Pico Hydro-Powered Agricultural Mills in Nepal: Clean Energy Development Bank and SNV

Employing majority of the population and accounting for around 38 % of GDP, Agriculture is Nepal’s predominant sector of the economy. The country’s development strategy is therefore anchored on poverty reduction through rapid growth in the agricultural sector. At the same time, standing in the way is a combination of poor energy infrastructure, high upfront investment costs, lack of financing opportunities and underdeveloped business models for add-on services. 

The Clean Energy Development Bank (CEBD) and SNV have developed a unique comprehensive offer that incorporates a Pico Hydro Power Unit, capacity building and targeted financing, which hopes to significantly improve the livelihoods of the local farmers.

 

Background

Nepal is among the poorest and least developed countries in the world, with about one quarter of the population currently living below the poverty line. Agriculture is the predominant sector of the economy, employing over 70% of the population and accounting for around 38% of GDP. At the same time, Nepal is highly vulnerable to food insecurity, due in large part to market access inadequacies for Nepalese farmers, who are mostly subsistence farmers. Productivity levels remain low as a result of limited access to new farming technologies, inputs and extension services.

Nepal is also energy-poor, having no known fossil fuel reserves of any type and hindered by extremely difficult terrain upon which to build energy infrastructure. Electrification in Nepal was around 50% in 2010, with around two-thirds of Nepali citizens using loyally-sourced firewood for cooking needs.

Purpose

For centuries Nepal’s farmers have utilised the country’s vast hydropower potential via Traditional Water Mills (TWMs), primarily to grind maize and wheat. This is a prime area for innovation and investment, and indeed solutions to upgrade them already exist.

Whereas a typical TWM produces up to 0.5kW and manages 10-20kg of grain per hour, an improved version (Improved Water Mill or IWM) can produce between 1-5kW and process more than 50kg per hour, and new versions allow other uses such as paddy hulling, oil expelling, saw milling and electricity generation. 

The potential benefits of large-scale market take-up of these new IWMs as a replacement for TWMs and displacement of encroaching diesel generators are significant. Compared to diesel, REEEP estimates that Nepal could avoid up to 60,000 tCO2 annually, and drastically improve livelihoods of local farmers.

 

Main Activities

The CEBD and SNV have developed an innovative offer that includes a new IWM, capacity building and targeted financing to allow the formation of community-owned village electrification committees and agrifood processing enterprises to manage the IWMs. A major aspect of the venture is the simultaneous provision of credit to potential owner/operators, marketing and capacity-building on how to economically utilise the IWMs benefits for small-holder and subsistence farmers, the development of pay-per-use consumer financing model for processing services and an electricity tariff structure for the village.

Clean Energy in the Agrifood Value Chain

Commercial Process Innovation

Expected Impact

Pico Hydro-powered Agricultural Milling and Electrification: Potential Market Impact

 

CEBD and SNV: Direct Impact for Food-Processing Micro-Enterprises

  • Up to 50% increased wheat and grain processing capacity 
  • 70% decrease of agricultural waste
  • 30% reduction in cost of production
  • Increased income
  • Diversification of processing activities
Programme sector: 

Agrifood Value Chains

Stage of project: 

Completed

Location: 

Nepal

Implementing agency: 

Clean Energy Development Bank and SNV

REEEP grant funded by:

Austria