Monday, April 22, 2019

Government, World Bank launch new project to scale up renewable energy options

The government and the World Bank signed an agreement today to scale up renewable energy options in selected regions of Nepal in partnership with private sector. The agreement was signed by joint secretary at the Finance Ministry Shree Krishna Nepal and acting country manager Bigyan Pradhan on behalf of their respective institutions.
Total of $17.21 million will be spent during four-year period of the Private Sector-Led Mini-Grid Energy Access Project, of which the World Bank will finance total of $7.61 million (approximately Rs 845.2 million) through its Strategic Climate Fund (SCF) comprising of SCF Grant of $5.61 million and SCF soft loan of $2 million. Similarly, the government will contribute subsidy of $6 million and the remaining $3.60 million will be contributed by the private sector. The project will provide renewable energy to 126,000 rural people and support more than 80 businesses through micro/mini-hydro and solar subprojects in Nepal’s rural areas. The project will be implemented by the Alternative Energy Promotion Centre (AEPC), the government's nodal agency for renewable energy promotion in Nepal.
"We are thankful for the support of the World Bank in launching this milestone project to encourage commercial financing of renewable and off-grid energy systems in Nepal," Nepal said, adding that the project will demonstrate that the private sector led model is feasible in mini-grid development and the government is committed to engage private sector in development.
Under the Project, private entities and cooperatives will be mobilised to provide electricity services to rural areas as 'energy service companies' (ESCOs). These specialised ESCOs will crowd-in financing capacity to develop, build, own and operate renewable mini-grid projects. The commercial banks are a key partner who will assume credit risk of the subproject loans to ESCOs once they are eligible and selected to participate in the project by AEPC. The credit facility component of the project is in turn supported by a technical assistance component for stronger project development support to the mini-grid sector, ESCOs and partner banks to ensure sustainable implementation beyond the life of the project.
"Maximizing finance for development is an important element in Nepal’s growth trajectory,” said World Bank acting country manager for Nepal Bigyan Pradhan. "By encouraging the participation of the private sector, this project motivates a business approach to improve energy access while supporting the government’s efforts to provide clean and efficient energy options to rural communities," he added.
The government accords high priority on the renewable energy sector and the World Bank Group supports the government’s energy sector through investments in both grid and off-grid energy and energy efficiency programmes.
This project aims to support more than 25 mini-grid subprojects and add new generation capacity of 3.8 MW, while rehabilitating and restoring the capacity of existing mini-grids.
The improved policy environment through the government’s Renewable Energy Subsidy Policy 2016 and the effective implementation of this project are expected to create opportunities for this model to succeed in providing energy access to Nepal’s rural areas.

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