Low Carbon Economic Development Strategy - unescap.org. Low Carbon Economic Development... · 12 Use of Petroproducts. 17%. ... Samsung Plaza. Sherpa Mall. President Travel. ... 10

Low Carbon Economic Development Strategy of Nepal and energy/GHG emission scenarios of Residential Sector in Kathmandu Valley, Nepal

(National Workshop on Eco –efficient Water Infrastructure for Sustainable Development in Nepal, 15 -16 October 2014)

Amrit Man NakarmiProfessor & Coordinator

Energy Systems Planning and AnalysisCenter for Energy Studies, IOE/TU

ADAPT - Nepal15 October 2014

Main Outline• Overview of energy sector• Use of petroleum products in generating

electricity• Economic impacts of growing dependence on

fossil fuels• Nation’s avoidable costs and benefits• Levelized electricity costs of captive gensets• Future energy/GHG scenarios of the country

and the Kathmandu Valley Nepal• Some major strategies for low carbon

economic development 2

OVERVIEW OF ENERGY SECTOR

3

Biomass85%

Petro-product9%

Coal3%

Grid Elec2%

Mod Renewables

1%

Fuel Mix

Current Energy Overview

Total Energy Consumption in 2010: 410,000 TJI TJ = 23.89 toe (MOF, 2012; WECS, 2010)

4

Residential87%

Transport6%

Industrial5%

Agriculture1%

Commercial1%

Sectoral Consumption

Total Energy Consumption in 2010: 410,000 TJI TJ = 23.89 toe (MOF, 2012; WECS, 2010)

5

Current Energy Overview

Per Capita Electricity Consumption in 2012

3,475

760447 527

280119

893

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

China India Pakistan Sri Lanka Bangladesh Nepal Asian Aver

kWh

Norway: 23,656 kWh/capita

6

Key World Energy Statistics, IEA, 2014

HDI and per capita electricity consumption (ADB, 2007)

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2,000 KWh per capita is needed to achieve HDI of 0.8. Nepal is currently at HDI of 0.5.

Energy systems analysis

8

Power capacity development: historical trend

NEA, 2012

Energy systems analysis

9

Sales of Petroleum Products from 1994 to 2010

Imports of Captive Generating sets (MW)

10

5661 64

69

0

10

20

30

40

50

60

70

80

2009 2010 2011 2012Calculations based on TPC statistics, 2012

Petroleum Products Imports in monetary terms ( 2004 – 2013)

11-

20

40

60

80

100

120 20

04

2005

2006

2007

2008

2009

2010

2011

2012

2013

NR

billi

on

NOC, 2014

Average annual growth rate

20%

Import cost: 6% of GDP

Use of petroleum products for electricity generation

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Use of Petroproducts 17%

Use of diesel in Kathmandu* 60%

* : From total diesel consumption in Kathmandu (Clean Energy Nepal, 2013)

Historical trend of Petro Imports vs. Exports

(Source: MOF, 2014; NOC, 2014)

13

24%32%

41% 42%50% 49%

78%

107%

133% 131%

152%*

0%

20%

40%

60%

80%

100%

120%

140%

160%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

* : Expected in 2014

Crude Oil Price in future

14

WEO, 2008, IEA

Household Fuel Economics• Cooking on electricity has become the cheapest recently for

an urban household even with the hike of 20% in the electricity tariff in July 2012.

• To completely substitute the LPG imports in Nepal requires 850 MW extra thus saving imports by NR 25 billion annually (2014).

Year Kerosene LPG Electricity

1997 180 350 6052000 270 410 6802003 340 510 7902014 1,760 1,030 1,012

Monthly Life Cycle Cost of Cooking in an Urban Household15

Econ.cost:NR1,430

NR 9.50/unit

LPG in remote villages From firewood to LPG

16

Can we sustain this

kind of trend?

Historical Growth in LPG imports

17

-

50,000

100,000

150,000

200,000

250,000 19

95

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

MT

CAGR of LPG imports: 17%;Doubling every 5 years

Nation’s Avoidable import costs (2014)

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Petro products for electricity* 20 Billion NR

LPG imports 25 Billion NR

Based on NOC data, 2014

*: Expected in 2014

0.0

10.0

20.0

30.0

40.0

50.0

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

39.1

31.5

37.5

52.8

41.3

54.2

36.6

45.6 45.5

37.7 37.2 37.4 38.7

46.5

37.9

47.1 46.2

41.438.4

33.0

54.7

40.6

58.3

Individual Levelized Electricity Cost (LEC) NRs/kWh at Durbar Marg

(Neupane et al, CES/IOE, 2011)Electricity costs: NR 31.50 to 58.30/unit

Electricity cost at Thamel, 2012

20(Bhandari et al., CES/IOE, 2012)Electricity costs: NR 29 to 80/unit

Comparison

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*: Based on US$ 1,600/kW

Assumed installed capacity DG sets 700 MWNeeded Hydropower plant toreplace DG sets 180 MWHydropower cost* 26 Billion NRPayback period More than 1 year20 year fuel import savings 400 Billion NR

Useful Energy Demand

Agricultural Sector Commercial Sector Industrial Sector Residential Sector Transport Sector

Base Year 2010

Development policies

Social Data

Economic Data

Technological Data

MAE

D

Constraints

Process Technologies

Conversion Technologies

End-use demand technologies

Energy Resources

Scenario Analysis Framework

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ANSWERMARKAL

Economic Growth/demographic Scenarios

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• 4.4% GDP Growth

Low Economic Growth

• 5.6% GDP Growth

Medium Economic Growth

• 6.5% GDP Growth

High Economic Growth

• 9.2% GDP Growth

DC Economic Growth

Population growth : 1.4%

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Policy Scenario Analysis

Agriculture-Electrification

Commercial-Electrification-Efficient Technology

Industrial-Electrification-Efficiency Improvement

Residential-Electrification-Efficiency Improvement

Transportation-Mass Transportation-Electrification-Biofuels

2010 2020 2030

LOW 104 143 256

MED (BAU) 104 145 277

HIGH 104 149 304

COMB Policy Intervention

(LESO)104 263 628

DC* (HIG) 104 151 391

DCI*(LEHI) 104 279 94525

Per capita Electricity consumptionkWh per capita

•: GDP growth as per approach paper for graduation from LDC to DC by 2022, NPC.•DCI: scenario with GDP growth rate at 9.2% (CAGR) with policy intervention

2010 2020 2030

LOW 1,272 1,496 3,868

MED (BAU) 1,272 1,975 4,131

HIGH 1,272 2,015 4,472

COMB (LESO) 1,272 4,061 11,537

DC* (HIG) 1,272 2,051 5,605

DCI* (LEHI) 1,272 4,325 17,726

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Power Plant requirementMW

* : GDP growth as per approach paper for graduation from LDC to DC by 2022, NPC.

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-2 4 6 8

10 12 14 16 18 20

2010 2015 2020 2025 2030

mill

ion

tons

GHG emissions

BAULESOHIGLEHI

2010 2015 2020 2025 2030 ReductionBAU 4 5 7 9 13 -LESO 4 5 6 7 8 42%HIG 4 5 7 11 18 -LEHI 4 5 6 8 10 43%

Investment Analysis

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Total Technology Cost (million NRs) (2005 Constant Prices)

2015 2020 2030

BAU 35,299 26,418 30,838

Capital investment on % of GDP 5.00% 2.50% 1.60%

LESO 52,849 55,550 92,732

Capital investment on % of GDP 6.70% 5.30% 5.00%

HIG 33,460 26,120 42,829

Capital investment on % of GDP 4% 2% 2%

LEHI 50,961 56,973 140,384

Capital investment on % of GDP 6% 5% 5%

ENERGY AND GHG EMISSION SCENARIOS OF RESIDENTIAL SECTOR OF KATHMANDU VALLEY, NEPAL( RAJBHANDARI, U. AND NAKARMI, A. M., 2014)

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Kathmandu Valley

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• Major urban center of Nepal • 9% of total population (CBS, 2012) • Fastest Growing urban agglomerate in South Asia [AGR 4.35%]

(Muzzini & Aparicio, 2013)• Major user of commercial energy resources (WECS, 2010)

Energy Consumption (Kathmandu Valley-2013)

31Year 2013/14(Calculation from

sample survey conducted in 2013)

7500 TJ

Energy Consumption (Kathmandu Valley-2013)

32Year 2013/14

(Calculation from sample survey

conducted in 2013)

7500 TJ

Scenarios

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BAU Business As Usual

- Follows current trend of technological shares

AEL All Electrification

- Total Electrification in all major enduse

MFA Modern Fuel Access

- Access to modern fuels replacing conventional

GCP GHG Cap

- GHG Emission in future no more than of base year

CCP Carbon Cap

- CO2 Emission in future no more than of base year

Final Energy Demand

34

GHG Emission

35

Strategy for materializing the low carbon economic development strategy• Electrification and Energy Access

• Develop hydropower plants (both RoR and Storage) to meet the enhanced demand

• Access to modern energy resources - electricity• Promote electricity operated small

appliances, machines, in selected possible sectoralend-uses.

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Strategy for materializing the low carbon economic development strategy

• Energy Efficiency• Efficiently utilize of available biomass resources• Promote the use of modern bio-energy generation• Substitute the present unsustainable use of TE with

modern, renewable, indigenous energy sources• Promote efficient electric technologies to substitute less

efficient and high GHG emitting technologies

• Renewable Energy• Create awareness about RET;• Formulation of appropriate legislative tools• Expand appropriate RET installations at every level• Ensure implementation and monitoring of RET plans and policies.• Uplift national economy through grid connection.

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THANK YOU ! ! ! 38