www.iteco.ch/Renewable Energy & Water/Project Selection/Small Hydropower in Nepal

Developing small scale hydropower in Nepal

Nepal Map

Mountain people are often disadvantaged by being cut off from transportation and communication. Yet there is often great potential for the development of decentralised small scale hydropower to stimulate sustainable local development. In Nepal, 80% of the population lives in rural areas, adding an important political dimension to decentralised electrification. Nepal's installed electric generating capacity is around 390 megawatts (MW), of which about 85% is hydroelectric and the remainder diesel power. There are frequent power outages, and only 15% of the population has access to electricity. Only 1% of the economically feasible hydroelectric potential, estimated at 44,000 MW, is currently exploited. Potentially, Nepal could supply both its rural and urban needs and even be a large power producer and an exporter to neighbouring countries.

power supply

Salleri Chialsa in 1992 (left) and 2000 (right). The village is no longer at the end of the world. Migration and brain drain to urban centers has stopped. As Salleri Chialsa still lacks an access road, the small scale hydropower plant did not result in large-scale industrial development but in the promotion of small, thriving enterprises.

Rural electrification

Least-cost power generation schemes, streamlined for production economics, are often very large. Their production is geared to earning foreign exchange in distant industrial centres and neighbouring countries. Rural electrification is, if at all, of marginal concern. If profits are the main consideration economies of scale never favour small schemes. Scaling down hydropower units from 10 to 1 MW increases specific costs of installed capacity by 40%, and scaling down from 1MW to 100 kW' by another 70%. However, for remote areas far from the national grid, isolated power utilities have a competitive edge. Harnessing water power is by far the best choice.

Hydropower

Nepal's ambitious plans for electricity generation rely on large-scale hydropower schemes to serve the needs of foreign electricity markets and urban centres - a policy which will strongly disadvantage mountain areas: while small decentralised schemes currently account for 9% of total capacity, this proportion is expected to drop to only 0.1% in future.

 

The Salleri Chialsa small scale hydropower project

Salleri is the district headquarters of Solu Khumbu,, 80 km south of Mount Everest. On foot, the nearest road head is three days distant, over high mountain passes, and the nearest airfield is an hour away. Fourteen years ago, the first electric bulbs were switched on, fed by a 400 kilowatt (kW) small hydropower plant on a small mountain stream below Salleri. Today, the Salleri Chialsa Electricity Company Ltd. (SCECO) is fully autonomous. The power utility operates two cross flow turbines and an isolated grid, providing electricity to 900 commercial and domestic consumers. With a 98% grid availability (= electricity is available on 358 days per year, i.e. 98% of 365 days), reliability is second to none. Small business and cottage industries now provide quality employment opportunities and income to a well-educated middle class.

The Sallen Chialsa Project was initially supported by Swiss government agency, which commissioned the design and construction of the plant and grid. An extensive training component was included with a technical assistance package, ensuring know-how transfer in all relevant technical, organisational, and financial aspects. Long before the current trend of privatisation of infrastructure utilities, SCECO was designed as a private shareholder company, including local consumers as shareholders. Its financial condition is sound and stable, with a remarkable sum set aside for depreciation. The coming challenge is to develop and manage local telecom and television systems. SCECO envisages the construction of a second small hydropower plant, to meet rising demand in the service area.

SHP in Salleri Chialsa

Initially designed to combat rapid deforestation by replacing fuel wood with electric power for wool dyeing in a local factory, the power plant now supplies energy to 900 commercial and domestic consumers.

 

Distributing the benefits of hydropower in Nepal

In coming decades, Nepal’s power sector is expected to boom tremendously. Hydropower Projects currently under construction, planned, and proposed should boost the country’s total generating capacity by a factor of 65, to 22,000 MW, half of the country’s economic hydropower potential. The government’s tax and duty concessions plus a commitment to purchase generated power strongly encourage private investment in the hydropower sector. Losers in this rapid development will be the country’s remote areas served by decentralised small hydro schemes, as independent power producers will invest mainly in large, least-cost schemes, connected to the national grid’s high tension backbone. While small hydropower schemes (less than 10 MW rated capacity) currently account for 9% of Nepal’s hydropower capacity, only 0.1% of upcoming capacity will be generate in small hydro schemes. However, as the Saller Chialsa example shows, electricity can trigger modest but sustainable development in remote areas, benefiting a large portion of the population. Yet without initial external support, the scheme would never have taken of. Such support from concerned governments and donors is crucial to ensure well balanced decentralised development.

Off-Grid System

Second-best equipment is very often not good enough for small schemes. Technically sound design and appropriate, high-quality machinery ensure high production efficiency and considerably reduce operation and maintenance cost.