Hydro Power

 Figures on hydro plant in Nepal:

Theoretical feasible: 83, 000 MW
Economically feasible: 43, 000 MW
1911: First Plant: 500 kW Pharping
Till 1990: Infrastructures
After 1990: Investment sector (Govt+Private)
Present Status: 609MW (Hydro 546MW)
                        144MW (private)

International SHP Markets

  • EU- largest supplier of SHP turbines
  • Domestic market constraints
  • Growing energy needs in developing. countries
  • CDM opportunities
  • Power Sector Restructuring in DCs

Micro Hydro



Small  Hydro Plants
  • There is not any fixed definition of small hydro plants.
  • No one definition – upper limit generally 10MW
  •  – up to 50MW in China
  • low Low env impact (ROR).
  • Mini Hydro < 1 MW
  • Micro Hydro < 100 kW
  • Pico Hydro < 5 kW

An indigenous and renewable source of energy for which the potential exists in almost the whole Hindu-kush Himalayan Region, which includes Afghanistan, Bhutan, China, India, Myanmar, Nepal and Pakistan. Micro hydro are the small scale decentralised water powr which is less than less than 100kW but somewhere it can also be found less than 300kW.

Importance of Hydro Plants
  • Cheap to run and maintain once they have been set up.
  • Save thousands of women from the drudgery of milling grain by hand
  • generate electric light, which improves the quality of life for people
  • enable electric cookers to be used, which save trees and time previously spent collecting fuel wood
  • Allows communities to manage their own power supplies
  • Act as a significant input for the human resource institutional and technological development.
  • Promotes local participation through cash/subsidy.
  • Creates opportunity to become shareholders for local community.


Application of Micro Hydro Plants
  • Rural residential lighting, information and communication
  • Industrial processes like: grinding milling
  • Rural Agricultural
  • Grid Connection
  • SHP-Contribute more than any Rural Energy Technology.

Micro hydro in Nepal
Micro hydro has existed in Nepal for centuries and in the form of milling.  The first modern micro hydro plant was installed just only four decades ago which further followed by the installation of thousands of of plants.  Those plants were used initially for the purpose of milling only. However the micro hydro has increasingly used as add-on and stand alone system for the purpose of electric lighting over the last two decades.

Factors like: external technical assistance, indigenous innovation and conducive government policies have made it possible for the widespread dissemination of micro hydro technology.   The government has been providing the subsidy for the last two decades, initially from the Agricultural Development Bank of Nepal (ADB/N) and more recently from the Alternative Energy Promotion Center (AEPC) Interim Rural Energy Fund (IREF), as a part of a promotion programme that links subsidy with a structured project cycle, productive end-use and quality requirements.

Basic Micro Hydro Layout

Figure: Basic Micro Hydro Layout

Weir and intake extract water from the river in a reliable and regulated way.

Structure designed to create a head through which the water falls and also to conduct the
water from the intake to the fore bay tank.

The pen stock is the pipe, which conveys water under pressure from the fore bay tank to
the turbine

Micro hydro electrification has featured conspicuously in the Five-Year Plans of Nepal since 1980. In eighth year and nine year plan, targtes for micro hydro plants were set 5MW fore each period. In the past couple of years the sector was deregyulated with the abolishment of the licensiong requirements for micro-hydro plants as a major feature.

Subsidy in various forms since 1985 has been the key policy feature however subsidy was in intially provided for  electrical components at 75% of cost for remote areas and 50% for non remote areas by ADB/N.  The policy was reformulated with establishment of Alternative Energy Promotion Center in 1997 as  a government body for the promotion of renewable energy technologies, which includes micro hydro as well. Since 2000, the Interim Rural Energy Fund (IREF) at AEPC, supported by DANIDA Energy Sectro Assistance Program has administered subsidy for micro hydro.

As verified by IREF the subsidy provision is on a kW output basis.  This  is a push pull element that tends developers and manufacturers to pay attention to quality as manifested in  actual output. Making 10% load from productive use mandatory the reformulate policy also keeps micro hydro in a rural energy perspective. Subsidy is augmented by the mini grid support programme that supports the project cycle with detailed procedural guidelines, promotes productive end use, develops local support structures, and supports training activities and the development of standards.

The subsidy policy is explained below

Subsidy Mechanism
A subsidy amount of Nrs. 55, 000/kW will be made available for the new MHP projects of capacity up to 3 kW  mainly the peltric sets.  Micro Hydro Projectsof capacity above 3 kW to 100 kW will be provided with subsidy of Nrs. 70, 000 per kW.

A subsidy at the rate of Nrs. 27, 000 per kW will be provided to the add-on electricity generation form Improved Ghatta for village electrification.

An additional subsidy will be provided for the transportation of the equipment and materials of the MHP project. The transportation subsidy will be provided in the basis of walking days by porters to cover the distance from the nearest road head to the project site.  The MHP projects will be categorized for transport subsidy as shown below:


Location of MHP Projects

Subsidy in NRs./kW of installed capacity


Project located at the distance of more than 5 days

21, 000


Project located at the distance of 2 days to 5 days

8, 750


Project located at the distance of less than 2 days

No subsidy

Subsidy of 50% on the estimated cost, but not exceeding Nrs. 35, 000 will be provided for the rehabilitation of MHP projects.


Types of MHPs that Qualify for Subsidy
Any individual / community in specified areas of the country is eligible to apply for subsidy for the following type of MHP projects:

  • All new MHP projects of capacity upto 3 kW (mainly Peltric sets).
  • All new MHP projects of capacity above 3 kW to 100kW.
  • Add on electricity generation from improved ghatta.
  • Existing micro hydro schemes that need rehabilitation.

Subsidy Eligibility Criteria

  • The proposed project must be a legal entity
  • The proposed installation must be in area where national grid is unlikely to reach the load center within the loan repayment period of the project.
  • The investment of the MHP does not exceed as follows:

Distance from the nearest road

Maximum Investment ceiling

Less than 2 days

Rs 170,000/kW

2-5 days walk

Rs 182,000/kW

More than 5 days walk

Rs 204,000/kW

  • Monthly tariff for basic consumption of 100W of power is atleast as high as NEA's average tariff per month.
  • Productive demand for power in total production must be above 10%.

Rehabilitation Schemes

  • Schemes must be at least 5 kW, must not older that 15 years.
  • Schemes established later than 1999 do not qualify for subsidy.
  • At lest 50% of the rehabilitation cost must be borne by the applicant.
  • The number of households served per kW should not be less than 7 households.
  • The scheme must ensure a reasonably good income after rehab

Organizations involved in Micro hydro
Annapurna Area Conservation Project (ACAP) and Canadian Center for International Studies are the most prominent among the number of NGOs and INGOs in the micro hydro sector. 

Rural Energy Development Programme (REDP) of the United Nations Development Programme provides significant assistance to the program in addition to the AEPC's micro hydro support programme.  It supports community projects in 25 districts.  Involvement of local government (VDC's and DDC's) in energy planning and social mobilization are the major features of REDP in this sector. REDP receives subsidy from AEPC on micro hydro projects.

The Nepal Government Remote Area Development committee (RADC), another key player, supports community owned plants with an aim of achieving regionally balanced growth, efforts are directed at remote areas.