Renewable Energy Subsidy Policy of Nepal

Source: JOIN IEA/IRENA Policy and Measures Database
Last updated: 7 February 2017

The Policy aims to develop the renewable energy sector and encourage very poor households to use renewables by providing subsidy for deployment.

It revises the subsidy determinded in the Renewable Energy Subsidy Policy – 2012 and Urban Solar System Subsidy and Credit Mobilization Guidelines. The subsidy amount is expected to cover 40% of the total costs; with around 30% coming from credit and around 30% from private sector investment and/or community or households contribution (cash or in kind).

The policy primarily focusses on off-grid applications and provides subsidies for mini/micro hydropower, improved water mill, solar energy (home systems, mini-grids, grid connected), biogas, biomass energy, wind energy and wind-solar hybrids. Detail of the subsidy for each technology type is provided in the policy document. The subsidy amount differs according to technology and the region - with higher subsidy being offered for remote areas. Selected examples are:

Solar PV mini-grid:

  • Generation – equip. (per kWp): NPR 175,000 to 150,000/kWp (USD 1640 to 1410).
  • Distribution (per household): NPR 32,000 to 28,000/household (USD 300 to 260).

Mini/micro hydropower

  • Generation – equip. (per kW): NPR 125,000 to 80,000/kWp (USD 1175 to 750).
  • Generation – civil. (per kW): NPR 80,000 to 20,000/kWp (USD 300 to 190).
  • Distribution (per household): NPR 35,500 to 28,000/household (USD 333 to 260).

For technologies producing electricity output, the subsidy is not only given for equipment and civil work but also, where applicable, for development of distribution infrastructure.

Subsidy will also be provided for installation of solar PV systems in grid connected areas with irregular supply. This includes subsidies for solar street lighting in urban and rural areas and for solar PV systems in households, public educational institutions, public health facilities and religious places.

A subsidy delivery mechanism will be prepared by the Alternative Energy Promotion Centre (AEPC) and implemented after approval from the Ministry.

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