As access to electricity widens across the country with the government setting a target of 100% electricity access by 2027, the per capita energy consumption will increase. In response to the projected addition of power generation capacity (5,000MW in the next five years), Nepal Electricity Authority has set a target to increase per capita energy consumption from 245kWh in 2018 to 700kWh by 2022. This will require initiatives to promote the use of electricity, such as electric cooking, water heating, electric cars, and so on. While this may address the future concern of surplus generation and hint at economic development, energy efficiency, if not given priority, may take us down the path of unsustainable energy practice.
What is energy efficiency?
Energy efficiency is basically reducing energy consumption to perform the same task. The energy saved has a variety of benefits, such as the reduction in greenhouse gas emissions (GHG), reduction in energy demand and energy import, and lower energy cost in households and nationwide levels.
Looking from the other side, one may argue that since the majority of Nepal’s energy comes from hydropower plants, which is a form of renewable energy, energy efficiency doesn’t have to be a priority for us. However, we must realize that Nepal still imports 37.25% of its electricity from India, mainly produced from coal-fired plants. While a mix of renewable energy sources such as hydropower, solar, wind energy etc, will contribute to our self-reliance, energy efficiency is the cheapest and immediate way to reduce our import and cut-down on future power generation plants additions.
Lack of energy efficiency in public buildings, industries, and households results in lost opportunities for potential savings. At a household and industrial level, energy efficiency results in direct energy bill cost saving. For utilities, it may come as operation & maintenance cost savings of transmission & distribution networks. On a national level, the cost savings can be used to fund other priority projects.
According to the World Bank, typically up to 15% of energy savings can be achieved by taking advantage of low-hanging fruit (such as good housekeeping measures, including lighting retrofit, tune-ups, and equipment adjustments). Similarly, 20-30% energy savings can be achieved with tighter control, equipment upgradation, and equipment use optimization. Likewise, 35-50% of energy savings can be achieved by more capital intensive measures, such as equipment replacement and system redesign.
Where are we now?
The Ministry of Energy, Water Resources & Irrigation with technical assistance from GIZ has been promoting energy efficiency in Nepal since 2010 through the Nepal Energy Efficiency Programme (NEEP). The program provides expertise to the government for the establishment of policy frameworks, strengthen NEA’s power managing capability, the establishment of market for energy efficiency services and products, and supports the integration of energy efficiency in university education and vocational training.
In 2019, Nepal government prepared a National Energy Efficiency Strategy. The document recognizes the importance of energy efficiency to achieve sustainable development goals for medium-income countries by 2030. It sets a goal to double the average improvement rate of energy efficiency in Nepal from 0.84% per year (achieved between 2000 to 2015) to 1.68% per year in 2030. It describes its plans and activities towards this goal. However, even with this strategy in place, it does not quantify step-wise short-term activities. Furthermore, the document emphasizes the need for policy, legal, and institutional frameworks to recognize energy efficiency as an additional source of energy and remove potential barriers in energy efficiency promotion. Clearly, we have a long way to go to see energy efficiency practices across different sectors.
Who can lead?
With the vision to achieve energy efficiency at all local, provincial and federal levels, instead of gobbling this mammoth of a task, it’s better to take small bites, then reassess the plans and build on it for wider adoption. Let’s take a top-down approach, going from public building and transitioning to a wider market. Let public buildings become the catalyst for the initial success of energy-efficient practices and set the stage for market transformation throughout the economy. Starting with public buildings will be a relatively easier implementation process for the government than aiming for wider market adoption immediately. Later, this will eventually attract the private sector to enter the market. The large demand set by the public sector for energy efficiency appliances/purchasing will stipulate a competitive response in the market to provide products that meet the efficiency standards. Lastly, the large buying power of provincial & local levels will transform the market for energy-efficient products. The Alternative Energy Promotion Center (AEPC) has taken steps for energy efficiency in a few public institutions and engaged the private sector through consulting assignments. However, with the uncertainty in the economic downturn due to the COVID-19 pandemic, let’s hope these actions do continue to gain traction.
Public buildings can implement energy management practices, energy-efficient purchasing, and new & renovated buildings can adopt market-leading practices. However, the energy efficiency strategy must have measurable goals & metrics with a specified timetable. This initial lead taken by the public sector will eye toward the long-term goal of market transformation.
Barriers
Understanding barriers to improving energy efficiency in public buildings will enable policymakers to identify the most effective policy and programmatic tools for overcoming them. Firstly, the cost of energy-efficient appliances are generally higher than inefficient appliances and there is a lack of understanding of the life-cycle cost of inefficient appliances, which may prove that inefficient appliances can be more expensive in the long run. Furthermore, inefficient appliances manufactured or imported without adhering to energy efficiency standards may pose a safety risk to the user. This may come as the installation of inefficient components that consume power and produce heat even during times when the appliance is not in use.
Secondly, if government agencies are not responsible to pay for their electricity or gas bills, it gives them minimum incentive to pursue energy-efficient methods.
Thirdly, there is limited information and awareness about potential energy-saving opportunities in public buildings.
At last, there is a lack of technical capacity to undertake energy efficiency tasks and the availability of energy-efficient products & services in Nepal.
Overcoming the barriers
There are a number of important elements that need to be in place for energy efficiency strategy to be effective. First of all, we need the strong support of senior government officials who will provide continuity and leadership to the strategy even after a turnover in elected officials and/or government staff. Currently, even though the government has prepared a National Energy Efficiency Strategy document, there has been no evidence of senior government officials mandated to lead energy efficiency across sectors in Nepal. Furthermore, the government should delegate responsibility at a federal, provincial, and municipal level to implement programs and seek assistance from other agencies on technical assistance, information collection, reporting & fund allocation. Regular reporting & progress tracking must be in place and make the lesson learned available to the energy efficiency community and the broader public. The overall approach should follow a cyclic flow of Vision → Strategy → Planning → Communication → Implementation → Results → Reports and cycle back to Vision.
It is important that initial policies set by the government are flexible. The government may grant legal authority to federal, provincial, urban and rural municipalities to contract energy companies to implement projects using energy performance contracts or equipment leasing agreements. Government bodies may, through public-private partnerships, attract private capital through the outsourcing of service & management contracts to upgrade the operational efficiency of municipal buildings, street lights & other public infrastructure. In addition, government bodies can be made to pay their energy bills which drives them to reduce their energy loss and adopt energy efficiency practices.
On the ground level, targets of energy audits, energy metering, monitoring, data collection, and reporting systems should be in place, and benchmarking public buildings in comparison to other buildings should be done. Furthermore, to increase awareness among the public, public buildings should organize awareness programs demonstrating energy efficiency practices as an example.
Another thing that is quite ignored in program implementation is the practice of reward. A reward is an important catalyst for change. Rewarding government bodies that have successfully adopted energy efficiency policies by providing incentives, recognition, allowing bodies to retain part or all of their energy costs can go a long way to facilitating the transition from the public sector to the entire market.
At an initial stage, it is important to be flexible and make revisions on energy efficiency strategy from the success & failures of earlier plans. Similarly, it is crucial to leverage co-benefits recognizing other motivations for energy efficiency which may be cost savings, GHG emission reduction, improved comfort of health, and job creation.
A successful example from Mexico
One of the successful example of setting achievable goals in pilot programs comes from Mexico. The Mexican government implemented a program called “100 Public Buildings”, managed by the national energy efficiency agency, CONAE (Comision Nacional para el Ahorro de Energía).
Under the program, CONAE provided training and technical assistance to building operators of 100 public buildings to gather data and conduct their own assessments. The program supported technical energy-saving measures (eg. equipment upgrades) and operational measures (eg. turning off unnecessary lights). With this program, CONAE achieved a 21 percent reduction in electricity consumption in most buildings with payback periods in the range of 17 months.
The success of this program led to the Energy Minister authorizing the Administración Pública Federal (APF) program. Starting in 1999, all federal buildings over 5,000 square meters were required to perform energy audits, and to implement cost-effective retrofits. This mandate was later expanded to include buildings as small as 1,000 square meters. By the end of 2005, nearly 2,300 buildings, or roughly 6.6 million square meters of floor space, had complied.
Way forward
Nepal government has set encouraging targets in the energy sector and has taken initial steps towards energy efficiency by creating the National Energy Efficiency Strategy in 2019. It cannot be stressed enough that these actions can only prove successful if they are diligently implemented and monitored. One thing that our recent history has shown across different sectors, is the showcasing of a ‘perfect’ plan on paper which doesn’t get implemented properly. Let’s correct that reputation. Now we need to push ahead, the government can take lead by implementing energy efficiency strategy at public buildings first. This task will require defining energy efficiency standards in building codes & electrical appliances, conducting training programs for energy efficiency practices, setting quantifiable targets for energy audits, partnering with the private sector to develop human skillset, benchmarking and setting an action plan for public buildings, monitoring the progress, reviewing the energy efficiency plans and eventually setting the path for the market.
In the long run, wider adoption of energy efficiency practices in the market will mean direct cost savings at a household level and economical at a nationwide level. This way we will reduce our energy imports and cut-down on future power generation plant additions. As a country, we will benefit by using energy in a sustainable manner and become self-reliant. These reasons make energy efficiency practices even more worthwhile anticipating economic conditions ahead of the COVID-19 pandemic.
Good information.