EnDev Nepal

In the right time for the celebration of the Nepali festival of lights (Tihar) the first 4 Micro Hydropower (MHP) Plants which have been supported by an Energising Development (EnDev) Nepal-initiated credit scheme have brought power and light to rural communities. The communities have received loans from the MHP Debt Fund which is implemented in partnership of Alternative Energy Promotion Centre (AEPC) and GIZ. It is an important step in moving from a subsidy to a credit-based rural energy financing.

The 4 plants in operation are Khani Khola in Kavre District (20 kW), Thulo Khola in Okhaldhunga District (50 kW), Swara Tap Khola in Khotang District (30 kW) and Chari Khola in Rammechhap District (80 kW) and have provided electricity to more than 7,500 persons (1,370 households).

Despite available subsidies for off-grid electrification especially through Micro Hydropower by the Nepali government for decades there is still a substantial funding gap for local communities or private developers due to high initial investment costs. Local financial institutions and commercial banks could fill this gap and many MHP plants would be also economically viable.

In order to bring the private sector into financing MHP in Nepal, EnDev Nepal seeks to build partnerships between banks and local micro finance institutions in a way that they act as the bank’s local agents in rural areas and making them familiar with rural energy finance. The Micro Hydropower Debt Fund (MHDF) has been set up and tendered out to two Nepali commercial banks (Clean Energy Development Bank and Himalayan Bank) acting as fund managers to speed up rural electrification by providing credit for viable MHP projects.

Contact: Roman.Gruener@giz.de