Grid-connected solar irrigation in Nepal

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Summary

The Alternative Energy Promotion Centre (AEPC) offers subsidies for off-grid Solar Irrigation Pumps (SIPs) to promote sustainable irrigation practices. The utilization of these off-grid SIPs is low due to irrigation demand patterns. The potential for grid-connected solar irrigation is increasing as Nepal’s national utility grid network grows. Nevertheless, despite net metering regulations, off-grid SIPs are not integrated into the national grid. The Swiss Agency for Development and Cooperation (SDC) is implementing a pilot project called Solar Irrigation for Agriculture Resilience in South Asia (SoLAR-SA). The project aims to explore grid-connected solar irrigation and answer policy questions on the best techno-institutional model for grid integration in Nepal. Collaboration among major stakeholders during the implementation of pilot projects will contribute to developing guiding policies for grid-connected solar irrigation. Establishing specific policies for net metering targeted at agriculture meters is crucial for the scalability of grid-connected solar irrigation.

Introduction

Nepal has about 1,337,000 hectares of irrigable agricultural land in its southern Terai region, with only 18% currently irrigated using groundwater. Traditionally, diesel pumps dominated the irrigation market. To promote sustainable practices, the Alternative Energy Promotion Centre (AEPC) offers a 60% subsidy for Solar Irrigation Pumps (SIPs). These SIPs, mostly 1-2 horsepower systems, are popular among farmers due to their zero operational costs compared to diesel pumps. However, the subsidy budget is insufficient to meet the growing demand, necessitating a scalable business model for solar irrigation​​.

Opportunities

Grid-connected SIPs present a significant opportunity to increase energy efficiency and reduce costs. Grid connection enables better utilization of the plant’s energy, lowering Levelized Energy Costs (LEC) and addressing groundwater over-abstraction issues by feeding excess energy into the grid. With the expansion of the Nepal Electricity Authority (NEA) grid, the gap between grid-connected and off-grid areas is decreasing, presenting a timely opportunity for GCSI​​.

Challenges

Despite the potential, GCSI in Nepal faces several challenges:

1. Institutional Gaps: AEPC’s mandate is focused on off-grid areas, while NEA prioritizes major hydropower projects and increasing energy consumption. There is no clear government institution leading GCSI initiatives, creating a significant gap in national-level project oversight​.
2. Economic Disincentives: The current net metering policy offers a rate of NPR 5.94/unit, primarily for institutional solar rooftop projects. In contrast, agricultural meters have a subsidized rate of NPR 2.3/unit for the NEA to sell energy. This discrepancy discourages NEA from buying surplus energy from SIPs, as it would incur a financial loss​​.
3. Technical and Procedural Barriers: Implementing net metering in rural areas is complicated by the lack of experience and procedural clarity among local NEA offices. Additionally, there is ambiguity regarding the type of farmer user group eligible for bi-directional agriculture meters.
4. Social Dynamics and Ownership: Transitioning from individual to community-level systems raises questions about system ownership and the social dynamics involved in maintaining the community’s commitment to pay electricity bills and share net metering income fairly​​.

Pilot Projects and Policy Recommendations

To address these challenges, the Swiss Agency for Development and Cooperation (SDC) is implementing a pilot project under the Solar Irrigation for Agriculture Resilience in South Asia (SoLAR-SA) initiative. This project aims to explore the best techno-institutional model for GCSI in Nepal. The pilot involves collaboration between IWMI, AEPC, NEA, and local governments, focusing on capturing learnings to develop guiding policies for GCSI​​.

Way Forward

For GCSI to be scalable, two key issues must be addressed:

1. Policy Development: Specific policies for net metering targeted at agriculture meters need to be established, and tariffs should be set accordingly to avoid financial and technical burdens on NEA.
2. Pilot Implementations: Major stakeholders need to implement several pilot projects of varying sizes to gather data and insights. These pilots will help tailor net metering guidelines for GCSI and ensure a sustainable and scalable model​.

Conclusion

Grid-connected solar irrigation holds promise for sustainable agricultural practices in Nepal. However, realizing this potential requires addressing institutional gaps, economic disincentives, technical barriers, and social dynamics. Through targeted policies and collaborative pilot projects, Nepal can develop a robust model for GCSI that benefits farmers and the national grid alike.

Suggested citation

Shrestha, S., Gnawali, S., Mukherji, A. (2022). Grid-connected solar irrigation in Nepal – Exploring opportunities and identifying hurdles. IWMI Issue Brief.