Rural Energy Development Programme in Nepal

Micro-hydro in Nepal
A micro hydropower plant is part of a larger programme seeking to promote renewable energy sources to provide reliable, low-cost electricity to rural communities in Nepal.

The rural population in Nepal is highly dependent on traditional bio fuel for heating and cooking. This form of energy however, is a threat to the environment and the health of the population.

Supported by UNDP, the Rural Energy Development Programme is seeking to promote renewable energy sources by building small hydropower and solar heating (cooking stoves) systems to provide reliable, low-cost electricity to a large number of isolated, rural communities.


  • The project has so far provided almost 1 million Nepalese access to electricity from renewable energy sources.
  • By the end of 2012, 15 percent of Nepal’s electricity will be generated from micro and mini hydropower plants.
  • For each new micro hydropower system, 40 new businesses are created.
  • Since 1996, nearly 400 micro-hydro power plants have been built in the most remote and impoverished areas of Nepal, bringing electricity for the first time to nearly half a million people.

Launched in 1996 as a small pilot initiative in five remote hill districts, the programme was subsequently scaled up via the national Hydropower Development Policy of 2001, which focused on rural development via low-cost hydropower systems. The lessons learned from this programme helped formulate Nepal’s National Rural Energy Policy in 2006 and its subsequent national five-year plans.

As of 2010, the programme had:
•    connected 59,000 households to micro hydropower installations;
•    constructed 317 new micro hydropower plants, with 5.7 megawatts of installed capacity; and
•    installed nearly 15,000 improved cooking stoves, 7,000 toilet-attached biogas plants, and 3,200 solar home heating systems.

By the end of 2012:
•    modern energy services will have been made available to almost a million people in remote rural areas of the country; and
•    15 percent of Nepal’s electricity will be generated from micro and mini hydropower plants.

The primary beneficiaries of the programme, which is now being extended to all 75 districts, are rural communities, with particular attention to vulnerable women and indigenous people. Over the next 20 years, the government wants to expand the share of electricity generated from micro and mini-hydro plants to 15 percent.

In addition to improving access to energy services, the programme has made possible significant progress in rural development. Research conducted by UNDP and Nepal’s Alternative Energy Promotion Centre found that improved access to electricity in rural areas led to:
•    an eight percent increase in household incomes in 2009
•    reduced average annual household spending on energy to US$19, compared to US$41 spent by non-electrified households; and
•    the creation of 40 new businesses for every new micro hydropower station brought on line.

In addition to supporting business formation and raising rural incomes, this research found increases in school enrolment rates (particularly for girls), and improvements in child and maternity health, in water quality and access to modern sanitation, as well as in environmental quality. Reductions in time spent gathering water and firewood also allowed women to more actively participate in socio-economic life.

In this and other ways, the programme demonstrates the benefits that can come from rural development programming that takes an integrated approach to economic, environmental, and social development challenges.

Read the full case study in the Triple Wins report:

Triple Wins for Sustainable Development

This report features case studies of sustainable development in practice.

Students in Kharbang, western Nepal, have been enjoying a constant supply of electricity to their classrooms.

In Nepal, a simple solution brings light to mountain communities
Lessons learned

National ownership and commitment. The programme benefited from a strong, long term commitment from the national government. The establishment of the Alternative Energy Promotion Centre to lead Nepal’s rural energy programming played a crucial role in scaling up the micro hydro and improved cooking stove pilots.

Local engagement. In addition to providing substantial matching funds to support renewable energy programming, local governments have worked to ensure integration into local development planning, rather than being stand-alone, donor-funded projects. Local government financing was also instrumental in supporting the capacity development needed for this programming to work.

Catalytic finance. While public funding accounted for well over 90 percent of total programme finance at the start, by 2006 communities were contributing almost 40 percent of the total funding. Without this community funding, the rural electrification programme could not have been scaled up.

Community mobilization and local partnerships. Community empowerment has been key to ensuring both effective local service delivery and longer-term financial sustainability. Training and collaboration with local entrepreneurs and civil society organizations provided households with better access to micro-finance services.

Capacity development at all levels. The Programme focused on capacity development both at the national level (to create the appropriate policy environment) and at the local level, to help community members to better design, construct, and manage new energy systems, and ensure effective service delivery—including via community mobilization.