Energy Efficiency


  1. Background

Understanding the significant role of energy in inclusive economic growth of the country, the Government of Nepal (GoN) has been reiterating its commitment to energy sector reforms. Despite continuous endeavors together with support from Development Partners, Nepals energy supply and demand balance, particularly electricity remains in deficit. A comparison to international and regional data demonstrates not only the inadequacies in terms of access to energy and modern energy services in Nepal, but also very high energy intensity resulting from inefficiency in energy consumption patterns. Despite the tremendous potential for hydropower generation, huge gap exists between demand and supply of electricity in the country. The gap becomes more critical during the dry season with long hours of load shedding affecting households, commerce, industries and the economy as a whole. The sluggish growth of the supply side together with inefficient energy consumption patterns has proven to be one of the major obstacles in the socio-economic development of the country. Dependency on imported fossil fuel as an alternative source for electricity generation has not only negatively affected competiveness of industries but also worsened the trade balance, including trickling adverse effect at household level.

Recognizing such an impasse, the government, recently, has started to put some impetus on the efficient use of energy. However, dearth of strategic and regulatory framework for energy efficiency has hindered the country in reaping the economic and ecological benefits of the untapped resource – energy efficiency. Political frameworks are not available even for the primary source of energy in the country – biomass.

1.1 Energy Efficiency

Energy Efficiency, is the goal of efforts to reduce the amount of energy required to provide products and services. Reducing energy use is also seen as a key solution to the problem of reducing emissions.While effectiveness marks the degree of achievement of objectives of an activity, efficiency refers to the ratio of benefits to expenses. Energy Efficiency, therefore, describes the ratio between the benefit gained and energy used (Wolfgang Irrek, 2008).

If energy is used in an efficient way, less energy is wasted during its usage. Nearly every energy transformation process has energy losses, to minimize these losses through better technology and optimal surrounding conditions is the main idea of Energy Efficiency. For instance a CFL lamp is up to 4 times more efficientthan a regular incandescent lamp. According to the International Energy Agency, improved energy efficiency in buildings, industrial processes andtransportation could reduce the world’s energy needs in 2050 by one third, and help control global emissions of greenhouse gases.

1.2 Nepal Energy Efficiency Programme (NEEP)

NEEP is being implemented to promote and realize energy efficiency in Nepal and is a bilateral technical cooperation between Government of Nepal (GON) and Federal Republic of Germany. Executed by Ministry of Energy with technical assistance provided by the Deutsche Gesellschaft fr Internationale Zusammenarbeit (GIZ), acting on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ).

After completing its first phase in June 2014, NEEP continues to support improving the efficiency use of energy in Nepal in its second phase from July 2014 to June 2017. The programme assists with the introduction of market based energy efficiency services for the private and public sector. It also backs the development and introduction of performance for biomass based improved cooking stoves for rural households. Moreover, it provides direct advice and expertise to the government for the establishment of policy and institutional framework to foster energy efficiency in the country.

In the above context, a Technical Cooperation (TC) programme was agreed between Government of Nepal (GoN) and Federal Republic of Germany to implement Nepal Energy Efficiency Programme (NEEP II). Along with the growing prominence of energy efficiency in the country achieved in the past through NEEP, the second phase of NEEP focuses on horizontal and vertical widening of the energy efficiency market. The main objective of the TC module (programme) is to improve the basic pre-requisites for the planning and the implementation of measures to increase the efficient use of energy in Nepal, Ministry of Energy (MoE) being the executing agency for NEEP II.

1.2.1 3 Key Intervention Areas

Awareness Rising and capacity building for selected target groups and intermediaries are integral to key interventions

  1. Promote energy efficiency in industry and public infrastructure as a main agenda of Energy Efficiency Market
  2. Promote energy efficiency on Clean Cooking
  • Improve the framework conditions for energy efficiency on policy level

1.2.2 Energy Efficiency Market

With the success of the first phase of NEEP, the second phase of NEEP focuses on horizontal and vertical widening of the Energy Efficiency Market which comes under Component-I. The Energy Efficiency Center (EEC) under the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) is the implementing agency of the TC measure along with other implementing partners Town Development Fund (TDF) and Nepal Electricity Authority (NEA). The objective of the first component is to diversify the market opportunities for energy efficiency services and technologies. INTEGRATION along with Adelphi and IP consult is providing advisory service to Energy Efficiency Centre (EEC), FNCCI and the other implementing partners on behalf of GIZ.

1.2.3 About TDF

Town Development Funds (TDF) is an autonomous financing institution established by the Government of Nepal (GoN) in 1989 with a long term institutional objective of becoming a self-sustaining and complementary part of intergovernmental fiscal transfer system. The TDF is the only financial autonomous intermediary institution in the country presently providing debt financing to local governments. Several donor agencies, including the GiZ, the KfW, the ADB, and the World Bank have worked with TDF since its inception. Local governments in Nepal, especially municipalities and fast growing emerging towns, are its main clients. The GoN, especially, the Ministry of finance (MoF) and the National Planning commission (NPC), view it is a key institution that has an important role t play in the urban infrastructure development of the country.

TDF finances long-term urban infrastructure development projects through its loan and grant funding.

1.2.4 TDFs Perception about Energy Efficiency (EE)

From the latest statistics, 42% of the population lives in 217 municipalities of Nepal and increasing urbanization and growing population are causing the demand for energy to rise sharply. This has resulted bottleneck in the energy supply, an increased financial burden on the state, the economy and private households, and a growing burden on the environment through the increased use of fossil resources. For these reasons, decoupling economic development from energy consumption has become an important goal of sustainable energy management for Nepal. Hence, Energy Efficiency is an essential element of sustainable energy management, if energy consumption is to be reduced.

The global potential for reducing energy consumption is enormous: It amounts to about 30 percent in OECD countries and as much as 30 to 50 percent in developing and transition countries. To achieve energy efficiency, the necessary conditions must be actively put in place by policy makers. Efficiency must, however, be implemented wherever energy is ‘consumed’: In power generation and distribution, in buildings, industry, private households, community facilities, transportation and urban infrastructure and services.

Nepal as an energy deficit country with inadequacies in terms of access to energy and modern energy services and very high energy intensity resulting from inefficiency in energy consumption patterns, TDF positions high concern for energy conservation, as it is as good as energy production. Hence, TDF sets high priority in EE sector and willing to incorporate EE component in projects to be financed right from the design phase, in future. It is believed that TDF could be a vehicle to bring EE through its clients which includes the municipalities, to household level and the other area of its investments . However, EE intervention is, rather a new business for TDF. Hence, TDF is in process for incorporating EE components in its Business Plan and Investment Plan, along with Operation and Maintenance (O&M) Plan to ensure assets management for asset life with optimum operation.

TDF is cognizant of relevance of social responsibilities to emerging crucial issues like energy efficiency and environment for sustainable development. Hence, puts high priority to make EE as integral part of its business process in days to come by encouraging and factor in relevant interventions to nurture energy efficiency in procurement and operational practices as social responsibility.

  1. Possible Intervention for EE

Green House Gases (GHGs) emissions and energy demand have risen high on the global environmental agenda – given the magnitude of GHG emissions from cities, urban energy efficiency is a significant challenge that requires special consideration. The role of urban planners and the construction industry is essential as they create the necessary pre-conditions for energy savings opportunities to be realized at the local level.

Some important aspects of energy efficient urban infrastructure include

(a) maximizing the energy efficiency of building and infrastructure operations through the use of renewable resources, decentralized co-generation and energy cascading techniques in a manner which optimizes integrated energy flows and minimizes potential global environmental impacts such as GHG emissions, and

(b) linking producers and consumers of energy and materials throughout the community, city and surrounding regions to facilitate resource exchanges and recycling networks.

For example, mitigating and reducing the impacts contributed by many urban activities is a significant challenge for urban planners, designers, architects and the local industry, especially in the context of population and urban growth, and the associated infrastructure requirements. It is therefore important to encourage environmentally sound management of urban areas through more energy and resource efficient eco-design, infrastructure development, and construction practices. A similar scenario can be drawn for urban transportation. Increased transportation, as an offshoot of the growing/globalizing economies, has led to pollution, climate change, traffic congestion, and sprawl – people are driving more cars further distances for longer periods of time. The result is environmental decline, and poorer health for urban residents as well as a poorer environment for the city as a whole.

There is a clear need for a comprehensive and holistic review from the perspective of three fundamental issues:

(1) Sustainability: how much and at what rate is energy consumed, and its effect on long term sustainability; the quality and quantity of available alternative/renewable forms of energy; and the effect of existing energy use on the global environment as a whole;

(2) Efficiency: the technology, planning and management of energy systems that will facilitate efficient use of energy for human activity, particularly transportation; and

(3) Equity: the appropriate financial mechanism for research, development and use of finite and alternative energy forms, and their equitable distribution for all humankind.

Ultimately, development and environmental issues go hand-in-hand, and an understanding of these issues is crucial to developing nations, such as Nepal, on their transition to sustainable economies.

  • Green Building Promotion

TDF, as one of the implementing partners of Energy Efficiency Market component under NEEP II, has identified promotion of Green Building projects to be financed by TDF as one of the possible tangible intervention in future. Green Building Promotion initiative could be taken as a strategic alignment as a pilot to increase number of green building projects financed by TDF in public sector.

The Green Building could be defined as a building project that would allow to preserve most of the natural environment around the project site, while still being able to produce a building that is going to serve a purpose. The construction and operation will promote a healthy environment for all involved, and it will not disrupt the land, water, resources and energy in and around the building.

The U.S. EPA says Green building is the practice of creating structures and using processes that are environmentally responsible and resource-efficient throughout a buildings life-cycle from siting to design, construction, operation, maintenance, renovation and deconstruction. This practice expands and complements the classical building design concerns of economy, utility, durability, and comfort. Green building is also known as a sustainable or high performance building.

2.1.1 The purpose of Promotion of Green Building

The Green Building Promotion is first and foremost an environmental initiative. CO2 emissions from residential buildings and commercial and public services (% of total fuel combustion) in Nepal was 13.81 as of 2013. Its highest value over the past 42 years was 39.66 in 2003, while its lowest value was 13.81 in 2013 (IndexMundi). Green construction and site design represent an enormous opportunity to reduce environmental impacts from the building sector by:

  • reducing energy use and CO2 emissions;
  • improving air quality;
  • reducing the quantities of, and improving the quality of, stormwater run-off;
  • reducing the urban heat island effect;
  • reducing demand for potable water; and,
  • reducing waste

From a City services perspective, the design and construction of buildings affects the load on municipal infrastructure including storm water management facilities, treatment and distribution of potable water and sewage treatment. With an emphasis on re-using and recycling building materials, green building practices also reduce the amount of construction and demolition waste being sent to landfills.

Going Green will enable to reduce carbon footprint and lend a helping hand to the environment, thereby promoting sustainable development. There are variety of different ways to go green, but builders and construction workers must do their part as well, as it is more of a practice. Green buildings are designed in such a way to reduce overall impact on environment and human health by:

  1. Reducing trash, pollution and degradation of environment.
  2. Efficiently using energy, water and other resources.
  3. Protecting occupant health and improving productivity.

2.1.2 Cost Implications in Green Buildings

There is a very common misconception that Green Buildings will costs more money. It may cost little more to get started in Green Building initiatives, because green materials and products can be more costly, and have to consider the type of savings that will be able to reap. Ultimately, Green Buildings will help to save on energy costs, because Green Building also means conserving energy. The Green Building should be looked as more of an investment, for reduced operating cost on energy, water etc. Green Buildings may cost more up-front, these higher capital costs are often more than offset by operational savings during the buildings life cycle. Hence, it should be taken as an investment that will save money, as well as an investment that will help the environment, for achieving sustainable development.

2.1.3 Benefits of Green Building

With new technologies constantly being developed to complement current practices in creating greener structures, the benefits of green building can range from environmental to economic to social. By adopting Green Building practices, we can take maximum advantage of environmental and economic performance. Green Building construction methods when integrated while design and construction provide most significant benefits of green building which includes: Environmental Benefits:

  • Reduce wastage of water
  • Conserve natural resources
  • Improve air and water quality
  • Protect biodiversity and ecosystems Economic Benefits:

  • Reduce operating costs
  • Improve occupant productivity
  • Create market for green product and services Social Benefits:

  • Improve quality of life
  • Minimize strain on local infrastructure
  • Improve occupant health and comfort

2.1.4 The Goals of Green Building Initiative

The main goal of the Green Building Initiative is to make the planet earth more sustainable, but it really does go deeper than that. The Green Buildings help to sustain the environment without disrupting the natural habitats around it. A general building project will have impact on natural habitats, including the wildlife and environment having much like a butterfly effect. Even the smallest changes in design will help to promote a better planet earth, and a better place for us all to live- not just us humans, but also the plants and wildlife that take up their residence here on earth as well.

With minimum intervention in design, we can make a difference for contribution in our environment. A few green changes within our homes, we can ensure to achieve the goals of Green Building concept. The fundamental idea of Green Building is to cut down on energy usage, save money, and make a big impact on the environment. TDF is committed to promote Green Building concept and Energy Efficiency components right from the design phase of the projects to be financed by TDF in future.

  1. Conclusion

Energy Efficiency and Green Building is more of a practice in creating structures and using processes in sustainable development initiatives, rather than a separate project in itself. Hence, it has to be gradually adopted in development initiatives by incorporating Energy Efficiency and Green Building concept right from the design phase any infrastructure project.

When it comes to the Benefits of Building Green, there is a growing body of research on the economics and cost-benefit analysis of green building. And the research increasingly finds that while green buildings may cost more up-front, these higher capital costs are often more than offset by operational savings during the buildings life cycle.

TDF as an only intermediary financial institution of Nepal providing long-term debt financing to local governments in the field of urban infrastructure and services, it can be a vehicle to bring the Energy Efficiency and Green Building concept to household level by incorporating fundamental concepts right from the design phase of infrastructure project to be financed by TDF. Additionally, TDF is cognizant of relevance of social responsibilities to emerging crucial issues like energy efficiency and environment for sustainable development. Hence, puts high priority to make EE as an integral part of its business process as a way forward by encouraging and factoring in relevant interventions to nurture energy efficiency in procurement and operational practices as social responsibility.