friend request on Facebook immediately.