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Strategic Elements for Development of Mini- and Micro- Hydro Power
Kamal Rijal, Ph. D.
Renewable Energy Specialist
International Centre for Integrated Mountain Development (ICIMOD)
P. O. Box 3226, Jawalakhel, Kathmandu, Nepal
Tel: 977-1-525313; Fax: 977-1-524509
Email: krijal@icimod.org.np
Abstract
Mini- and Micro Hydro Power (MMHP) plays an important role in terms of meeting domestic, commercial and industrial energy demand with the conversion of potential energy into mechanical energy and then converted to produce electricity. Number of initiatives have been taken within the Hindu Kush – Himalayan Region to promote MMHP plant for the social well being of the people living in remote and inaccessible mountain areas, but it still faces technical, managerial, and financial problems due to lack of holistic approach for the promotion of MMHP. The paper put-forths the strategic elements for development of MMHP in the mountain areas so that it plays a lead role to diversify mountain economies, to improve the productivity of mountain areas and to reduce the existing environmental damages of the eco-system. Besides these, MMHP has potential to reduce prevailing drudgery and health hazards of mountain population specifically of women and children. These strategic elements are: a) provision of electricity must be conceived as a social obligation to improve the living standards of the population residing in inaccessible and remote mountain areas; b) proper assessment of costs and benefits of MMHP; c) enhance the economics of MMHP through cost reduction efforts as well as end-use diversification; d) promote the role of private sector by providing suitable incentives packages to attract entrepreneurs; and e) Link mega-power project development with decentralised energy systems to ensure the market for suitable decentralised renewable energy technologies (RETs).

1. BACKGROUND

The energy needs of mountain areas can be satisfied by increasing supplies of traditional fuels (reforestation, energy plantation, upgradation of biomass fuels), by increasing the energy efficiency of end-use device (e.g.., cooking, heating, lighting and processing), and by numerous renewable energy technologies (e.g., micro- & mini-hydro, solar, wind, biomass) as well as conventional energy technologies (e.g., diesel engine, motor, generator).
Hindu Kush – Himalayan (HKH) Region has a long history of hydropower use, in the form of prayer wheel (known as ‘Mani Khorlo’ in Bhutan and Tibet), and traditional water wheel (known as ‘Ghatta’ in Nepal and ‘Gharrat’ in India). The first efforts to modernize ‘ghatta’ or ‘gharrat’ started in the sixties. There is an immense potential for development of MMHP within HKH region that has number of rivers and streams criss-crossing its mountainous terrain.
Mini- & Micro Hydropower (MMHP) schemes combine advantages of large hydro on the one hand and decentralized power supply, as with diesel sets, on the other. They do not have many of the disadvantages, such as costly transmissions and environmental problems of large hydro plants, and dependence on imported fuel and the need for highly-skilled maintenance personnel. Moreover, the harnessing of small hydro-resources, being decentralized, leads to decentralized use and local implementation and management, thereby making rural development possible through self reliance and the use of local natural resources.
The energy of micro-hydro plants is best used when the larger part is consumed on the spot as mechanical energy, without the intermediary of electricity generation and transmission. This is applicable to decentralized agro-processing, sawing and water lifting. MMHP units solely for electricity generation for the local consumption are often not economical because of the high unit costs. Instead of this, grid-connected system or system-based on utilization of power for productive purposes may be financially attractive for the private investors.
The primary application of MMHP is to provide power or electricity for motive-power application, illumination (i.e., light) and to operate electrical appliances in remote, inaccessible mountain areas. In some areas, cooking and heating needs are also being met with the use of electricity. Besides this, the electricity produced can also be fed into the decentralised grid or national grid network.

2. NEEDS AND RATIONALE FOR PROMOTING MMHP

Conceptually, energy must be viewed as a means of fulfilling the social and economic objectives of the mountain population. In this context, the development of energy is essential primarily for four distinct reasons. First, the minimum level of energy services required to meet the basic needs of the communities, such as cooking and space heating, is of prime importance and must be ensured. Second, provision of energy is essential to meet the social objective of alleviating human drudgery (particularly that of women, children and economically poorer section of population). Third, energy services are also required to sustain and support economic activities (newly emerging or traditional ones). Finally, the development of energy supply infrastructure should be conceived in such a way that it plays the leading role in increasing the productivity of mountain areas thereby increasing the economic efficiency of the resource use.
The quantity and quality of energy services required in the mountains is quite low due to the scattered settlement pattern and lack of infrastructural development and diversification of economies. At the same time, the extension of grid electricity in the mountain areas is not economically feasible. Besides this, suitability of a particular energy resource and technology needs to be judged not only from the quality and quantity of energy services required but the physical environment too, so as to maximise the social and economic benefits. It is therefore desirable to take into consideration of mountain specificities such as inaccessibility, fragility, marginality and diversity as it provide condition for feasibility and suitability of certain types of energy technologies. The opportunities that exist in the mountains include the huge potential for the utilisation of hydropower along with indigenous technical knowledge systems to operate local institutions.
These arguments, together with the fact that mountains are extremely scale-sensitive due to their fragile nature makes MMHP as one of the suitable option among various options available for the provision of energy in rural mountain areas, which exploit the indigenous energy resource base and knowledge system by appropriately integrating local management skills. Also, the small-scale interventions in mountain communities are also less risky compared to large-scale interventions, be they road or dam construction.
The provision of mechanical and/or electrical energy from MMHP schemes will help to increase the living standards of the mountain people as well as to rectify the ecological imbalance. For example, MMHP schemes could contribute to (See chart 1): a) the substitution fuelwood for cooking and heating specifically in the commercial sector and agro-based rural cottage industries such as hand-made paper making, processing of raw wool and weaving activities, etc.; b) the reduction of human drudgery, specially of women and children, by substituting manual agro-processing units; c) the increase in income generating activities ; and d) the reduction of emission of the oxides of carbon as well as the rate of deforestation.

3. STATUS OF MMHP IN MOUNTAIN AREAS

Many programmes have been initiated within the HKH Region during the last two decades to promote and disseminate MMHP both by the government and private sector. Donor communities have also shown commitment to promote MMHP sector by way of capacity building and funding. The overall status of the MMHP sector within the countries of the HKH Region is briefly enumerated in the following paragraphs.
In China, about 43,000 plants of less than 500 kW has been installed with the generating capacity of 6,500 MW by the end of 1996. Most of these MMHP schemes are installed, owned and managed by decentralised administrations of counties, townships or villages. The State Council of the Chinese government initiated a special rural electrification programme to promote MMHP and small hydropower (SHP) in some specific counties about 15 years ago. The authority was delegated to county administration to exploit water resources to meet their own energy needs. At present, more than 300 rural counties (out of the total of 2,300) have MMHP or SHP as the main source of supplying electricity. Another 400 counties also mainly depend on SHP for electricity.
Chart 1: Energy Induced Enterprise Development: The Case of Barpak Micro-hydropower Scheme

End-use Benefits


The programme is continuing and more counties would be electrified through MMHP and SHP schemes. It is interesting to note that electricity is not only being used for lighting but also for industrial applications, irrigation schemes, and for cooking. One of the distinct phenomenon is that the installation of micro-sized plants have actually decreased in number while the larger capacity plants have been increasing in recent years.
In India, there are very few MMHP plants mainly because permissions are required to be obtained from State Electricity Board (SEB) and Forest Department to set up a private hydropower scheme of any size. Two NGOs, namely, Ladakh Ecological Development Group (LEDeG), and Himalayan Environmental Studies and Conservation Organisation (HESCO), U.P. have so far installed about 60 units in 5 to 50 kW range, which are then handed over to the communities for operation. About 20 MMHP plants are expected to be installed in the North East India under UNDP-GEF assisted Hilly Hydro Project of the Ministry of Non-Conventional Energy Sources (MNES). It is a project with total cost of US$ 15 million over a period of three and half years due to end in 1998. It is hoped that successful completion of this project would bring about fundamental changes in the implementation policies and processes for the benefit of remote and marginalised mountain communities.
In Nepal, about 1,000 MMHP plants have been installed. Only about three percent of the plants have sizes higher than 20 kW. There are about 400 units of pico-sized plants called ‘Peltrics’ for electricity generation between 0.5 – 3 kW. The power produced is used by 5-10 adjacent households mainly for lighting. The Government provides subsidy of 50% to 75% on electrical component of MMHP. The higher level of subsidy is applicable for remote mountain areas. Most of the MMHP plants are installed by local entrepreneurs on their own initiative and apply for loan available from the Agriculture Development Bank/Nepal (ADB/N) at an interest rate of 17%. Most of these units are mainly installed for agro-processing as commercial ventures, except Peltrics. Nepal now has a sizeable indigenous micro hydropower (MHP) industry. At present, there are eight different manufacturers located in Kathmandu, Butwal and Biratnagar. The quality of the design as well as production has also improved significantly during the last two decades. Many design improvements have also been brought about through R&D; especially in collaboration with some international agencies.
In Pakistan, primarily the community owns MMHP plants. Three agencies, namely, Pakistan Council of Appropriate Technology (PCAT), Aga Khan Rural Support Programme (AKRSP) and Chitral Area Development Project (CADP) are promoting the installation of MMHP. PCAT provides 60% subsidy and other two agencies provide up to 95% subsidy. PCAT has so far installed about 200 plants over a period of 22 years. The largest sized unit installed is about 50 kW. The failure rates are reported to be quite high, particularly for the PCAT installed plants. There is no stated requirement for seeking approval from anywhere to install MHP plant, but both Federal as well as provincial governments has been supporting these programmes. Yet, the agencies responsible for rural electrification simply ignore the existence and contribution of MHP. This is in spite of the fact that in Chitral District about 30% of the population receive electricity from MHP installations.
Positive developments have occurred in the field of MMHP in Nepal and India recently, while the business is as usual in China and Pakistan. The MMHP programme in Pakistan has been steady but without significant initiatives in the policies, programmes and implementation. In China also, the policies and programmes have remained the same, however the emphasis is on higher capacity range and installation rates have significantly increased during the past five years. In India, the two main initiatives have been announcement of incentives to private sector for the installation of SHP and execution of the UNDP-GEF Hilly Hydro Project. In Nepal, number of initiatives has been taken to promote MMHP sector. Some of these are: a) no license is required to installed MMHP up to 1000 kW; b) establishment of Alternate Energy Promotion Centre by the government to coordinate and promote renewable energy technologies; c) implementation of a UNDP sponsored project titled ‘Rural Energy Development Programme (REDP) with MHP as an entry-point for rural development; and d) number of INGOs is actively promoting the installation of MMHP by way of capital subsidy and capacity building.
Another important development was NORAD-sponsored project executed by ICIMOD for the development and promotion of MMHP in five countries of HKH region. The first phase of the project reviewed MMHP programmes and policies and identified problems and constraints in the promotion of MMHP. One of the main constraints identified was the lack of trained manpower in the MMHP sector.

To address this, the second phase of the project took up initiative to prepare five information manuals to be used by the field-based implementers. Four manuals such as; a) site survey and layout design; b) management and operations; c) installation and commissioning; and d) maintenance and repairs have been prepared and are being disseminated also in local languages for wider use.

4. ISSUES AND CONSTRAINTS OF MMHP

A number of issues and constraints have been identified and reported in the HKH Region. Some of these are technical, financial and managerial in nature and seem to be common to all countries of region, while policy and institutional issues are specific to one country to the other and are difficult to generalise. Also, the socio-cultural context is quite significant in the mountain areas where subsistence economy predominates. The major issues and constraints are outlined below.
High Costs and Inadequate Funding: The installation costs have been increased significantly during the past 20 years both in Pakistan and Nepal. However, the increases have been much higher in Nepal. For example. the present range of total plant cost is more than 2,000 US$ per kW, while it was not more than US$ 1,000 in early 80’s. Some of the stated reasons for these cost escalations are: relatively high transportation costs for newer plant, improved quality, inclusion of control equipment such as ELC and higher cost of imported materials. At present, rate of MHP installation in Nepal and Pakistan is less than 40 per year (not including Peltrics), which is too small to make a significant impact on the overall energy scene. Such a low rate of installation does not justify establishment of adequate institutions and other interventions such as R&D, training, monitoring/back-stopping and repair facilities. Therefore, the amount of funding must be increased considerably, so as to achieve an installation rate higher than 100 per year.
Low Power Utilisation and Incomes: One of the serious problem being faced by many MMHP schemes is the inadequate income; main reason for which is that power available from these plants is not utilise fully to generate reasonable incomes. There is a need for research and development and promotion of the innovative technologies needed locally, including cold storage and ice production, small dairy operations, rural transportation, wood carving and food processing. These developments will not only enhance the profitability of the plant by increasing the load factor but also bring positive changes in village economy through rural industrialisation.
Conflicts on Water Use and Multiple Use of Water: During the past five years, there have been many reports in Nepal about MMHP schemes facing water shortages or conflicts. This is mainly due to emergence of new irrigation schemes, a consequence of the shift from subsistence farming to commercial farming. Besides this, Water Resources Act of Nepal, 1992 gives priority for water use for irrigation. There is no provision in the Act with regard to compensating MMHP plant if water is diverted for irrigation scheme from the existing MMHP plant. Multiple use of water resources such as tail end use in irrigation and fish farming, trout culture in water canal, sprinkler irrigation in peltrics, etc. should be promoted in order to minimise conflicts in water use.
Inconsistency in Subsidy Policy: The subsidy on MMHP scheme varies not only among the countries of the region but also within the country. For example, some donors in Nepal have provided subsidy higher than the subsidy being given by the government. This has created a situation whereby the residents of other villages would also like to have a similar level of subsidy instead of trying to diversify end-use to enhance the plant load factor. No innovations can occur if a programme is fully subsidy-driven. Subsidy may only be justified in terms of promotional activities and creation of market rather than supporting technology-driven approach of improving quality of life.
Unhealthy Competition and Weak Marketing Strategies: A disturbing trend visible in MMHP sector is the formation of cartel by the manufacturers to maximise their benefits, as is reflected in the increasing cost of MMHP plant installation in some areas within HKH. At the same time, manufacturers are demanding a further increase in the level of subsidy for promotion of MMHP. In order to rationalise pricing and check avoidable rise in the cost of MMHP installation, it appears necessary that a suitable policy frame be worked out on a tripartite basis between the government, manufacturers and association of users’ group. Concerted efforts may be required to bring together the MMHP plant owners to agree on forming an association to protect their interest.
Inappropriate Feasibility Studies : An accurate project feasibility study and design is essential for any successful enterprise. The over ambitious projection of use of electricity by the villagers in the feasibility study is one of the main reasons for the failure. Similarly, unrealistic provision for maintenance of long earthen canal, inaccurate head/discharge measurement has led many micro hydro entrepreneur towards financial losses and often bankruptcy. Preparing a feasibility study it is important to recognise implications of making assumptions about socio economic set up, technical and managerial capability of the community, and market potential or load estimation.
Suitability of Management Practices: Privately managed MMHP plants are found to perform better compared to the community-based plant. That, however, does not imply that community-based MMHP plants should not be promoted. Community-based MMHP plant would be the only option in areas where private investors may not find them profitable, but the potential for MMHP development exists. The need is to improve management of such plants by making MMHP users’ groups more transparent and effective.
Lack of Technical Back-stopping and Monitoring: This is one of the main issues in the field of MMHP installation. Particularly in Nepal, as a bank is a financing agency, it monitors only from financial perspective, while manufacturers are by nature profit making entrepreneurs, their main concern being the sales’ volume of their micro-hydro equipment. It looks imperative that there should be a monitoring and backstopping agency for enhancing the technical and managerial capability of the micro hydro owner and manager.
Gender Issues: Since agro-processing, cooking and weaving activities are primarily done by women, use of MMHP is expected to have significant impact on saving women’s time, increasing their productivity and improving their health conditions. The installation of MHP has not only reduced the drudgery of women but also changed the division of labour of gender. For example previously only women were involved in grinding and husking operation but after the installation of MHP, the male family members also carries loads for processing.

Besides these, low quality of equipment, lack of quality control, incompetent operation and management skill and insufficient attention to repair and maintenance are a hindrance to the development of MMHP in the remote and inaccessible mountain areas.

5. STRATEGIC ELEMENTS FOR PROMOTING MMHP

A five-pronged strategy is conceptualized to enhance the effectiveness of MMHP promotion.

Provision of electricity as a social obligation: The government of HKH countries must show their commitment to improve living standard of the population residing in inaccessible and remote mountain areas. It is in this context that provision of electricity becomes social obligation as MMHP besides providing electricity has the potential to reduce drudgery of mountain women and children, and improve health and sanitary conditions of the households.

Proper assessment of costs and benefits: The existing distortions in economic and market prices of energy must be internalized in carrying out the economic and financial analyses of MMHP so as to promote healthy competition, based on economic merit rather than on hidden subsidies. Additionally, the measures, such as: a) improving rural development linkages; b) optimizing design standards, costs, and reliability; and c) encouraging local participation, have the potential for improving the viability of MMHP.

Enhance the economics of MMHP: It is unlikely that people will replace fuelwood with electricity without external intervention. These interventions could be in the form of education and awareness, reduced electricity tariffs, increased employment opportunities, and diversified use of electricity. Electricity has the potential for substituting fuelwood in agro- and forest-based cottage industries as well as replacing human labour in agro-processing activities and other income generating activities. End-use diversification, together with appropriate energy pricing, will also help to improve the load factor of the MMHP scheme and thereby reduce the cost of electricity.

Promote the role of the private sector: The development of MMHP is primarily due to the efforts of private manufacturers and entrepreneurs, the role of the credit organizations and the contribution of policies to promote MMHP cannot be undermined. The issues that must be dealt with in order to make private sector participation more attractive can be outlined as follow: a) provision of management, financing and training; b) identification of the role of the private sector; c) standardization of technology and equipment; and d) and appropriate incentive package for manufacturers.

Link mega-project development with decentralized RETs: Mega-power projects do not often envisage electrification of the project area. In such cases, the development activities associated with the project, which require additional energy inputs, may place tremendous pressure on forests for fuelwood. In addition to this, these projects can also lead to widespread resentment among the local people, along with negative socioeconomic and political impacts. Therefore, sufficient energy supplies must be made available in rural mountain areas where large-scale hydropower projects are being considered for implementation. Additional energy supplies for the project areas could be made available through various decentralized RETs such as MMHP.

6. CONCLUDING REMARKS

MMHP is and will continue to be the major source of electricity and motive power in remote and inaccessible mountain areas. However, it needs to be realised that the provision of mechanical/electrical energy can act as a catalytic agent if \\\'other\\\' development inputs are also geared for the rural development needs. An exclusive focus on MMHP development may tend to neglect other renewable sources such as solar, wind and biomass, which are important locally available resources in remote and inaccessible areas. Also, without sufficient focus on the local resource base and energy needs of local communities, MMHP development programmes as practised in most cases, has the tendency to be ‘technology-driven’. Thus a needs-oriented approach of rural development linked with the provision of energy should be conceived to provide the opportunity for local initiatives in rural mountain areas. It is, therefore, important to adopt a holistic approach, with equal emphasis on needs, resources and technologies.


About the Author
Kamal Rijal joined ICIMOD in August 1995 as Renewable Energy Specialist. He has Ph.D.in Energy Economics and Planning from the Indian Institute of Technology, New Delhi, India. M.E.in Energy Technology from the Asian Institute of Technology in Bangkok. B.E.in Mechanical Engineering from Allahabad University, India.

Have published widely in different international and national journals and have presented papers in numerous national and international conferences.

Formerly a lecturer at the Institute of Engineering, Tribhuvan University, Kathmandu. Have carried out numerous short and long term consultancies in Nepal for many different agencies and organisations, among them being CIDA (Canada), ESCAP, FAO and ICIMOD. Dr. Rijal was the Chief Technical Adviser for the UNDP/National Planning Commission Project \\\'Preparation of a Perspective Energy Plan for Nepal\\\' during 1993-1995. He was also nominated as a member of the National Water Resources\\\' Development Council (1994-1996).


Selected References

1. dLA and CRT, 1997. Institutional Strengthening the Rural Energy Planning and Implementation – Nepal, deLucia and Associates Inc. and Centre for Rural Technology, Kathmandu.
2. IT 1999. Energizing Nepali Villages – The Barpak Experience, Intermediate Technology Development Group, IT Nepal, Kathmandu.
3. Junejo, A. A., 1998. Private Mini- and Micro-Hydropower Development in the HKH – A Review of Inputs and Methodologies, Status paper presented at the ‘Experts’ Consultation on Private Mini- and Micro-Hydropower’. ICIMOD, Kathmandu.
4. PEP, 1995. Perspective Energy Plan for Nepal, UNDP Project, Submitted to National Planning Commission Secretariat, Kathmandu.
5. Rijal, K., 1995. Perspective on Mini- and Micro-Hydropower Development, In ‘Report of a National Seminar on Min- and Micro-Hydropower Development in the HKH Region - The Nepal Perspective’, Joshi, R. D. and Amatya, V. B. (eds.), ICIMOD, Kathmandu.
6. Rijal, K. (ed.), 1998. Renewable Energy Technologies – A Brighter Future, ICIMOD, Kathmandu.
7. Shrestha, S. and Amatya V. B. 1998, A Case Study of Micro-hydropower in Nepal, In ‘Renewable Energy Technologies – A Brighter Future, Rijal, K. (ed.), ICIMOD, Kathmandu.
8. Wahaj-us-Siraj (ed.), 1995, Proceedings of the Pakistan National Seminar on Mini- and Micro- Hydropower Development in the HKH Region, ICIMOD, Kathmandu.
9. WECS/UNDP, 1994. A Study on Improvement of Economic Viability of Micro Hydro Plants. Vol. 1 (Main report), Water and Energy Commission Secretariat, Kathmandu.
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