Power Requirements in Future Energy Scenarios of Nepal

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1 Hastening pace of hydropower development Power Requirements in Future Energy Scenarios of Nepal Amrit M Nakarmi Professor & Coordinator Energy Systems Planning and Analysis Unit Center for Energy Studies, IOE/TU Pulchowk, Lalitpur Kathmandu 06 June

2 Outline Energy consumption in Nepal: An overview Energy systems analysis Stakeholders perception in 2050 Future energy scenarios and share of electricity in the total energy demand Policy and institutional requirements for the power development 2

3 3 Energy Overview

4 Per Capita Primary Energy Supply in 2010 (Kgoe) 2,000 1,800 1,810 1,600 1,400 1,200 1, China India Pakistan Sri Lanka Banglades h Nepal Asian Aver 4 Key World Energy Statistics, IEA, 2012

5 Per Capita Electricity Consumption in ,500 3,000 2,500 2,942 Norway: 23,000 kwh/capita kwh 2,000 1,500 1, China India Pakistan Sri Lanka Bangladesh Nepal Asian Aver 5 Key World Energy Statistics, IEA, 2012

6 Primary Energy Supply/US$1,000 (GDP) in 2010 (Kgoe) (Energy Intensity) 1,200 1,000 1, China India Pakistan Sri Lanka Bangladesh Nepal Asian Aver 6 Key World Energy Statistics, IEA, 2012

7 HDI and per capita electricity consumption (ADB, 2007) 2,000 KWh per capita is needed to achieve HDI of

8 NEA s forecasting model * 8 *: Presentation of Mr. Sher Singh Bhatt 25 Aug 2013, at IPPAN Summit 2013

9 Energy Investment in 2010 Country Energy Investment % GDP Bhutan 16% India 3.4% Remarks Nepal 0.3% Extremely low WDI,

10 Current Energy Overview Fuel Mix Petro-product 9% Coal 3% Biomass 85% Mod Renewables 1% Grid Elec 2% Total Energy Consumption in 2010: 410,000 TJ 10 I TJ = toe

11 Sectoral Consumption Transport 6% Industrial 5% Residential 87% Agriculture 1% Commercial 1% Total Energy Consumption in 2010: 410,000 TJ 11 I TJ = toe

12 Monthly life cycle costs of cooking in urban households (based on D sa, A. and Narasimha Murthy, K. V., 2004) NRs Year Kerosene LPG Electricity ,720 1, At price adjustment in Aug 2012 (NOC, 2013); NEA (July, 2012) INR 1.00 = NR 1.60 Economic cost of cooking LPG: Rs 1,375 Economic cost of cooking Kero: Rs 1,500 12

13 Energy systems analysis Power capacity development: historical trend 13 NEA, 2012

14 Commercial energy analysis Import of Petroleum Products against Commodity Exports 140% 133% 131% 120% 100% 107% 80% 78% 60% 40% 20% 24% 32% 41% 42% 50% 49% 0% (Source: MOF, 2013; NOC, 2014)

15 Energy systems analysis Sales of Petroleum Products from 1994 to

16 Imports of Captive Generating sets (MW) Calculations based on TPC statistics, 2012

17 Individual Levelized Electricity Cost (LEC) NRs/kWh at Durbar Marg Nanglo Bakery KFC Delicatessen Wimpy Hot Bread Smol Lounge Tehzeeb Saino Lakhey Vintage Restaurant & Bar Moti Mahal Beijing Friendship Klassic Bentley Eighteen Big Apple Tin Tin Benetton Kasthamandap Samsung Plaza Sherpa Mall President Travel Kingfisher Reebok Electricity costs: NR to 58.30/unit (Neupane et al, 2011)

18 Crude Oil Price in future 18 WEO, 2008, IEA

19 Energy Resources Potential Renewable energy sources Theoretical potential MW/MWa Economical potential MW/MWa Utilized MW/units % of utilization Hydropower 83,000 42, ** 1.5 Microhydro Solar PV power plant Solar PV home system 9,750* Wind Power 1,215 0 Biogas plant (MW) Solar water heating Urban (MW) Based on NEA, 2011; SWERA, AEPC; AEPC, 2011 and author s calculations *: Kawajiri et al, 2011: 5% of potential 19in Himalayan Range: 14,000 MW **: This value sans electricity generated by thermal plant (53.4 MW)

20 Installed PV systems cost declining (Cost US$/kW) European PV Industry Association: EPIA IRENA,

21 21 Stakeholders' perception for energy sector 2050

22 Biomass Petroleum Coal Sol.Th Biogas Electricity Sol.PV Residential 8.7% 7.4% 1.2% 5.8% 6.8% 64.9% 5.2% Commercial 5.8% 6.6% 0.6% 7.8% 5.4% 60.3% 13.4% Agriculture 21.5% 1.5% 56.0% 21.0% Industrial 3.7% 8.5% 1.5% 3.7% 2.2% 76.5% 3.8% Transportation 36.8% 0.3% 55.7% Biogas 3% Sol.Th 3% Coal 1% Petroleum 16% Biomass 4% Stakeholders Expectation 2050: Fuel mix 22 Electricity 64% Sol.PV 9% Stakeholders survey, Dec 2012 to Jan 2013

23 23 Methodological Approach

24 Scenario Analysis Framework Base Year 2010 Social Data Economic Data Technological Data MAED Useful Energy Demand Agricultural Sector Commercial Sector Industrial Sector Residential Sector Transport Sector Energy Resources Process Technologies Conversion Technologies Development policies ANSWER MARKAL End-use demand technologies Constraints 24

25 Economic Growth/demographic Scenarios Low Economic Growth 4.4% GDP Growth Medium Economic Growth 5.6% GDP Growth High Economic Growth 6.5% GDP Growth DC Economic Growth 9.2% GDP Growth 25 Population growth : 1.4%

26 Sample end use energy consumption in cooking Residential Cooking Urban, Coal, existing Residential Cooking Urban, Kerosene, existing Residential Cooking Urban, LPG, existing Residential Cooking Urban, Electric, existing Residential Cooking Urban, Fuel Wood, existing Residential Cooking Urban, Agricultural Residue, existing Residential Cooking Urban, Animal Dung, existing Residential Cooking Urban, Bio Gas, existing Residential Cooking Rural, Coal, existing Residential Cooking Rural, Kerosene, existing Residential Cooking Rural, LPG, existing Residential Cooking Rural, Electric, existing Residential Cooking Rural, Fuel Wood, existing Residential Cooking Rural, Agricultural Residue, existing Residential Cooking Rural, Animal Dung, existing Residential Cooking Rural, Bio Gas, existing 26

27 Sample end-use energy consumption in cement and non-metallic products manufacturing Industrial Cement & Non-metallic Products - Process Heat, Diesel, existing Industrial Cement & Non-metallic Products - Process Heat, Kerosene, existing Industrial Cement & Non-metallic Products - Process Heat, Coal, existing Industrial Cement & Non-metallic Products - Process Heat, Fuelwood, existing Industrial Cement & Non-metallic Products - Motive Power, electric, existing 27

28 Policy Scenario Analysis Agriculture -Electrification Commercial -Electrification -Efficient Technology Industrial -Electrification -Efficiency Improvement Residential -Electrification -Efficiency Improvement Transportation -Mass Transportation -Electrification -Biofuels 28

29 Scenario Results Low economic growth scenario Medium economic growth scenario High economic growth scenario Combined policy scenario at medium economic growth rate 29

30 Low economic growth scenario Results Energy Mix by Fuel Type % 9% 26% 8% 7% 1% % 9% 17% 5% 5% 1% % 9% 12% 4% 3% 1% % 9% 8% 3% 2% 1% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Fuelwood Other Biomass Petro products Coal Grid electricity Biogas 30

31 Electricity Demand Low Growth scenario Electricity Demand (GWh) Electricity, Grid, hydro Electricity, Off-grid+pico

32 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 - Hydropower plant requirement Low Growth scenario Capacity (MW) Year Hydropower-Grid 1,258 1,884 3,649 7,496 Off-grid Ren ,183 Total 1,272 1,496 3,868 8,679 32

33 Medium economic growth scenario results Energy Mix by Fuel % 9% 31% 10% 9% 1% % 8% 18% 5% 5% 1% % 9% 12% 4% 3% 1% % 9% 8% 3% 2% 1% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Fuelwood Other Biomass Petro products 33 Coal Grid electricity Biogas

34 Electricity Demand Medium Growth scenario Electricity Demand (GWh) Electricity, Grid, hydro Electricity, Off-grid+pico

35 Hydropower plant requirement Medium Growth scenario Capacity (MW) 12,000 10,000 8,000 6,000 4,000 2, Year Hydropower-Grid ,914 3,912 11,005 Off-grid Ren ,183 Total 1,272 1,975 4,131 12,187 35

36 High economic growth scenario results Energy Mix by Fuel Type % 9% 34% 12% 10% 0% % 8% 19% 6% 6% 1% % 9% 12% 4% 3% 1% % 9% 8% 3% 2% 1% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Fuelwood Other Biomass Petro products Coal Grid electricity Biogas 36

37 Electricity Demand High Growth scenario Electricity Demand (GWh) Electricity, Grid, hydro Electricity, Off-grid+pico

38 Hydropower plant requirement High Growth scenario 20,000 Capacity (MW) 15,000 10,000 5, Year Hydropower-Grid 1,258 1,954 4,253 15,841 Off-grid Ren ,183 Total 1,272 2,015 2,994 17,024 38

39 Combined policy scenario Energy Mix by Fuel Type % 12% 21% 13% 32% 0% 1% % 10% 19% 7% 24% 0% 0% % 9% 14% 5% 8% 0% 0% % 9% 8% 3% 2% 1% 0% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Fuelwood Other Biomass Petro products Coal Grid electricity Biogas Biofuel 39

40 Electricity Demand Combined Policy scenario Electricity Demand (GWh) Electricity, Grid, hydro Electricity, Off-grid+pico

41 35,000 30,000 25,000 20,000 15,000 10,000 5,000 - Power Plant Capacity Requirement Combined Policy Scenario (requirement) Capacity (MW) Hydropower-Grid 1,258 3,900 9,218 27,857 Solar Grid ,100 2,100 Off-grid Ren ,183 Total 1,272 4,061 11,537 31,140 41

42 Hydropower Diffusion Curve in Nepal Diff.curve Years (MW) , , , , , , , , NEA, 2012; author s calculations, 2014

43 Diffusion Curve of Solar Home 4,000,000 Systems (SHS) in Nepal 3,500,000 3,000,000 2,500,000 Units 2,000,000 1,500,000 1,000,000 Diffusion curve Current SHS Limit 500, AEPC, 2012; Author s calculations, 2014

44 Electricity Demand DC scenario 70,000 Electricity Demand in Gwh 60,000 50,000 40,000 30,000 20,000 10, Electricity, Grid, hydro 2,801 3,325 4,679 8,605 13,896 27,020 35,612 47,517 63,152 Electricity, Off-grid+pico

45 Power Plant Capacity Requirement DC Scenario (requirement) 25,000 Capacity (MW) 20,000 15,000 10,000 5, Hydropower-Grid 1,258 1,890 3,387 17,33,5 Solar Grid ,000 5,000 Off-grid Ren , Total 1,272 2,051 5,605 23,518

46 Electricity Demand DC intervention policy scenario 140,000 Electricity Demand in Gwh 120, ,000 80,000 60,000 40,000 20, Electricity, Grid, hydro 2,801 4,965 8,617 17,542 33,519 54,766 71,411 94, ,967 Electricity, Off-grid+pico

47 Power Plant Capacity Requirement DC Intervention policy Scenario (requirement) 70,000 Capacity (MW) 60,000 50,000 40,000 30,000 20,000 10, Hydropower-Grid 1,258 4,164 15,507 52,723 Solar Grid ,000 5,000 Off-grid Ren ,183 Total 1,272 4,325 17,726 58,905 47

48 Comparison Per capita Energy Consumption Per Household Electricity Energy Intensity 48

49 Comparison of per capita electricity consumption Reference Case Per Capita Electricity Consumption, kwh Medium 541 base economic Electricity Growth consumption Scenario per capita, kwh/capita Combined 541 combined policy Electricity Scenarioconsumption per capita, kwh/capita 49

50 Comparison of per capita electricity consumption DC case 3000 Electricity consumption per capita, kwh/capita DC Economic Growth Scenario DC policy Scneario 50

51 Power Plant requirement Reference case Power plant requirement (MW) Medium economic Growth Scenario Combined policy Scenario 51

52 Power Plant requirement DC case Power plant requirement (MW) DC Economic Growth Scenario DC policy Scneario 52

53 Power Plant requirement MW LOW 1,272 1,496 3,868 8,679 MED 1,272 1,975 4,131 12,187 HIG 1,272 2,015 2,994 17,024 COMB 1,272 4,061 11,537 31,140 DC* 1,272 2,051 5,605 23,518 DCI* 1,272 4,325 17,726 58,905 * : GDP growth as per approach 53 paper for graduation from LDC to DC by 2022, NPC.

54 Per capita Electricity consumption kwh per capita LOW MED HIG ,55 COMB ,464 DC* ,348 DCI* ,647 * : GDP growth as per approach 54 paper for graduation from LDC to DC by 2022, NPC.

55 Policy and institutional requirement Functional legislative, regulatory and institutional framework Integrated Energy Sector Policy Sub-sector Policies, Acts and Regulations reviewed/enacted Electricity Act and Regulations are amended Unbundling of NEA, separation of transmission and distribution entities Involvement of private sector in transmission and distribution Involvement of private sector in marketing of petroleum products Institutional Framework with self functioning mechanism for efficient and effective energy management 55

56 Conclusion Development of hydropower be promoted as a lead sector Prioritize major hydropower projects, with preference to storage power plants in the ratio of 70:30 (ROR/storage) Adequate transmission infrastructures be developed for facilitation and utilization of added capacity generation Power trade with neighboring countries Appropriate financing arrangements, system of targeted subsidy and incentive mechanisms to be developed Conducive environment with consistent fiscal and tax incentives shall be promoted to encourage foreign and domestic private sector participation in hydropower development. Involvement of private sector in transmission & distribution in electricity sector and marketing of petroleum products 56

57 Thank you!!! 57