Introduction

• Context and objective of the study

• Overview of Nepal's development context

• Development

• Energy

• Rural energy development programme (REDP)

• REDP in Nepal

• Costs and investments for REDP's MHS programme

The aim of this study is to quantify the development benefits of electricity access and to assess how electricity access contributes to the achievement of the millennium development goals using Nepal as a case study. Nepal is one of the poorest and least developed countries, with marked disparities between rural and urban areas; it is also emerging from a period of internal unrest. Access to electricity remains very low, especially in rural areas, where only 34 per cent of the population has access to electricity. To boost development in rural areas, the Government of Nepal is emphasizing the provision of decentralized energy systems such as micro-hydropower, solar PV home systems or improved cooking stoves. Its Rural Energy Development Programme (REDP) operates not only in the provision of hardware but also in wider development activities through community mobilization.

Context and objective of the study

Access to modern energy services is essential for poverty reduction and sustainable development. Living without modern energy services significantly compromises progress towards the MDGs, including those relating to poverty reduction, child and maternal survival, education, gender equity and environmental sustainability. Yet 2.7 billion people still depend on traditional biomass for cooking and heating, and 1.4 billion people have no access to electricity (IEA, UNDP, UNIDO, 2010).

Access to modern energy services to meet the basic development needs of poor people must be a top priority on the international development agenda. Those needs include:

• modern fuels and devices for cooking;

• electricity for health clinics, schools and public lighting;

• mechanical power for basic agricultural and food processing, and water pumping;

• energy for cottage- and micro-enterprises; and

• household electricity for illumination and communication.

Such services can drastically expand poor people's opportunities and choices for development. They also help to develop social, economic and environmental capital, which are essential for people faced with adapting to the increased risks from climate change.

Recognizing the fundamental role of energy for sustainable development, a recent report issued by the United Nations Secretary General's Advisory Group on Energy and Climate Change (AGECC) has called on the United Nations system and its Member States to commit themselves to ensuring universal access to modern energy services by 2030 (AGECC, 2010).

In order to ensure that new investments in energy access programmes are cost effective and actually provide the expected development benefits, it is critical for policy makers and practitioners to understand what works and what does not work, and where their efforts should best be concentrated. Evaluation of the impacts of energy initiatives allows for comparisons between different approaches in terms of delivery of results, and provides a more solid basis for prioritizing programmes and developing successful policies.

It is particularly important to document the development benefits of decentralized off-grid electrification systems, because the relatively high up-front costs have often deterred governments from investing in these systems (Box 1). To date, analysis of the impacts of decentralized off-grid electrification models has been scarce and there is a knowledge gap in terms of exactly what levels of development benefits they deliver to communities.

This study aims to fill the knowledge gap on the development benefits of off-grid electrification systems by providing an assessment of impacts from such programmes, and showing that the benefits from investing public and private funding in this area far outweigh the costs.

The main objectives of this study of the Nepal national micro-hydropower programme are to:

• quantify the benefits of access to off-grid electricity in remote rural villages. The study assesses the development benefits of electricity from Nepal's national micro-hydropower programme (popularly known as the Rural Energy Development Programme), which is executed by the Alternative Energy Promotion Centre of the Government of Nepal with support from UNDP, the World Bank and other partners. It also examines the benefits of expanding access to electricity using micro-hydropower systems as an entry point for rural development.

• demonstrate the linkages between electricity access and the MDGs. The study seeks a better understanding of the various MDG-related development benefits of expanding access to electricity based on decentralized off-grid models. A previous report produced by Winrock International Nepal (2007) assessed the development impacts of the Rural Energy Development Programme, which provides a wide variety of energy systems (e.g. solar household systems, improved cooking stoves, and biogas), with regard to MDG-specific indicators; however, it did not quantify the development benefits derived specifically from expanding access to electricity.

• highlight lessons learned and provide recommendations to policy makers. The study provides important information and recommendations for policy makers and development practitioners seeking to expand energy services to enhance economic growth in rural communities and accelerate progress in meeting MDG targets.

Overview of Nepal's development context

Development

Nepal is among the world's poorest and least developed countries. The Human Development Index 2007 ranks Nepal 144th out of 182 countries (Table 1; UNDP, 2009).

Rural-urban disparities are still large in Nepal. Urban poverty stands at around 10 per cent, compared to about 35 per cent in rural areas, where 85 per cent of the people...