Introduction: Micro-hydroelectricity in ACAP

Development requires energy.  In the Annapurna Conservation Area (ACA), the traditional source of energy has been biomass fuels such as firewood.  Continued development using firewood puts increasing pressure on the natural environment through deforestation.

One of the goals stated in the ACA Management Plan for the Annapurna Conservation Area Project (ACAP) is to "reduce stress on critical resources, primarily forests, through wider use of electricity and other alternative energy programs" (KMTNC, 1997).  The Alternative Energy Program (AEP) was established to meet this goal.  It is one of the nine core programs administered by the CAMC, and is supported by an Alternative Energy Officer and two Alternative Energy Assistants. The Micro-Hydro Management Committee (MHMC) is a sub-committee of the CAMC responsible for managing the MHP. The AEP has two primary approaches to reducing pressure on forest resources:
1. Promotion of fuelwood-minimizing technologies, such as back-boiler, smoke, and solar water heating systems, thermos flasks, pressure cookers, low-wattage electric cookers, kerosene stoves and improved cook stoves.
2. Promotion of fuelwood alternatives, such as micro-hydroelectricity, solar technology (heating and lighting), biogas, kerosene and liquid petroleum gas (LGP).

Micro-hydroelectricity is one of AEP's main programmes.  Micro-hydroelectric plants, or MHPs (defined as 100 kW or less of generating capacity) convert the mechanical energy from water flowing downhill into electricity.  Since many of the villages in the ACA, particularly in the mid-hill region, are situated on hillsides near water sources, micro-hydro is an ideal source of alternative energy for these villages.  In addition, micro-hydro provides a local source of electricity for remote villages in the ACA that will not have access to the national electricity grid in the near future.

To date, ACAP has built 11 MHPs in its area, totaling 453 kW.  Ever since the first plant in Ghandruk was constructed in 1990, ACAP has assisted with the construction, operation and maintenance of these plants, all of which are community-owned and operated.  In addition, five other MHPs in the ACA that were not originally built by ACAP receive technical and financial support from ACAP. 

History of hydropower in Nepal

Hydropower in Nepal comes in two forms, mechanical and electrical.  Mechanical hydropower, in the form of ghatta or traditional water mill, has been used in Nepal for hundreds of years.  The first hydroelectric power plant was established in 1911 with a capacity of 500 kW (Thapa, 1995).  Today there are over 350 documented (and presumably many small undocumented) hydroelectric plants in Nepal, totaling over 300 MW.  Of this total, only about 9 MW, or 3.5%, are generated through MHPs.  Estimates of theoretical hydroelectric potential in Nepal range from 43,000 MW (Rana-Deuba, 2001) to over 80,000 MW (Amatya and Shrestha, 1998).

In the beginning, most of the micro-hydro units in Nepal were not used for electricity, but rather for mechanical agro-processing.  Later, the concept of attaching a generator to the turbine for electricity generation caught on.  In 1981-82, the government devised a 50 percent subsidy scheme to encourage the development of these "add-on" electric schemes as well as new MHPs.  Since then, almost 1000 micro-hydro schemes have been installed in Nepal, totaling over 4,000 kW capacity, but uncertain government subsidy policies have seen a decline in the installation rate (REDP, 2000)

Issues pertaining to micro-hydropower development

Financial and Regulatory

Financing of MHPs take many forms, depending on who initiates the project.  Because MHPs are capital intensive, and many remote communities do not have the cash to pay for the upfront cost, subsidies and loans are often required.  Until 2000, the Agricultural Development Bank of Nepal (ADB/N) has been the primary source of subsidies and loans for Nepalese MHPs. 

However, in September 2000, HMG/N changed the subsidy rules and created the Alternative Energy Promotion Center (AEPC) with support from the Danish government to administer the new subsidy plan (AEPC, 2000b).  All new MHPs wishing to apply for a subsidy must now apply through AEPC.  The current MHP subsidy scheme is gradated depending on the distance from the nearest road, and includes transportation and materials costs.  It does not provide for continuing operation/maintenance costs (AEPC, 2000a).

One issue with the government's subsidy scheme is that it has changed frequently enough to make financial planning of future projects difficult (REDP, 2000).  Many contractors, private parties and NGOs have expressed frustration at not being able to rely on a consistent subsidy policy or long-term government policy regarding micro-hydro development (Adhikari, 2001; Junejo, 1995).  With Nepal's MHP market being relatively small in volume and revenue, this inconsistency is enough to make otherwise capable engineering firms and suppliers hesitant to fully invest in this industry.

Another issue with the one-time subsidy scheme is that operation and maintenance costs are often underestimated or not planned for.  Over 50 percent of the MHPs installed in Nepal to date are currently nonfunctional (Rijal, 2001).  Technical problems that commonly occur (mentioned below), if not taken into account, are enough to put a plant out of business.  If concurrent income-generating activities are not in place, or savings allocated for operation, maintenance, and capital replacement, then the community or private owners find themselves unable to pay for repairs once a problem does occur.

Lack of micro-enterprises means no productive end use of electricity. Widespread poverty can reduce the purchase of electric micro-enterprise machinery which require up front payment. MHPs are also faced with stiff competition from diesel and mechanical hydropowered agro-processing mills which reduces MHP revenue (Junejo, 1995). 

One disincentive for building a MHP at a given site is the possibility of national grid extension to that site in the near future.  Knowing that the government may be less willing to extend the grid to an area with an installed MHP, the builders may opt instead to wait or to use expensive diesel generators in the meantime.

Another policy issue is that of water rights and water resource use conflicts.  The Water Resources Act of 1996 prioritizes the use of water resources in Nepal in the following order: drinking water, irrigation, agriculture, hydroelectricity.  The law does not specify any prior right of water use for MHPs, for instance; this has caused several existing MHPs in Nepal to shut down because the water was subsequently diverted for other uses (Amatya and Shrestha, 1998).

To encourage the widespread use of MHP electricity, ACAP has developed its own community-friendly policy for financing subsidy for MHP installation. ACAP also assists in finding donors as the current government policy is insufficient for installation of MHP in remote areas. As most MHP sites in the ACA are remote, the cost is substantially higher requiring greater subsidy. Besides ACAP's MHP promotion is natural resource conservation oriented, making it different from other MHP project objectives.

Technical

Lack of sufficient local technical expertise and capacity is the single biggest issue cited for previous MHPs.  In Nepal, contractors such as Balaju Yantra Shala (BYS), Development and Consulting Services (DCS), Intermediate Technology Group (ITG) and others have been instrumental in the growth of MHP to date (Shrestha and Amatya, 1998).  However, without district-level capacity for repair and maintenance, breakdowns become costly in both money and time, as technicians and equipment have to be sent in from Kathmandu or further.  Even this level of support is in jeopardy, as DCS is now no longer working in the MHP industry and ITG no longer manufactures low-wattage electric cookers. 

Lack of local technical capacity also means that prices of equipment in Nepal are high compared to India, Pakistan and China, often two to three times as much (Rijal, 2001; Junejo, 1995).  Since MHPs are usually located in remote areas far from road heads, maintenance also becomes expensive for transportation costs for equipment and travel costs for technicians.  However, the dilemma is that in many cases, locally manufactured equipment is also inferior in quality to imported equipment, as well as more prone to expensive breakdowns (Junejo, 1995, Rijal, 1997a). 

Unrealistic project feasibility studies in terms of design, maintenance expectations, and demand projections often lead to plant failure as well (Shrestha and Amatya, 1998), stressing the importance of close collaboration with the target community from the beginning of the project.

The steep topography and high rainfall that make the mid-hills of Nepal so suited for hydropower also make them prone to landslides and floods (Goel, 1995).  Compounding this issue is the frequent lack of quality control on the civil works of the MHP.  Even if proper feasibility studies and design surveys are conducted, unexpected landslides and other natural disasters frequently claim the civil structures of the MHP, or even the plant itself.  Potential solutions to this costly issue include insurance for MHPs, as well as extended warranty periods for contractors, but they have yet to be implemented in Nepal at this time (Rijal, 1997b).

Low load factors are also a consistent problem with MHPs.  Average load factors range from 10 to 20 percent, with some plants as low as 5 percent (Arya, 1995; Thapar, 1995).  Since many of the MHP schemes are used mainly for evening lighting, peak load only occurs from 6pm to 9pm, with low utilization at other times.  Such low load factors are a sign that the capacity of the plant is not being used efficiently.  Experience has shown that the long-term economic viability of such plants is not good (Shrestha and Amatya, 1998; Junejo, 1995).

Owners and managers of private MHPs are often not qualified to manage them properly, resulting in plant failure (Shrestha and Amatya, 1998; Junejo, 1995).  Lack of training, record keeping, or managerial skills often disable an otherwise technically sound MHP scheme.  Currently, there are no national standards for MHP management or operation, nor are there any coordinated programs for training or certification (Rijal, 1997b).  However, MHPs that have had assistance through a technical or management intermediary, such as ACAP, have historically had higher success rates than fully private or individually run plants, presumably because capacity building through training and guidance has occurred (Shrestha and Bajracharya, 1998). During the period 2001 to 2003, under the Water Resources Use Project, several action researches were undertaken by KMTNC/ACAP to improve the management of MHPs in the ACA. As a follow up to the recommendations of the action research, numerous workshops, trainings to operators and preventive maintenance procedures were developed for the 11 MHPs (WRUP 2001/2002, WRUP 2002/2003).

SOCial and gender issues

In Nepal, biomass fuel, particularly firewood, is the predominant energy source (Figure 1).  Electricity accounts for a mere 1 percent of energy consumption.  In rural areas, only five percent of people in rural areas have access to electricity.  Decreasing the heavy reliance on biomass energy in rural areas, particularly hill areas, has varying social impacts.

Typically, energy in rural communities is used for the following purposes (Goel, 1995):

ˇ         Domestic and commercial lighting;
ˇ         Cooking, water heating, and space heating;
ˇ         Small and cottage industries such as agro-processing and weaving;
ˇ         Medium sized industries based on local raw material;
ˇ         Irrigation and drinking water.

Of these, many can be substituted by electricity, but only with the proper tools and education.  For instance, the purchase of an electric cooking appliance is necessary to substitute firewood with electricity for cooking.  This in turn requires education on the value of the electric cooking appliance, money for its purchase, and the willingness to use it (Junejo, 1997a).

Substituting biomass and other fuels with electricity has a number of benefits (Shrestha and Amatya, 1998; Thapa, 1995; UCS, 2000; Rijal, 1997b; Junejo, 1997b).  Removing the smoke from traditional cooking fires or the fumes from kerosene improves indoor air quality and thus health.  Using electricity to power mills, oil presses, husking machines and other agro-processing units reduces drudgery and saves time over manual methods.  Time and drudgery are also saved by not having to collect firewood, which takes even longer with increased deforestation.  Good-quality lighting allows later working hours and increased study time for children.  Radios and television allow outside information to reach the home.

In mountain villages, women traditionally bear the burden of energy collection and use, so any changes in energy source and usage thus affect women disproportionately (Rana-Deuba, 2001).  In particular, the health, drudgery and time benefits of electricity noted above impact women more than men.  However, there is no documented study of women participation in MHP planning or management, and no gender-specific policies exist for MHP development (Shrestha and Amatya, 1998).

Availability of electricity itself, as well as the time freed up through electricity, also enables income generation opportunities especially for women (Rana-Deuba, 2001).  In one example, a village couple started a poultry farm with the free time and hot water generated through electricity.  Another example cites a woman who took a small loan for an incense-rolling machine.  She has already repaid her loan and now generates 50 percent profits with the sticks she sells through a distributor in Kathmandu. Further study is required to fully understand the social impacts of MHP.  However, the benefits of MHP seen to date are encouraging.

Gender analysis of benefit from MHP as depicted in Table 1 shows that women benefit more from the use of MHP electricity.

Table 1. Gender analysis of benefit from MHP (Bhadra & Karky, 2002)

As above, highest proportion of respondents (42%) report of MHP electricity as attributing to raising their living standards followed by improved health (36%). MHP end uses has also contributed to increased income generation as reported by 12% of the respondents and also subsequently reduced drudgery, which is more evident amongst women (eight men against 12 women). Interestingly, three women also feel that access to the benefits of MHP has raised their social status. 

Graph 1. Drudgery graph for fetching fuelwood in the different ecological regions within ACA (Bhadra & Karky, 2002).

The graph (Graph 1) clearly indicates the drudgery undergone for fetching fuelwood in terms of time taken and slope climbed or descended. Such scale of drudgery can be reduced by decreasing the frequency for collecting fuelwood by developing an energy mix by addition of electricity from MHP for household heating. For this reason, access to MHP electricity plays an important role in increasing the livelihood conditions, improving health conditions and reducing drudgery.    

Lessons learnt

With support from the Ford Foundation's Water Resources Use Project, a case study assessed the MHP management of Sikles and Chhomrong (Kim and Karky, 2001), two Gurung villages in the southern ACA region.  Field visits and interviews with local residents, village leaders, MHP staff and ACAP staff yielded many positive aspects of MHP management as well as areas of improvement. As lessons learnt, the following recommendation were made from the case study.

Two levels of recommendations stem from the summary of findings:
1.       Short-term: recommendations that can be implemented in the near future based on current resources.
2.       Long-term: recommendations that require institutional rethinking over a wider scope and period of time.

1. Short-term

Technical

Sikles urgently requires police switches to monitor their electricity usage, so that low-wattage electric cookers can once again be used.  In addition, since DCS will no longer provide them with technical support, the MHMC should begin building working relationships with other existing micro-hydro service providers (a list of whom can be provided by ACAP).  In this way, they will be prepared for any major technical problems that may occur in the future.

Also, ACAP has technical human resources in the form of the AEP staff - the Alternative Energy Officer, two Alternative Energy Assistants and several Alternative Energy Helpers.  However, when even minor technical problems occur, the VECs tend to ask ACAP to call a technician, often at great expense of time and money, and then ask ACAP to subsidize the costs.  Frequent turnover of the AEP staff has also left gaps in ACAP's knowledge base of its own MHPs.

Rather than hiring more staff, the existing staff should be more efficiently utilized to handle technical issues, as well as to find and prevent problems before they occur.  Local technical capacity should also be increased.  This can be accomplished through:

ˇ         regular and thorough hands-on training of staff, who can then train plant operators/managers;
ˇ         regular preventative maintenance visits by ACAP staff (these are planned, but have not yet occurred);
ˇ         more mobility of ACAP staff for troubleshooting;
ˇ         incentives for long-term retention of both ACAP and plant staff;
ˇ         proper handover between outgoing and incoming staff;
ˇ         proper handover of the MHP to the community.

Financial

Electricity generation should not just be for consumption, but also for production.  Income generation from electricity is important for continued financial sustainability of MHPs.  Compared to Chhomrong, where over half of the electricity is used to generate income through tourist lodges, Sikles only has three mills and one wood finishing machine.  Considering that Sikles has very little money saved after seven years of operation, they should expand their electricity end uses to include more productive, income-generating activities. 

Though their financial situation is better, Chhomrong should still consider diversifying their income-generating activities to reduce their dependency on only one sector, especially given that tourism has decreased significantly this past year.  Electricity is currently not allocated for agro-processing, even though agriculture is the other major economic activity in Chhomrong.

Both Sikles and Chhomrong should start setting aside separate funds for capital replacement and maintenance repair.

Budgeting for new plants should take into account the total life-cycle cost of a similar plant.  The only way to do this is to know from experience what this life-cycle cost might be.  ACAP should keep better financial records, especially of its own total yearly expenditures on each plant, to plan for future MHP budgeting and prepare current MHPs for financial independence.  From the beginning, the budget should include spare parts, full operation and maintenance, capital replacement, police switches and other enforcement, as well as provision for end uses (such as a subsidy for low-wattage cookers) and gradual reduction of ACAP assistance.

Management

Keeping good records, both technical and financial, is essential for long-term management and preventative maintenance of MHPs.  In Sikles, the plant manager ­keeps financial records, but they should be audited more regularly.  A technical log book should also be maintained by the Sikles plant operators as in Chhomrong. 

Careful record keeping is of no value if the information is not shared or utilized.  There were several noted communication gaps amomg the VEC, plant operators and ACAP in both villages.  More frequent communication among the plant operators, the plant manager, ACAP field offices, and the ACAP head office is necessary for all parties to learn from each other's experiences. 

Communication can be facilitated through:
ˇ         regular visits by ACAP AEP staff (as suggested above for technical purposes);
ˇ         regular workshops in Pokhara and/or in MHP sites;
ˇ         accountability of one staff member in each ACAP field office for collecting and maintaining information about the MHPs in its sector (this staff doesn't have to be an AEP staff);
ˇ         regular accountability of this field staff member to the AEO in Pokhara for reporting certain information about the MHPs in its sector.

Social

The advantage of both Sikles and Chhomrong from an MHP management perspective is that both villages are almost entirely Gurung, and share a strong sense of community.  In this study, very few problems were noted in terms of equitable distribution of electricity, water resource conflicts or the like.  However, both villages could use more representation from women and lower-income groups in decision-making regarding electricity.

Before this can occur in a meaningful way, education is necessary.  Without education on the uses and advantages of electricity for reducing drudgery, increasing income generation, and resource conservation, those who may be affected most will not even realize, much less articulate, their electricity needs and wishes. 

Education on energy use should be coupled with education on energy efficiency.  Once energy efficiency is made a priority, then villages with MHP will be able to do much more with the electricity they are allotted, rather than limiting important uses like low-wattage electric cookers as in Sikles, or cooking with firewood as in Chhomrong.

In addition to education, ACAP should also continue to encourage end uses, such as low-wattage electric cookers and water-heating immersion rods, that support the conservation goal.  For the short term, ACAP can solicit or support other organizations or companies that develop these types of technologies, and then provide incentives to the communities for their use.

2. Long-term

ACAP's investment into micro-hydro should not be viewed in isolation, but as part of an integrated system.  If MHP is to truly support ACAP's goals of natural resource conservation and sustainable development, then each new MHP project should be considered holistically: from now to later, from construction to production, from ACAP input to community use.  Without a holistic view towards MHP management, the goal gets lost.  Why, for instance, are the households in both Sikles and Chhomrong still using firewood to cook? 

Figure 4 below illustrates the MHP system.  ACAP provides technical and financial support for the construction of the MHP as well as its operation and management.  The MHP in turn provides electricity to power devices for cooking, lighting, leisure and micro-enterprise.  Revenue is generated from device use through tariffs, which also pay for operation and maintenance.

The outputs of this system are decreased firewood use, increased living standard, increased time, reduced drudgery, and increased income.

Figure 2.  MHP system, with ACAP input and current AEP goals.

As it stands, only cooking appliances and electric heaters, neither of which are used very widely in Sikles or Chhomrong, directly contribute towards the AEP goal.

Figure 2 illustrates that investment in MHP construction alone does not necessarily lead to firewood conservation nor to sustainable development especially if electric cookers and heaters are not used.  To that end, each new project should include not only construction and basic maintenance, but also provide for:
ˇ         diverse end uses supporting conservation and improved living standards
ˇ         education regarding electricity use (for community) and maintenance (for staff)
ˇ         income-generating activities

AEP cannot do this alone.  Right now, the goal of AEP is strictly conservation focused, but Figure 2 shows that MHP directly contributes to other positive benefits as well for the communities.  Changing AEP's goals to become broader means that ACAP will also need to become broader in its general approach.  ACAP has a rich array of programs and institutions already in place, such as Ama Toli, Lodge Management Committee, Savings and Credit Group, etc., that directly relate to MHP and its effects.  However, the current tendency is for each group to work separately and autonomously.  Working together across disciplines will enable the AEP to approach each MHP project in a holistic manner, thereby ensuring its long-term success and sustainability.

The eventual goal is for the management of the Annapurna Conservation Area to be fully handed over to the local communities, including their MHPs.  Long-term self-sufficiency means that communities have to decrease the ACAP input into the MHP system shown in Figure 2, through a combination of the following:
ˇ         Appropriate alternative energy sources, such as solar and bio gas, to reduce pressure on MHP.
ˇ         More efficient electricity use through energy-efficient appliances, insulated buildings, and demand management.
ˇ         More attention to income generation from electricity, so that MHP maintenance is funded entirely locally.

The end result, in Figure 3, is a self-sufficient, community-owned and managed MHP system with many positive benefits for years to come.

 

 

 

 

 

 

 

Figure 3.  MHP system without ACAP dependence, focused on new ACAP goals.

Conclusion

The goal of ACAP's Alternative Energy Programme is to conserve forest resources in the ACA by reducing the consumption of firewood.  Financially, the single largest activity in AEP, and in ACAP as a whole, is micro-hydroelectricity.  The justification for this investment is that micro-hydro brings the AEP closer to its conservation goal by providing communities that use firewood with a clean, local alternative energy source.

ACAP's micro-hydro projects in many ways differ from the rest being implemented in the country as it is predominantly conservation focused. To overcome numerous issues pertaining the micro-hydro sector, ACAP has developed its own policy especially with regard to subsidy so that MHP electricity becomes more accessible to the local poor living in remote areas. Regular trainings and workshops for the operators and management committee members have also become routine project activities to make the community owned and operated undertakings sustainable. Socially, the access to MHP electricity has brought numerous changes, primarily that of raising the living standard of the locals. Women have reported being more benefited from MHP electricity than men; one reason is from reduced drudgery. The slope, distance and time taken to collect fuelwood, results in a cumbersome effort.       

Learning from the ACAP's experiences in micro-hydro projects, one key attribute to all 11 plants functioning despite the low national average could be due to ACAP's longitivity in engagement in the area and its continued support for the development of MHP sector at community levels. Action researches to pin point trouble shooting areas, recommend ways to enhance efficient management systems and develop appropriate human resources at community levels and project levels are some measures taken by ACAP to make micro-hydro projects self sustainable. The case study focusing on two MHPs in   Sikles and Chhomrong have provided ACAP insights into improving its approach to current and future micro-hydro projects by assessing their management.  Comparing the overall MHP management between Sikles and Chhomrong shows that some progress has been made in the six years separating the two plants.  However, there is still some room for improvement. 

For Sikles and Chhomrong, as well as for ACAP, some near-term suggestions for technical, financial, managerial and social improvement are made.  These suggestions can be implemented with existing resources, and the resulting improvements can be seen in the near future.  However, further improvement for MHP sustainability requires a more holistic view towards MHP management over the long term. ACAP's AEP goal may include improving livelihood condition in addition to conservation of forests.

These recommendations can also be applied towards other ACAP micro-hydro projects, as well as other water resource use projects such as safe drinking water and irrigation.  Continued self-assessment and management improvement ensures that ACAP's programmes meet the ACAP goal of balanced conservation and sustainable development.

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