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Low Carbon Economic Development Strategy of Nepal and energy/GHG emission scenarios of Residential Sector in Kathmandu Valley, Nepal
(National Workshop on Eco –efficient Water Infrastructure for Sustainable Development in Nepal, 15 -16 October 2014)
Amrit Man NakarmiProfessor & Coordinator
Energy Systems Planning and AnalysisCenter for Energy Studies, IOE/TU
ADAPT - Nepal15 October 2014
Main Outline• Overview of energy sector• Use of petroleum products in generating
electricity• Economic impacts of growing dependence on
fossil fuels• Nation’s avoidable costs and benefits• Levelized electricity costs of captive gensets• Future energy/GHG scenarios of the country
and the Kathmandu Valley Nepal• Some major strategies for low carbon
economic development 2
OVERVIEW OF ENERGY SECTOR
3
Biomass85%
Petro-product9%
Coal3%
Grid Elec2%
Mod Renewables
1%
Fuel Mix
Current Energy Overview
Total Energy Consumption in 2010: 410,000 TJI TJ = 23.89 toe (MOF, 2012; WECS, 2010)
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Residential87%
Transport6%
Industrial5%
Agriculture1%
Commercial1%
Sectoral Consumption
Total Energy Consumption in 2010: 410,000 TJI TJ = 23.89 toe (MOF, 2012; WECS, 2010)
5
Current Energy Overview
Per Capita Electricity Consumption in 2012
3,475
760447 527
280119
893
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
China India Pakistan Sri Lanka Bangladesh Nepal Asian Aver
kWh
Norway: 23,656 kWh/capita
6
Key World Energy Statistics, IEA, 2014
HDI and per capita electricity consumption (ADB, 2007)
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2,000 KWh per capita is needed to achieve HDI of 0.8. Nepal is currently at HDI of 0.5.
Energy systems analysis
8
Power capacity development: historical trend
NEA, 2012
Energy systems analysis
9
Sales of Petroleum Products from 1994 to 2010
Imports of Captive Generating sets (MW)
10
5661 64
69
0
10
20
30
40
50
60
70
80
2009 2010 2011 2012Calculations based on TPC statistics, 2012
Petroleum Products Imports in monetary terms ( 2004 – 2013)
11-
20
40
60
80
100
120 20
04
2005
2006
2007
2008
2009
2010
2011
2012
2013
NR
billi
on
NOC, 2014
Average annual growth rate
20%
Import cost: 6% of GDP
Use of petroleum products for electricity generation
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Use of Petroproducts 17%
Use of diesel in Kathmandu* 60%
* : From total diesel consumption in Kathmandu (Clean Energy Nepal, 2013)
Historical trend of Petro Imports vs. Exports
(Source: MOF, 2014; NOC, 2014)
13
24%32%
41% 42%50% 49%
78%
107%
133% 131%
152%*
0%
20%
40%
60%
80%
100%
120%
140%
160%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
* : Expected in 2014
Crude Oil Price in future
14
WEO, 2008, IEA
Household Fuel Economics• Cooking on electricity has become the cheapest recently for
an urban household even with the hike of 20% in the electricity tariff in July 2012.
• To completely substitute the LPG imports in Nepal requires 850 MW extra thus saving imports by NR 25 billion annually (2014).
Year Kerosene LPG Electricity
1997 180 350 6052000 270 410 6802003 340 510 7902014 1,760 1,030 1,012
Monthly Life Cycle Cost of Cooking in an Urban Household15
Econ.cost:NR1,430
NR 9.50/unit
LPG in remote villages From firewood to LPG
16
Can we sustain this
kind of trend?
Historical Growth in LPG imports
17
-
50,000
100,000
150,000
200,000
250,000 19
95
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
MT
CAGR of LPG imports: 17%;Doubling every 5 years
Nation’s Avoidable import costs (2014)
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Petro products for electricity* 20 Billion NR
LPG imports 25 Billion NR
Based on NOC data, 2014
*: Expected in 2014
0.0
10.0
20.0
30.0
40.0
50.0
60.0
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Sher
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all
Pres
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King
fishe
r
Reeb
ok
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
39.1
31.5
37.5
52.8
41.3
54.2
36.6
45.6 45.5
37.7 37.2 37.4 38.7
46.5
37.9
47.1 46.2
41.438.4
33.0
54.7
40.6
58.3
Individual Levelized Electricity Cost (LEC) NRs/kWh at Durbar Marg
(Neupane et al, CES/IOE, 2011)Electricity costs: NR 31.50 to 58.30/unit
Electricity cost at Thamel, 2012
20(Bhandari et al., CES/IOE, 2012)Electricity costs: NR 29 to 80/unit
Comparison
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*: Based on US$ 1,600/kW
Assumed installed capacity DG sets 700 MWNeeded Hydropower plant toreplace DG sets 180 MWHydropower cost* 26 Billion NRPayback period More than 1 year20 year fuel import savings 400 Billion NR
Useful Energy Demand
Agricultural Sector Commercial Sector Industrial Sector Residential Sector Transport Sector
Base Year 2010
Development policies
Social Data
Economic Data
Technological Data
MAE
D
Constraints
Process Technologies
Conversion Technologies
End-use demand technologies
Energy Resources
Scenario Analysis Framework
22
ANSWERMARKAL
Economic Growth/demographic Scenarios
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• 4.4% GDP Growth
Low Economic Growth
• 5.6% GDP Growth
Medium Economic Growth
• 6.5% GDP Growth
High Economic Growth
• 9.2% GDP Growth
DC Economic Growth
Population growth : 1.4%
24
Policy Scenario Analysis
Agriculture-Electrification
Commercial-Electrification-Efficient Technology
Industrial-Electrification-Efficiency Improvement
Residential-Electrification-Efficiency Improvement
Transportation-Mass Transportation-Electrification-Biofuels
2010 2020 2030
LOW 104 143 256
MED (BAU) 104 145 277
HIGH 104 149 304
COMB Policy Intervention
(LESO)104 263 628
DC* (HIG) 104 151 391
DCI*(LEHI) 104 279 94525
Per capita Electricity consumptionkWh per capita
•: GDP growth as per approach paper for graduation from LDC to DC by 2022, NPC.•DCI: scenario with GDP growth rate at 9.2% (CAGR) with policy intervention
2010 2020 2030
LOW 1,272 1,496 3,868
MED (BAU) 1,272 1,975 4,131
HIGH 1,272 2,015 4,472
COMB (LESO) 1,272 4,061 11,537
DC* (HIG) 1,272 2,051 5,605
DCI* (LEHI) 1,272 4,325 17,726
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Power Plant requirementMW
* : GDP growth as per approach paper for graduation from LDC to DC by 2022, NPC.
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-2 4 6 8
10 12 14 16 18 20
2010 2015 2020 2025 2030
mill
ion
tons
GHG emissions
BAULESOHIGLEHI
2010 2015 2020 2025 2030 ReductionBAU 4 5 7 9 13 -LESO 4 5 6 7 8 42%HIG 4 5 7 11 18 -LEHI 4 5 6 8 10 43%
Investment Analysis
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Total Technology Cost (million NRs) (2005 Constant Prices)
2015 2020 2030
BAU 35,299 26,418 30,838
Capital investment on % of GDP 5.00% 2.50% 1.60%
LESO 52,849 55,550 92,732
Capital investment on % of GDP 6.70% 5.30% 5.00%
HIG 33,460 26,120 42,829
Capital investment on % of GDP 4% 2% 2%
LEHI 50,961 56,973 140,384
Capital investment on % of GDP 6% 5% 5%
ENERGY AND GHG EMISSION SCENARIOS OF RESIDENTIAL SECTOR OF KATHMANDU VALLEY, NEPAL( RAJBHANDARI, U. AND NAKARMI, A. M., 2014)
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Kathmandu Valley
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• Major urban center of Nepal • 9% of total population (CBS, 2012) • Fastest Growing urban agglomerate in South Asia [AGR 4.35%]
(Muzzini & Aparicio, 2013)• Major user of commercial energy resources (WECS, 2010)
Energy Consumption (Kathmandu Valley-2013)
31Year 2013/14(Calculation from
sample survey conducted in 2013)
7500 TJ
Energy Consumption (Kathmandu Valley-2013)
32Year 2013/14
(Calculation from sample survey
conducted in 2013)
7500 TJ
Scenarios
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BAU Business As Usual
- Follows current trend of technological shares
AEL All Electrification
- Total Electrification in all major enduse
MFA Modern Fuel Access
- Access to modern fuels replacing conventional
GCP GHG Cap
- GHG Emission in future no more than of base year
CCP Carbon Cap
- CO2 Emission in future no more than of base year
Final Energy Demand
34
GHG Emission
35
Strategy for materializing the low carbon economic development strategy• Electrification and Energy Access
• Develop hydropower plants (both RoR and Storage) to meet the enhanced demand
• Access to modern energy resources - electricity• Promote electricity operated small
appliances, machines, in selected possible sectoralend-uses.
36
Strategy for materializing the low carbon economic development strategy
• Energy Efficiency• Efficiently utilize of available biomass resources• Promote the use of modern bio-energy generation• Substitute the present unsustainable use of TE with
modern, renewable, indigenous energy sources• Promote efficient electric technologies to substitute less
efficient and high GHG emitting technologies
• Renewable Energy• Create awareness about RET;• Formulation of appropriate legislative tools• Expand appropriate RET installations at every level• Ensure implementation and monitoring of RET plans and policies.• Uplift national economy through grid connection.
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THANK YOU ! ! ! 38