People's Power: An energy policy we need to "FiT" in
KASHISH DAS SHRESTHA
At 9AM today, a meeting of experts and policymakers is scheduled to take place here in Kathmandu to discuss the long-term role of Renewable Energy (RE) in Nepal.
The Alternative Energy Promotion Center, the government body, is rightfully keen on developing a revised plan to carve out a real space for RE in the country.
It’s about time.
Last weekend, the world witnessed something amazing: Germany produced half of its energy needs – 22 Giga Watts (22,000MW)– from solar power, a world record.
“The record-breaking amount of solar power shows one of the world’s leading industrial nations was able to meet a third of its electricity needs on a workday, Friday, and nearly half on Saturday when factories and offices were closed,” The Guardian reported.
That feat in energy production didn’t happen simply because the days were exceptionally bright. Rather, it was a calculated result of a series of thoughtful and long-term policies tied to technologies that enables citizens to not just be energy consumers but also energy producers and suppliers.
One clear reason why Germany is a leader in the renewable energy production sector is its Feed-in-Tariff policy.
“51% of all renewable energy in Germany is owned by individual citizens or farms, totaling US$100 billion worth of private investment in clean energy,” a column in TreeHugger.com noted. “A democratic shift in control of resources and a break from the way electricity and energy has been produced over the past century.”
“We have noted that Feed-in-Tariff will be important in the long run, but it is something that hasn’t really discussed or studied here yet,” explained Govind Raj Pokharel, Executive Director of the Alternative Energy Promotion Center.
The European Environment Agency defines FiT as “the price per unit of electricity that a utility or supplier has to pay for renewable electricity from private generators.
The government regulates the tariff rate.” Simply put, if your house is generating electricity, depending on the payment model, you are paid for the production of those units or for selling those units to the Grid, or both.
FiT could drastically change the way we perceive energy production and use in Nepal. Combining it with micro-grid is something that could be developed and used with any other energy sources, including biogas and micro hydro. But in Nepal, it many best work with solar energy.
As a technology, solar is also uniquely positioned to serve both an individual home as well as a micro grid whereas that may not necessarily be possible with biogas because of the amount of biomass it would require, or micro-hydro because of the relatively large-scale logistical and infrastructural issues involved in its development.
Add to all this the fact that solar modules costs are at a historical low while its efficiency and installation rate is ever growing. The amount of solar module installed in 2011 in the US was double of what it was installed in 2010.
Nepal takes pride in the fact that there are about 600,000 homes that are solar lit. While that is remarkable, using solar technology only for lighting lamps in regions that are ‘disconnected from the gird’ is a gross underutilization of a technology that can deliver, as we have seen, 22GW in two days.
Limiting the use and promotion of solar energy in “off grid” areas, as Nepal’s policies right now dictates, is an unfortunate opportunity loss.
Solar energy can and must be efficiently harvested in Nepal’s densest urban centers – the growing consumer base of Nepal’s electricity. Kathmandu’s daily average consumption of electricity today comes to about 4,000,000 units.
If the city used FiT to help solar panel even just on 500,000 roofs in the city, a significant load would certainly be taken off the country’s national grid during the afternoon hours.
Not only that. Kathmandu becomes an urban heat bubble during the summer. The asphalt roads and concrete trap and emit a lot of heat. Rooms under solar-paneled roofs would most likely experience cooler temperatures too.
As a Municipality, would Kathmandu be able to partner with a private group to create a shade composed of solar panels over the footpath that surrounds Tundhikhel, just as a prototype? With FiT, the energy generated could be sold directly to a local grid while the shade would shelter pedestrians in both rain and shine.
The logistics of solar paneling have become significantly simple and minimalist over the years. By taking storage out of the picture for homes, particularly, things become even simpler for households.
In the Nepali context, for feasibility and logistical sake, it might make most sense to combine FiT with micro grids managed by either community/private groups or whatever the local authority might be.
Here, the system would have to offer individual producers at least two things: storage, and some guarantee of accessing the stored power in case the grid is unable to provide electricity.
While countries like Germany don’t have to worry about load shedding, in Nepal any version of FiT and micro grid would need to keep in mind that households who produce energy would like to access it most when the traditional options cannot provide it.
However, regions that don’t have access to grid already could be developed more independently.
There is another technical reason why FiT may work in Nepal only through a collective distribution point: Nepal Electricity Authority does not buy less than 100KW of electricity because of transmission losses.
In a city like Kathmandu, large gated communities and apartments as well as commercial buildings would be able to make the most of a model such as this almost immediately. As a country, there are possibilities of these ideas also earning us Carbon Credits.
Micro grids would also bypass major hurdles such as transmission lines, roads, and displacement that large-scale projects face. And as the country moves to a federal model, FiT tied to micro grids probably only make increasing sense.
One argument that an institute like NEA will raise is that the price of alternative energy is still too high in Nepal, particularly that of solar energy. One officer at NEA estimated that while the average per unit price NEA pays right now is less than Rs.6/unit, solar power might at best cost Rs.16/unit.
What is not mentioned is that electricity prices in Nepal have been stagnant for 10 years! Or what the real costs are at which NEA has been importing electricity.
According to the Nepal Rastra Bank’s 2009-2010 data, Nepal spent Rs.5 billion on importing electricity, and another Rs.5 billion on inverters, batteries and chargers to fight load shedding at homes.
That is to say, in a year, the country spent Rs.10 billion to address load shedding, and still the country experienced more than 12 hours of power outage per day during that time.
It must also be noted that the Electricity Tariff Fixation Commission (ETFC) has not yet raised prices per unit despite repeated calls from all major stakeholders. As recently as May 13, at a recent function on the issue of tariff, Energy Minister Bogati expressed interest and the need to raise prices.
The head of ETFC also committed to taking an action soon. Yet two weeks later, there is no word on the matter. If there is one consensus that the Prime Minister can act on immediately, it seems this is it: raising the price of electricity in Nepal because the country cannot afford the fake prices with which it is operating at the moment.
In the fiscal year 2067/68, NEA’s accumulated losses stood at Rs 27.32 billion. The Nepal Government paid for it. Last year, without a major government bailout, it was expected that NEA would go bankrupt in two years.
There is little real argument not to adjust electricity prices in Nepal. And based on conversations with people working on the issue, the Prime Minister could expedite the decision at will, should he have the will to do so.
Without it, not only would the State Utility Service provider risk bellying up but also it will remain difficult to get a real sense of where prices of alternative energy in different capacities stand against the prices of conventional sources in Nepal.
Surely, investing Rs.5 billion in producing solar power on the roofs of Kathmandu would have had significant long-term contributions to Nepal’s economy.
For one thing, the one-time investment would continue to produce energy for at least 20-25 years, unlike a one-season’s purchase of diesel for generators, or electricity from abroad. While FiT will need a detailed pricing study, so do the real costs of NEA’s current energy sources.
The energy crisis in Nepal demands as many avenues of domestic production and distribution mechanisms as possible, not just for the sake of home electrifications but also as a tool of economic growth, general development, communications services, and national security.
We are engaged in extremely complex energy trade negotiations, agreements, and policies with our neighboring countries and foreign investors.
Surely, we can engage in something quite less complex at a domestic level while moving to the same goal: electrification and socioeconomic development. FiT can be a real tool of People’s Power.
The key is not necessarily to define the source of energy immediately (although to keep in mind a major source, such as solar), but rather to ensure this technology itself is approved at a policy level.
Such an outcome would allow people to engage in using FiT model as and when it seems most beneficial, keeping in mind the rapid pace at which the technology for energy production is becoming ever more efficient and feasible.
Such a policy would also be impossible to implement without the public at large understanding its implications. And so, by default, it would be a policy that would be drafted and implemented with a broad public discourse initiated through the concerned bodies in the government, civil society and community groups as well as the media.
The implications of FiT are not limited to electrification alone, but also to matters of local governance and accountability, and the dynamics and functioning of community user groups in the country.
Something as fundamental as energy usage across the nation can no longer be confined to an antiquated central body that has always held a monopoly, and a handful of powerful industrialists, nor should Nepal’s energy policy hinge on a single source when clear alternatives are available.
And after what the world witnessed in Germany last week, there can be little question about the capabilities and potential of renewable energy at the hands of communities and individuals.
The author is a Policy Fellow researching the role of FiT policies for Nepal at the Niti Foundation. He will be writing more on this subject in his forthcoming columns. You can follow him on twitter @kashishds and email him at email@example.com