An Overview Of Our Solution
Micro-hydro as an Enterprise Model
In Nepal, most of the MHPs have been operated without proper management. As the produced electricity is not fully optimized resulting in low load factors and collection of revenues. Due to poor governance system including a lack of accountability and transparency among the management committee, as a result, the overall performance of the MHPs are operating in critical level.
Promotion of MHPs based on “social service” notion should be shifted to “commercial service” package. The MHPs should be treated as a business entity.
Innovative management model for the MHP plants has to be derived. RewNet Consultants (P) Ltd with the funding support from RERLhas involved in several numbers of activities to strengthen institutional capacity and commercial operation of MHPs as an enterprise model in Nepal.
- Population Impacted: 500 Families per Micro- hydro
- Continent: Asia
Last name
Organization type
Context Analysis
National grid electricity is not available in the large portion of the country. The mountainous terrain of Nepal will always be a challenge to any efforts to expand the existing transmission lines of national grid.
There are some issues and challenges that come under the successful implementation of MHP as an enterprise model i.e. post-installation support programs in the country which area) Economic aspects (revenue generation and profits, employment opportunities, saving and credit activities, maintenance fund etc) b) Technical aspects (reliability of power supply, plant load factor, safety measures, frequency of repair and maintenance works, demand-side management, operators’ capabilities etc). c) Community aspects (improved social facilities, improve agro-processing facilities, entrepreneurship development, the role of local government). d) Institutional aspects (financial management, public hearings, and audit, Human resource management, office setup, incentive packages ).
Describe the technical solution you wanted the target audience to adopt
- The installation of an energy meter in each MHPs which could track the overall energy usage in each HH.
- To facilitate more operation hours and utilization at full potential, the MHP rest time should be reduced by convincing the users to make an optimum use of electricity and the plant load factor may increase and proper utilization of generated power can be ensured.
-The consumer can get the entire information related to the income and expenses and also the implementation of computer billing system helps to keep financial governance and accountability. Due to this the financial irregularities or misuse in financial transactions can be minimized.
- For the MHPs with low capacity and insufficient load, the use of CFL/LED bulbs rather than the Incandescent bulb for low power consumption
- Advocacy and awareness campaign regarding the promotion of productive end uses for self-sustainability
Type of intervention
Describe your behavioral intervention
-The study team supports to form new management in some cases as well as managed the old committee in some cases to facilitate the management approach to commercialization. Before changing the management, it is very important to convince and manage the local people and stakeholders. It was a challenging job to bring together the MHP officials and the locals to agree on the perks and benefits of commercialization.
-The Social mobilizers play a vital role to coordinate and consult with the managerial team as well as consumers.
-The office setup with necessary furniture, equipment, and infrastructures is carried out for official tasks and functioning of the MHP smoothly. Previously, there were no proper office space and the documents, managers and operators were scattered around. After the intervention, office space has been managed and all the official task/documentation/billing etc. are carried in the office.
-The tariff rates previously were unrealistic and impractical so RewNet has implemented scientific tariff rates to both the domestic and commercial use. Now with the installation of energy meters, energy usage tracking is easier and the revenue to be paid by each user is exactly determined.
-Well-designed staff incentive schemes can have a positive and powerful impact on the productivity, efficiency, and quality of any organization.
-Saving and credit mechanism for future and self-sustainability
As needed, please explain the type of intervention in more detail
Systematic accounting: Bookkeeping and financial recording are essential to figuring out the turnover, savings, expenditures, and collaterals in any financial governance. So that the computerized accounting and billing system is required.
Transparency in accounts and Financial strengthening
For transparency in accounts and finance, public audit and financial audit scheduled at regular intervals to disclose the financial status of the MHPs to all the stakeholders and locals is practiced.
HR and revision of office policies: RewNet appointed dedicated staffs and resource persons to carry out the MHP operation. various workshops, training, and capacity building activities are also required.
Describe your implementation
During the construction phase, the community managed micro-hydro projects have increased group action and leadership development of the rural communities, contributing to enhance cooperation and social cohesion. These projects have provided opportunities to acquire additional skills and technical knowledge with regard to management, especially financial resources to the members of the users’ committee or community people, who are the direct beneficiaries. The various nos of capacity building activities were organized. With such capacity building programs, local people gained more knowledge and skill related to proper management and efficient mobilization, enterprise development activities, institutional setup, administrative procedure, leadership development, accounting and bookkeeping, monitoring and evaluation procedures etc.
Documentation, handling of operations and the MHP managerial skills etc. will not be effective if the manager is inexperienced and belongs to low education profile. As the computer accounting software is the new concept for every MHP and most of them claimed that whole system procurement is not financially viable for them due to many reasons, a justifiable amount of grant or software support should be allocated. Social mobilization process, which primarily aimed to create awareness, help for establishing village electrification committee, support to identify appropriate project site and mobilize resources, was found very challenging. Remoteness and scattered households in the communities coupled with extreme poverty further contributed in delaying the project development activities. There was no subsidy sufficient support for micro-enterprise, which further discouraged the local people to participate into the program. An effort was made to spread awareness amongst the community through programs in various localities considering the scattered households and their remoteness. Disputes were resolved at local level through mass meeting.
External connections
Local government could play vital role for the managerial improvement and sustainable operation of micro hydropower projects. As the primary concerned authority; the following are the major roles of the local government;
-To guide in preparation of appropriate rules and regulations, operational guidelines. It is also an authorized in implementing registration process of newly proposed business model.
-Local government can coordinate related stakeholders to self-sustain the MHP projects by implementing the activities like scientific tariff fixation, energy meter connection, computerized billing process, saving and credit program well-equipped office setup etc.
-Local governmental bodies should have direct or indirect involvement in public hearing, mass meeting and discussions to enhance the MHP and its management for institutional and sustainable development.
-Act as guardian and provide advice and suggestion in every activities involving the managerial improvement and monitoring of the site on regular basis.
- They can provide the financial support as a small grant for the repair and maintenance works or any upcoming needs.
The coordination and discussion with local organizations within the catchment area of project is important. Their opinion towards the MHP project management must be observed carefully. The other stakeholders like AEPC, UNDP/RERL, Winrock International etc could provide technical backstopping and policy framework as required.
Who adopted the desired behaviors and to what degree?
The desired behavior has to be adopted by the management committee as a well as the consumer for the sustainable operation of the project. The behavioral change determine the degree of adaption to promote micro hydro as an enterprise model. Darna Micro Hydro is one of the exemplary case of adaption. Established in 2012, the 83 kW Darna MHP, located at Bannigadhi Rural Municipality of the Achham district had numerous challenges and problems since its initial operation. Despite of such issues and problems since the beginning, the Darna MHP has managed to overcome great deal of obstacles and resolved many challenges over the years and has now become a role model for other MHPs. Darna MHP had surplus power and later wholesale of 25 kW to Kalagaun village was decided and implemented. The revenue collection is regular and compulsory. Besides improving management and operation, the Darna MHP has implemented compulsory mass meeting and EC meetings at regular intervals.
How did you impact natural resource use and greenhouse gas emissions?
Micro hydro has insignificant impact on the GHG emission. Demand side management plays a vital role in case of micro hydro projects. The shift from incandescent bulb to the CFL/LED helps to save the power consumption. As now the beneficiaries are full aware of the fact that the recent CFL/LED bulbs are known for extreme power saving. As we all know that the rural areas still use firewood for cooking. In in Sankh Khola III MHPs of Solabang, Rukum, has easy access to the community forest and are using fuelwood as primary source of cooking fuel. The use of wood fuels for cooking is directly associated with the deforestation and health problem. So to minimize the deforestation as well as health problem, demonstration of electric cook stove has been started on the member of management committee house. The daily data collection related to the load and efficiency of the induction cook stove has been taken, which signifies the feasibility of the electric cook stove in the rural areas.
What were some of the resulting co-benefits?
After installation of MHP project, the women participation in the community development programs is emerging gradually by changing their traditional role as housewives. Their involvement in the saving and credit activities, forest management, water and sanitation program, enterprise development etc. are growing. Increasing role of women in micro hydro sector shows sign of success in the recent years. Apart from the saving and credit activities, Mothers’ group have also been actively involved in the control and management of economic development works like off-season vegetable farming, drinking water projects and others. The involvement of women in community activities such as field in the field of health, water, community forestry, etc. has been significant. However, their roles in planning and decision making are still minimal. It has directly contributed so many benefits in the local community.
Sustainability
MHP as an enterprise model is one of the new concept in the rural communities of the Nepal. The economic sustainability can be maintained by the following :
-Scientific tariff upgradation
-Rewards, penalties and incentive mechanism:
-Regular revenue collection
-Provision of repair and maintenance fund
-Monitoring and supervision
Thus operating the MHP as an enterprise model relies on market-based revenue. This helps to operate the MHP as a profit motive organization, so it collects its revenue from the consumer providing the proper service. Sustainability of the MHP is possible only if the management maintains the good governance, financial transparency, and accountability.
Return on investment
At the implementation phase, the preliminary assessment survey should be conducted. Several numbers of mass meeting and FGDs should be facilitiated. The office setup including the sufficient nos of furniture, stationary, computer system should be arranged. In overall, it costs approximately $ 2000 for each to upgrade their management modality and commercialization of the project. Local people perceived that upfront investment to reform the management modalidy seems high. However, it can be noticed that after few months of interventions the regular revenue collection has been increased remarkably. As compared to the monthly income before and after the intervention, the investment on infrastructure development is noteworthy.
How could we successfully replicate this solution elsewhere?
An awareness campaign is a strong tool for the sustainable operation with managerial improvement, institutional setup, and commercialization of mini and micro hydropower projects. The concept of MHP as an enterprise model is relatively new in Nepal. RewNet Consultants (P) Ltd has been providing the consulting services as the piloting task funded by AEPC/RERL. The post-installation support is required for already established projects so the idea should be explored or scale up whole over the country. Approximately $ 1000 per plant grant support would highly encourage to adopt this management modality as soon as possible. More rigorous capacity building programs for Micro-hydro EC and staffs with frequent refresher training will help to build up the human resources capacity needed for proper repair and maintenance support.