As fuel crisis grips Nepal, solar industry eyes growth

KATHMANDU - After enduring endless blackouts in Nepal's months-long and ongoing national fuel crisis, management consultant Pankaj Shrestha finally splurged on a set of solar panels for his home in Kathmandu.

"First there was no cooking gas available, so we bought an electric cooker. But then there was no electricity, so how could we cook anything?" the 52-year-old asked.

With power outages lasting up to 15 hours a day and the price of diesel used to power generators soaring, the Himalayan nation's solar industry is eyeing a boom in sales.

Although solar panels are unaffordable for millions of poor Nepalis, the industry is confident the crisis will spur the country's frustrated middle-class to invest in the renewable energy.

"We have already seen a 10 per cent increase each year in the number of houses using solar energy," said Ram Prasad Dhital, chief of the state-run Alternative Energy Promotion Centre.

"But as interest develops in urban areas after the fuel crisis, we expect (the industry) to grow exponentially in coming years," said Dhital, describing solar as "the ideal option" for many in the power-starved country.

Landlocked Nepal has historically relied on neighbouring India for petrol, diesel and cooking gas, but these and other critical supplies have slowed to a trickle since a border blockade kicked off more than four months ago.

Nepal's Madhesi ethnic minority has blocked a key border crossing with India, in protest over a new national constitution adopted in September that they say denies them political representation.

Overnight queues at petrol pumps are routine and a black market for smuggled diesel and cooking gas thrives, as government talks fail to resolve the crisis.

Until now, solar firms in Nepal have targeted rural households cut off from the electricity grid. NGOs and the government have subsidised sales of solar panels to more than 750,000 homes in need.

But huge crowds thronged a Kathmandu trade fair on clean energy this month, with businessmen, housewives and middle-class professionals among the mix, in a sign of changing times.

Sales of solar systems surpassed US$18 million (S$25.64 million) during the three-day event, with representatives of about 90 companies struggling to keep up with demand, organisers said.

Reliable industry figures are not available, but estimates from the main manufacturers' association suggest annual transactions total around US$140 million.

Shrestha said he paid nearly US$6,500 for the 4,200-watt solar system installed at his home last month.

"It was a very good decision," he told AFP. "Now we can't even tell when the power comes and goes. We don't have to stand in queues (either)".

Nepal receives more than 300 days of sunlight a year, more than Germany, the world leader in solar power, making it an ideal hotspot to harness renewable energy.

But efforts at solving Nepal's energy problems have traditionally focused on tapping its hydro rather than solar potential. However a series of big-ticket projects on harnessing its Himalayan rivers for electricity have either stalled or fizzled out.

Foreign investors have long complained of red tape and other delays in getting government approval, with one Norwegian firm this month announcing its withdrawal from a US$1.5 billion hydropower project.

Nepal's total installed hydropower generation capacity is only about 800 megawatts - 1.9 per cent of its potential - despite its vast network of rivers.

"Hydropower projects are large-scale and require a lot of investment and time," said Dipak Bahadur Shahi, president of the Nepal Solar Power Producers' Association.

"Whereas the solar sector is driven by the private sector and we can deliver swiftly according to demand."

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In recent years, small-scale solar projects have sprouted across Nepal, from dusty villages to Himalayan guesthouses that offer freezing trekkers hot showers at high altitudes.

"Earlier the demand was just for basic lighting, (but) now people want high-capacity systems that can power laptops and appliances," Shahi told AFP.

Solar remains too expensive for many households and businesses in a country with a per capita annual income of US$700. A basic 120-watt package costs about US$400 to power six lightbulbs and charge one laptop or a mobile phone.

But some who can afford the investment are tired of the crisis. Dinesh Shrestha, chair of the leading Nepalgunj Medical College, said it planned to install a solar system to power its campus of 700 students.

"It is impossible to say when Nepal's energy crisis will be resolved," Shrestha told AFP.

"We have spent millions on diesel generators every year. Solar is not cheap, but at least it will be a one-time investment."