Nepali Times Asian Paints
The sun is free for everyone but not for Nepalis, it seems


In the early 1990s Lotus Energy was one of three companies promoting solar electricity for rural electrification. Everyone said solar was too expensive and that only micro-hydro was the way forward. MPs thought solar was used only for hot water.

Today there are over 70 companies in Nepal's solar industry employing tens of thousands of people to provide solar photovoltaic (PV) electric systems. There are very few villagers who do not know about solar.

The original solar subsidy program was a project between Lotus Energy and Agriculture Development Bank Nepal (ADB/N) and its 1,400 branches. The donor-supported Alternative Energy Promotion Center (AEPC) was set up and took over the subsidy program for solar in Nepal, albeit at a lower subsidy amount, a lot more paperwork and without the in-built microfinancing that ADB/N had offered.

Since the Nepal government was now eating out of the hands of donors, it didn't take long before their subsidy conformed more and more to donor country designs, mandates, and restrictions. Finally, the AEPC was acting more as a bureaucratic bottleneck than as a promotion center for the technology. Frequent lapses in budget forced many struggling solar companies to shut down and damaged other survivors.

Only recently has the AEPC realised how solar has become so practical and reliable that it could considerably ease Nepal's power shortage. But restrictions still make solar incentives difficult to obtain and components difficult to import. Restrictions on the import of cheap inverters, which divert peak electricity and store it without generating anything, have backfired as these units are still smuggled from India while more efficient inverters from abroad are banned. While the import of inverters needed for larger solar grid tied arrays are restricted.

On the village level, some of the least expensive and most reliable technologies are banned. The donor-created Renewable Energy Test Station (RETS) claims to provide villagers the service of filtering "bad" components out of the Nepal market. They make technical recommendations based on outdated or unfair specifications and mandates from donors with vested interests. Excellent products like inexpensive easy-to-service solar tube lamps were almost banned, as were cheap solar batteries which were some of the highest quality and longest lasting batteries used in Nepal, just because a German consultant didn't like them.

In 2003, a senior EU official came to see the solar program we were designing for remote areas. The consultant made it plain that no Nepali solar company could supply the equipment for a EU-funded project. "All the hardware must come from EU companies and nowhere else," he said. After a big outcry, the policy was later changed.

Another EU team leader resigned and told me he couldn't do the work with a clear conscience. Even though most donors "give" in some form, they "take" in another. Tied aid is alive and kicking in Nepal.

Nepal's solar subsidy program for villagers has inadvertently become a scam. When donors agree to give money, it operates for some months, and when funds run out or donors change their minds, it stops. This means that instead of buying the cheapest, longest-lasting solar year round with free market competition, the villagers buy expensive donor specified equipment like specialised tubular batteries only half the year. Solar companies must sit idle for six months and try to pay their staff and rent with no incomes.

A duty and VAT break is possible only if you are lucky to fulfill some donor-specified criteria. Subsidies restrict which solar products one can buy and how they are sold. Nepal is responsible for its own development, it must not be influenced by donors who don't really add any value.

The very best and fastest way to increase solar proliferation in Nepal is simply to drop all taxes on all solar components and installation materials for stand-alone remote and grid-tied solar systems and permanently end the unfair bureaucratic costly subsidies and dissolve the restrictions.

The cost of solar has dropped steadily for two decades while diesel and petrol constantly increases. RETS can be dissolved or converted to a research institute. The AEPC can remain as a true promotional body to provide microcredit and other incentives for urban and remote solar users.

Adam Friedensohn is the chairman of Lotus Energy Pvt Ltd in Kathmandu


With 14-18 hours of rolling power cuts this winter, Nepalis should ask the government:

Why can't we get all our solar equipment duty and VAT free?
Why don't we get incentives for urban roof-top solar which generates power for the national grid?
Why are solar companies not encouraged to fill in load shedding gaps with solar?
Why are we taxed to help our own country?
Why are you robbing our villagers of choices and more cost-effective solar products?

Read also:
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"Do for nation"
Small amounts of money donated by a large amount of people goes a long way in Nepal

1. DG
Electri vehical tax should be drastically reduced, .In UK andUSA they get subsidy for buying such vehicles.

Why not start pilot projet using wind power. Their components  can be fabricated in Nepal itself and they have a short lactation period.
Drinking water shortage will be there in the days to come.
Why not start with priority ponds , check dams as demonstration project.
The NGOs ,INGOs can also take the lead.
The dollar farmers of Nepal are in plenty ;how is it that they have not yet discovered this mine.

2. Ekta
Interesting article. I would love to hear constructive comments from people engaged in he energy sector in Nepal on Friedsohn's thoughts and experiences.


3. jange
# 1 DG

....lactation period.

Brilliant...just brilliant!! Genius!!

4. jange
In the early 1990s Lotus Energy was one of three companies promoting solar electricity for rural electrification...

Nepal's solar subsidy program for villagers has inadvertently become a scam.

I can understand why the author is not too pleased that others too have seen the opportunities offered by solar power.

5. KiranL
Lotus, the pioneer of electric transport in Nepal with Safa Tempos now needs to develop bigger electric public transport. Safas were for the 80s, Kathmandu's population has quadrupled since then. Govt subsidy, incentives for electric public transport are needed so the micros and safas can all convert. But in the medium term, generating enough hydro is the only feasible solution for Nepal. Solar at current prices and because of the storage requirement is never going to be truly viable. the beauty is that both are renewable, and solar is great as a stop gap till the load shedding days are a thing of the past.

6. Arthur
"� Why don't we get incentives for urban roof-top solar which generates power for the national grid?
� Why are solar companies not encouraged to fill in load shedding gaps with solar?
� Why are we taxed to help our own country? 
These three are easy:
1. Solar is only sometimes useful for remote areas with no grid at all. It is far more expensive than grid power so "incentives" to install roof-top panels in places that are connected to the national grid would be completely wasteful.
2. See 1. Wasting money on 35 watt solar panels would only delay installing the hundreds of millions of watts needed to end load-shedding.
3. All economic activities are taxed. Pure scams like demanding solar subsidies in areas connected to the grid should be prohibited, not just taxed.
I don't know about the other points, in the article but these three are so obvious that they make it it clear there is no reason to trust any of the other complaints by the author.

7. Funkybuddha917
#4: cynicism much jange? The author is not asking for a Lotus monopoly here, is he? The article provides an insight into the machinations in the workings of aid-involved projects and why they haven't really helped Nepali villagers which they were purported to serve. Juxtaposing two lines from the article to make a pointless remark is both lazy and disingenuous. All the questions raised at the end of the article are valid questions. Perhaps you don't share the problems of not having electricity or other energy sources to run daily lives faced by the large populace across the country, and if that's the case, no need to chime in here. 

#1: There's absolutely no need to have NGOs and INGOs to take a lead here. This is an opportunity to make investments, run companies, offer employments and take charge of the energy crisis that cripples the lives of the general population every year by ourselves. We need entrepreneurs like Mr. Friedshon and others, not INGOs that run on the mantra we-like-to-keep-thirld-world-thirld-world-forever.

As #2 pointed out, participation from professionals involved in the energy sector and their arguments for and against the issues raised in this article will be very helpful. 

8. chandra gurung
Adam, this is a very informative piece. It touches on two fields: one about solar industry itself and the other is donor-receiver dynamics. EU (and its members) is notorious for "taking more than giving", in Middle Marsyangdi hydropower project, they took more than they gave.

Besides that, though, I have always been keen about solar power. I was trying to install one that would make my house supplied 24-hour electricity. The total cost turns out to be Rs 35/- per KWH. Now, it seems it was because there are taxes/VATs on those equipment. If one can work towards removing these taxes, in a way that con men can't benefit from such tax breaks, it would be nice.

Ideally, I think it would be nice to have many companies (say 30 or more initially) and asking them compete vigorously, so that they find the cheapest and best materials from abroad. Breastfeeding by donors should be minimum anyway,but especially if it hurts the end users.

9. jange

5. chandra gurung

Rs 35/- per KWH...

Only 35!!! Very interesting. Would appreciate it very much if you could let us know how you achieved this. This is even cheaper than a diesel generator.

10. chandra gurung
Jange, look @ Ghampower website for this info. It is still 400% markup over hydroelectricity.

11. Gole
  #6 Arthur.

Lotus Power....Flower Power ....Puspa Kamal (Flower Lotus ) Dahal.....
Lotus Energy are they related?
 Arthur of all the people ., you must support this cause.
.   Viva El Prachanda our Maximum Maoist  Leader.

12. jange

10. chandra gurung

Thanks for the link. Very interesting but I couldn't find the page where they have calculated that it is Rs. 35 per kWh. Which section is it in?

13. chandra gurung
Jange, I also couldn't find it written exclusively in the website. But I talked to one ghampower guy after reading info in their website about the luxury installation. I wanted to ensure 24-hour electricity, so I asked him about the cost. He told me it would come at Rs 35/- per kwh on average during its lifetime (which I gather was at least 25 years). I don't know how reliable those guys were, I postponed installing because I left Nepal at the point, and my parents didn't show any interest in what they thought to be such an expensive adventure.

14. jange

# 13. chandra gurung

Thanks. I can guess where the Rs. 35 comes from. Cost of system Rs. 680,000 and it gives around 2000 kWh per year. If you assume that the system is amortised at 10 % per year over its lifetime then we get a figure of Rs. 68,000 for 2000 kWh. Therefore cost Rs. 34 per kWh.

This is misleading. It does not take into account the cost of replacing batteries every few years and other costs. It also assumes that the system will operate at its peak performance every day of the year- which is not true.

Your parents were correct, it seems.

15. Bhuwan
Interesting article. I feel that subsidies not only cramp market forces but also invite corruption and mal-practices to increase revenue. My experience in solar sector has taught me, its all about providing quality products and efficient service. That would please any costumer.

16. Shredk


I am reading all the feed backs constantly. I am the person who got solar panel installed and constantly making electricity - but am not based in Nepal, unfortunatley - am based in Sydney.

Okay, my story is as follow - due to forcasted carbon tax, increase in electricity and 1000 other reasons - Australian Government gave incentive to put Solar panel here in Australia. Make it simple --> Total cost of the panel (in 2010 when I installed one at my home) cost A$9000 - out of which 66% govenrment rebate and rest A$3000 from your pocket. Differnece between this panel and the panel used in Nepal is it does not have battery - whatever the electricity generated by the panel goes directly to grid. A meter is attached between inverter and grid which measures how many Kw/h been fed to the Grid. You buy the electricity from the Grid through consumption meters - simply you can not use the electricty form your panel at all.

Yes, when talking efficiency and reliabilty, ofcourse the branded one topple over the cheap one maily from China.

Now the incentive buy back plan from Government is very attractive. Currently - it cost per kw/hr 20 cents (increased from 17 cents) consumption and production per kw/hr  is 66 cents. See the difference.

Total life span of the panel and inverter is 25 years from the manufacturer - luckily mine one is world leading one.

The point is - government incentive plays major role in daily life. Instead of battery storage using your own generated power, why Nepla government not following by seeling to the grid? If this approach is followed - stealing the exletricity from the grid will be a story, cause you can make moeny by seeling your energy to the grid.

Plus - Nepal lies under Sunny zone like Austrlalia, where 60% sunshine through out the year. Do the simple mathmaticks - 8 panel solar can generate in 10 hours period 7.5 KW electiricy. 60% of 7.5 is  4.5KW. Now you do your calculation how much electricity your home consumes by counting each appliance. Plus - beauty is that during whole day it produces pure energy and when you needed get it from the grid - remove the costly battery storage.

I know that Balaju Yentra Sala and Butwal Power House/Compnay are capable of producing these types of panel for sure. Main problem is the cost. By looking the cost facture/government incentive/current electricty problem - people will be more attracted for this free energy. If better incentive is provided to the manufacturer - single 8 unit panel with highly efficient inverter can be produced/marketed and sold to individula under NRs 50,000 for sure! (trust me!).

Lets say, if half a million individual house joined to this plan/program, you will be generating 2,250,000 KW or 2250 MW per day which will be a mild stone to reduce current blackout. Compare the price of 2250 MW hydro electric and Solar power from scratch to production,, you will see the difference.

I read all the comments of the readers - some are pessimistic and some are optimistic. Nepal is a country of politics - without dirty politics, you can't even lay a sigle brick. Its true that nothing is free - most of the money you get from the donor country goes back to themselves with interest.

All the best

17. TD
To Shred
Really Awesome comment Shred. I am doing research in low-cost solar devices made from earth abundant materials. The price of solar panels are sure to go down as these type of research matures, which is not far away. So, it is important that Nepal invests without delay in it from all sides, consumer use to research. As you pointed out, a big hydro-project would cost a  lot of money, but with solar you can involve many people and a big share of the cost will be paid by the people themselves. I am originally from Nepal and now based in the US. However, I will contribute significantly to solar electricity effort of Nepal. I am just so optimistic that Nepalis do not have to go through the blackout. Solar will help.

(11 JAN 2013 - 17 JAN 2013)