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2011 Bhutan Climate Summit: Nepal Thematic Road Map
Country Roadmaps on
Ensuring Energy Security and Enhancing Alternative Energy Technologies for
Nepal
(Focusing specifically on preparing a 10-year adaptation plan to
Climate Change for Eastern Himalayas)
Dr. Govind Nepal
1. Introduction
Throughout history, mankind’s ability to live in harmony with its environment has been
dependent upon the availability of energy. In this regard, civilizations can be seen as
thermodynamic systems that grow in proportion to their energy access and are subject
to decline when they become unable to sustain productivity and quality of life from their
available energy (World Energy Council 2007). Adaptation and mitigation plans to
climate change mainly revolve around the plans for development of clean energy and
enhancement of energy efficiency. This is evident from the fact that reducing world
carbon dioxide emissions by 50% by 2050, compared to 1990 levels, will require
revolutionary changes in our energy production and consumption patterns (UNDP 2009).
Energy is the prime mover of modern life, industry, commerce, IT and Communication,
transport, and agriculture.
Energy security is therefore crucial for sustaining and
developing modern society. Further, energy access is the cornerstone of ensuring
energy security. Access to modern energy enables the alleviation of poverty, creates
new opportunities for livelihoods, and promotes health by improving air quality. The key
aspect of energy security is sustained supply of energy at affordable prices. The World
Energy Assessment defines energy security simply as “the continuous availability of
energy in varied forms in sufficient quantities at reasonable prices”. However,
considering the impact of energy supply on the environment and the economy, The Asia
Pacific Energy Research Centre, on the other hand, has defined energy security as “the
ability of an economy to guarantee the availability of energy resource supply in a
sustainable manner, with the energy price being at a level that will not adversely affect
the economic performance of the economy” (APERC 2007).
The key energy security concerns that the South Asia and the pacific region in general
and Nepal in particular face include a) low energy access, b) limited diversification of
energy resources, c) high dependence on traditional fuel, d) increasing gap between
energy demand and supply, e) overdependence on imported energy, and d) lack of
adequate energy infrastructure.
These challenges and barriers, if not overcome
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2011 Bhutan Climate Summit: Nepal Thematic Road Map
prudently by adopting affordable best technological options, will not lead economy to low
carbon growth path and threaten energy security both from financial and natural energy
supply constraints. Energy demand depends on population, economic growth, fuel
prices, energy consumption patterns, and the technology in use (ADB, 2009).
Under a business-as-usual scenario, energy demand in developing Asia will almost
double by 2030. Emissions from energy use are projected to be 107% higher in 2030
than they were in 2006, and the region will be responsible for 43% of all global energyrelated emissions (compared with 30% in 2006). A vehicle boom is driving up Asia’s
demand for oil. In 2030, oil use by the transport sector will be three times bigger than it is
today (ADB, 2008). In Nepal, the import of vehicle increasing at an increasing rate every
year with introduction of new financial instruments and the import of petroleum product
consumes more than 50 percent of the income from merchandise exports (WECS,
2010a). The implication is that the high cost of petroleum fuel strains the Nepal’s
economy and its trade balances, thereby intensifying poverty.
Nepal is rich in clean sources of energy but it has been marginally successful to harness
these sources. Out of the total 400506.4 thousand GJ of energy, the traditional sources,
commercial sources and renewable sources cater 87.1, 12.2 and 0.7 percent energy
demand of Nepal respectively (WECS, 2010). The share of residential energy is more
than 89 percent in total energy consumption. Cooking and heating are the main
household activities demanding significant amount of energy. More than two thirds (68.4
percent) of the total households of Nepal use firewood as their main source of fuel for
cooking followed by LPG (12.3 percent), cow-dung (10.7 percent), bio-gas (2.4 percent)
and kerosene (1.4 percent). LPG is the main source of fuel (51.8 percent) for cooking in
urban areas. The firewood is the major source of cooking fuel in Mountain (87.9 percent),
Hill (76.2 percent) (CBS/UNDP/ILO, 2008).
The present energy consumption pattern as depicted above is unsustainable as it
depends on depleting forest resources and imported petroleum products. Both energy
resources are high carbon emitting and need to be replaced/ reduced by other clean
energy technologies and energy saving devices. Apart from alternative energy
technologies, Nepal has the potentiality of generating hydropower. Hydropower is an
attractive energy source as it is renewable with minimal operational emissions of
greenhouse gases. But climate change will have severe impact on hydropower
generation. Climate warming is often accompanied by changes in the hydrological cycle
e.g. changes in rainfall patterns, snow and glacier melting, more atmospheric water
vapor and evaporation, and changes in soil moisture and runoff.
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2011 Bhutan Climate Summit: Nepal Thematic Road Map
The most critical impacts of climate change in Nepal can be expected to be on its water
resources, particularly glacial lakes, and its hydropower generation. Water supply
infrastructure and facilities are at risk from increased flooding, landslides, sedimentation
and more intense precipitation events (particularly during the monsoon) expected to
result from climate change. Greater unreliability of dry season flows, in particular, poses
potentially serious risks to water supplies in the lean season. Hydroelectric plants are
highly dependent on predictable runoff patterns. Therefore, increased climate variability,
which can affect frequency and intensity of flooding and droughts, could affect Nepal
severely. Glacier Lake Outburst Flood (GLOF) and increased run-off variability threatens
the potential for hydropower generation. There is also an important trans-boundary or
regional dimension to both climate change impacts and responses. Many catastrophic
GLOF events in Nepal, in fact originated in Tibet. Conversely, decisions about water
resource management or hydropower generation in Nepal affect neighboring countries.
Therefore, in addition to national discourses on linkages between climate change and
development, such discussions might also be needed at a regional level to formulate coordinate strategies (OECD 2003).
Effects of climate change on water resources could yield manifold implications either due
to too much and/or too little water. Climate-induced water stresses directly affects
agricultural productivity, malnutrition, human health and sanitation. On the other hand,
too much water impacts human settlements, infrastructure and agriculture land. Local
communities highlighted that climate induced events have direct impacts on renewable
energy sources. For instance, changes in river flow will have direct implications for
micro-hydro projects in the hills and mountains; an increase in the number of cloudy
days and changes in the form of precipitation (from snowfall to hailstones) adversely
affects solar power potential in the mountain; and increased incidence of forest fires
threatens the availability of already scarce fuel-wood sources. Nepal's development is
being severely restricted by lack of access to energy (MoEn, 2010).
A government recent report has identified following possible impact of climate change on
Nepal’s hydropower generation (MoE 2010; ADB 2009):

Climate warming will bring fluctuation in the quantity of river water in the snowfed rivers of Nepal, which in turn will affect the design and power generation.

The possibility of glacial lake outbursts is high with the increase in temperature. If
so happens, it will bring heavy floods in the concerned rivers and may wash
away the infrastructure or deteriorate reservoirs with sand and debris.

Changes in the quantity and timing of river runoff, together with increased
reservoir evaporation will have a number of effects on the production of
hydroelectric power.
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2011 Bhutan Climate Summit: Nepal Thematic Road Map

Climate change may also result in some planned projects being cancelled or
adapted.

Climate change will have impacts on both electricity demand and supply. Higher
air temperatures will tend to lower winter heating demands but increase summer
cooling demand.
Climate change may affect other renewable technologies; wind patterns may change as
a result of changed temperature gradients, and changes in cloud cover may affect the
performance of solar panels.
Understanding the impact of climate change on the generation of clean energy is
important for climate resilient planning. Such planning increases the return in its lifetime
and ensures sustainable supply over the life period. Energy Planning needs to be
decentralized and dedicated so should be diversified. Alternative/renewable Energy
technologies provide that opportunity. The definition of alternative technology could be
contextual. About 50 years of experience of Nepal shows that they are energy
generating (micro-hydro or solar panels) plus energy saving devices and/or negative
impact mitigating devices (for instance improved cooking stoves). International
experience shows that renewable energy development can be more effective and
reliable option to lead country to the low carbon trajectory that the hydropower
development as RE development is participatory, decentralized, user friendly,
diversified.
This paper intends to chart out Nepal Country Roadmap on Ensuring Energy Security
and Enhancing Alternative Energy Technologies for Nepal focusing specifically on
preparing a 10-year adaptation plan to Climate Change for Eastern Himalayas.
2.
Overview status of knowledge and actions taken to adapt to climate change
2.1.
Mainstreaming climate concerns in development planning
The climate resilient planning is complex as it has to make decisions under conflicting
situations. The growing demands for water and electricity, coupled with reduced
dependability of low season flows under climate change would suggest the need for a
greater role for storage hydro facilities as an adaptation response, as opposed to the
conventional run-of-river schemes. Construction of dams, however, is currently not being
encouraged, in large part due to other environmental risks posed by them.
Over 85% of the population relies on traditional biomass for their energy supplies and
more than 11 million people do not have access to electricity. Approximately 90% of
Nepal’s electricity production is from hydropower. Irregularities in stream flow affect the
reliability of hydropower, and siltation from landslides and flood events further reduces
power generation efficiency. Therefore, the climate resilient planning is very important
for the sustainable hydropower development in Nepal.
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2011 Bhutan Climate Summit: Nepal Thematic Road Map
The Tenth Plan (2002-2007) prioritized the power sector and aimed to expand electricity
coverage in a sustainable and environment friendly manner; accelerated rural
electrification; and developed hydro-power as an export item. It aimed also to develop
alternative energy, reduce dependency on imported energy and also emphasized to
strengthen the role of the private sector in developing and delivering these priorities. The
Three Year Interim Plan (2008-2010) envisions that the hydropower sector is to develop
based on optimal utilization of water resources to meet the domestic power demand and
export the surplus while expanding the development and services in order to contribute
to the livelihood improvement of Nepalese people. The Three Year Plan (2011-2013)
has explicitly stated the sustainable development as the goal of the planning and set the
development strategy as to achieve employment centric, poverty alleviation oriented,
sustainable and broad-based economic growth with the joint efforts of the government,
private and community/co-operatives sectors (NPC, 2010). For the first time in the
history of planning, Nepal has placed explicit focus on climate resilient planning
especially in the infrastructure sector.
The Government of Nepal approved Climate Change Policy 2011 was approved on 17
January 2011. One of the aims of this Climate change Policy is to take benefit from the
CDM, contribute to the development of clean energy and prepare National Strategy of
Carbon Trade by April 15, 2012. The objective of this policy is to increase the
consumption of clean energy such as hydroelectricity, renewable and alternative energy
and reduce green house gas emission by promoting energy efficiency and encouraging
the use of green technology. The Climate Change Policy among others include the
policies to
reduce the green house gas emission, further develop and use the
appropriate technology in the clean, renewable and alternative energy sector and
formulate and implement plan for alleviating climate change related adverse impacts; to
increase energy efficiency; the industries should submit energy audit report to climate
change related agency; to develop and promote electricity based transport system
(electric rail, Ropeway, cable car, etc.) and industries; to encourage low carbon emitting
activities will with financial and technical supports; to manage financial resources by
encouraging carbon trade through the promotion of clean development mechanism.
Further, Nepal Climate Change Knowledge Management Centre (NCCKMC) has been
established at the Nepal Academy of Science and Technology in partnership with the
Government of Nepal- Ministry of Environment. The NCCKMC Project is a part of the
expanded process of National Adaptation Program of Action (NAPA) for Climate Change
in Nepal (2008-2010), which is being supported by DANIDA, Department for
International Development (DFID) Global Environment Facility and United Nations
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2011 Bhutan Climate Summit: Nepal Thematic Road Map
Development Program Nepal. The Center is to carry out the following long-term activities
relating to the climate change and its impacts (NAST 2010):
• Documentation, research, training and capacity development
• Facilitate access to information
• Provide policy and development planning advisory services
• Formulate and implement strategies to sustain the Center and
• Spearhead the establishment of regional centers.
2.2
Renewable energy technology and national initiative to address climate concerns
Renewable energy technologies like biogas, solar, micro/mini hydro, improved cooking
stoves, improved water mills have been contributing in reducing emission and also have
good potentiality of carbon mitigation in future as well. The biogas replaces firewood for
cooking hence avoids deforestation. The improved cooking stoves lead to reduced green
house gas emission, mainly carbon di-oxide (CO2) by replacement of non renewable
biomass used for cooking. Micro/mini hydro plants produce electricity for supplying it to
households and other electrical end-use enterprises. Use of the generated electricity
replace possible establishment of diesel mills thus reduce use of fossil fuels such as
diesel used in rural areas of Nepal for lighting and agro-processing needs. Solar home
systems replace kerosene lamps used for lighting at rural household level. Similarly,
improved water mills avoids possible establishment of diesel mills for agro-processing.
As of 2010, 15.62 MW of micro hydropower has been developed, 5 MW of solar power
has been developed and installed in the rural household as solar home system; 7239
water mills have been installed, 9.2 kW wind power have been installed, 415649
households are using improved cook stoves, and 221286 biogas plants have been
installed (NPC/UNDP, 2010).
About 9% of the population uses renewable energy
resources. During the Three Year Plan there is a target to provide with access to
electricity to additional 7 percent of the total rural population from alternative energy
sources by installing 15 MW micro hydropower in the potential Hill districts of Nepal
which will benefit the 150,000 households from electricity facility, and 125,000 Solar PV
home system and 100,000 small solar systems. Additional 1 MW capacity will also be
generated with wind energy system (NPC, 2010).
The renewable energy programmes under Alternative Energy Promotion Centre (AEPC)
are already making an important contribution to the mitigation of greenhouse gas
emissions and have the potential to assist in adaptation to climate change as well. In
order to better address climate change issues, Government of Nepal decided to
establish Climate and Carbon Unit (CCU) in AEPC. The UK Department for International
Development (DFID) has provided financial support and the technical assistance has
been provided by SNV Netherlands Development Organization. The CCU has
set
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2011 Bhutan Climate Summit: Nepal Thematic Road Map
objectives to i) leverage the carbon mitigation and climate change adaptation potential of
existing and future Renewable Energy technologies and programmes; ii) promote district
level renewable energy-based mitigation and adaptation activities by overseeing and
coordinating District Climate and Energy Plans (DCEPs); iii) support the Government of
Nepal in formulating national policies as part of Low Carbon Development Strategy and
act as a knowledge centre on clean energy, carbon finance and climate change.
The following Table shows the estimated annual emission reduction by renewable
energy project.
Table: 1: Renewable energy project and emission reduction potential in Nepal
Micro-hydro
Promotion
The project activity reduces greenhouse gas (GHG) emissions
through the replacement of diesel fuel used for lighting and milling.
Estimated Annual Emission Reduction: 40,535 tCO2e
Biogas Support
Program - Nepal
The replacement of firewood that is non renewable biomass
(NRB) is counted as emission reduction under the Clean
Development Mechanism (CDM). Estimated Annual Emission
Reduction: 51,086 tCO2e
Biogas Support
Program - Nepal
The generated biogas will feed biogas cook stoves, and replace
the firewood used for cooking in wood stoves in the baseline
scenario. Estimated Annual Emission Reduction: 50,363 t CO2e
Nepal Biogas
Support Program-
The project replaces non-renewable biomass (firewood) and/or
fossil fuels (kerosene and/or LPG) for cooking purposes.
Estimated Annual Emission Reduction: 40,535 t CO2e
Promotion of the
Improved
Cooking Stove
(ICS) - Nepal
The project activity is efficiency improvement over the existing
traditional cook stoves which will save non-renewable biomass in
the baseline scenario. For instance, A study on Improved Cooking
Stove (ICS) and Its Impact on Firewood Consumptions and
Reducing Carbon Dioxide Emission: A Case Study from TMJ
Area, Nepal showed that after adopting ICS, their firewood
requirement has decreased by about 45% which resulted in a
significant reduction in the emission of the CO2 (Khanal and
Bajracharya Estimated Annual Emission Reduction: 113,128
tCO2e
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2011 Bhutan Climate Summit: Nepal Thematic Road Map
Promotion of the
Solar Home
System (SHS) –
Nepal
The Solar Home will replace the kerosene used for the lighting in
Promotion of the
Improved Water
Mills (IWM) Nepal
The improved water mill is a modified version of the traditional
these rural household. Estimated Annual Emission Reduction:
31,037 tCO2e
water mill which translates into a higher agro-processing capacity
(milling capacity often doubles) and possibility of providing a
diverse range of services like hulling, oil expelling, saw milling etc.
Estimated Annual Emission Reduction: 38,699 tCO2e
Source: Climate and Carbon Unit (CCU), AEPC
A recent study identified a list of climate proofing technologies that have high potential of
dissemination and can be considered as most potential ones for developing adaptation
and mitigation projects (CRT, 2011).
From this perspective, the most potential climate-proofing technologies include: microhydro, improved water mill, improved cook stove, solar home system and biogas
digester. Extending the list we may include hydraulic ram pump, rocket stove, parabolic
solar cooker, and solar dryer and solar photovoltaic pumping system.
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2011 Bhutan Climate Summit: Nepal Thematic Road Map
Table 2: Potential Climate-Proofing Technologies
SN
Technology
Adaptation
Mitigation Potential
Potential
Hydro-Power Based Technologies
1
Mini and Micro Hydropower
Yes, CDM project under
development
2
Pico-Hydro (Peltric Set)
Yes
3
Improved Water Mill (Ghatta)
Yes
4
Hydraulic Ram Pump (Hydram)
Yes
5
Rain Water Harvesting
Yes
Yes, CDM project under
development
Biomass Based Technologies
1
Household Improved Cooking Stoves
Yes
Yes, CDM project under
development
2
Rocket Stove
Yes
Yes
3
Metallic stoves
Yes
Yes
4
Household Biogas Plant
5
Briquette/Charcoal
Yes, CDM project registered
Yes
Solar Energy Based Technologies
1
Parabolic Solar Cooker
Yes
2
Solar Dryer
Yes
3
Solar Home System
4
Solar Photovoltaic Pumping System
Yes
Yes
Yes, CDM project under
development
Yes
Wind Power Based Technologies
1
Small Scale Wind Power System
Yes
Yes
Bio-fuel
1
Bio-diesel
Yes
An analysis of the carbon mitigation potential based on certain assumptions indicates
that among the Renewal Energy (RE) technologies currently in practice in Nepal
domestic biogas plants have highest (78%) carbon mitigation potential followed by
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2011 Bhutan Climate Summit: Nepal Thematic Road Map
improved cooking stoves (8.34%) over their technical lifetime. As of 2010, only 15 to 25
percent of carbon mitigation potential has been realized. Table 3 below shows carbon
mitigation potential from decentralized renewable energy technologies and mitigation
progress so far achieved in Nepal.
Table 3: Carbon mitigation potential and achievement in RET sector
Renewable
Energy
Technologies
(RET)
GHG ER/Unit
Domestic
biogas plants
2.3ton CO2
eq/plant/year
50,600,000
Contribution
of Major RE
technology in
GHG ER
potential in %
78.15
Micro-hydro
power plant
2.3ton CO2
eq/kW/year
3,450,000
5.33
Improved
Cooking Stove
1.2 ton CO2
eq/plant/year
5,400,000
8.34
1,188,000
Solar Home
System
0.22 ton CO2
eq/plant/year
3,300,000
5.10
660,000
Improved
Water Mills
8 ton CO2
eq/plant/year
2,000,000
GHG ER
Potential
(tones CO2
eq)
GHG ER
Progress
(tones CO2
eq)
Progress
as % of
potential
10,120,000
20.00
5,17,500
15.00
22.00
20.00
3.09
496,000
24.80
Assumptions
Life: 20,
Potential 1.1
million
Life: 15,
Potential:
100MW
Life: 3,
Potential: 1.5
million
Life: 15,
Potential:
1million
Life: 10,
potential:
25000
Source: Chaulagain and Laudari, 2010
Currently the income from Clean Development Mechanism (CDM) in biogas sector is
about US$ 0.4 million. Certified emission reduction (CER) from each biogas plant is
estimated to be 2.3 tons per annum. For each ton of CER, the kfW offers 9.8 Euro as per
agreement.
Additional about 0.1 million biogas plants are in the process of CDM
registration, which will generate about US $ 2.8 million income for Nepal (Nepal 2011).
As per the AEPC record followings are the Emission Reduction Purchase Agreement as
of today:



Biogas: ERPA signed with World Bank for 7 million USD (deliver 1million CER)
Biogas: ERPA Signed with KfW for 8.6 Million Euro (deliver 1 million CER)
Micro-hydro: ERPA signed with World Bank for 1.9 million USD (deliver 1,91000
CER)
Others (IWM, ICS, additional biogas) are in progress and not yet in the stage of
reporting.
The main driver for improved cooking stove program to date has been health and forest
conservation. However, as most improved cooking stoves and alternative fuels can offer
significantly reduced GHG emissions, the potential for carbon funding to transform the
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2011 Bhutan Climate Summit: Nepal Thematic Road Map
sector is considerable. This is an area where the goals of development and climate
mitigation overlap and improved cooking stoves could benefit from carbon finance on a
large scale (HEDON 2007)
2.3
Dimensions of climate resilient energy planning
For enhancing the use of alternative energy technologies and ensuring energy security,
the action plan should adopt three-prong strategy- enhancing adaptive capacity,
reducing vulnerability, and increasing resilience. Vulnerability is the degree to which a
system is susceptible to, and unable to cope with, adverse effects of climate change
such as climate variability and extremes. Vulnerability is a function of the character,
magnitude, and rate of climate change and the variation to which a system is exposed,
its sensitivity, and its adaptive capacity (IPCC 2007). Adaptive Capacity is the ability of a
system to adjust to climate change, to moderate potential damage, to take advantage of
opportunities, and to cope with the consequences (IPCC 2007). Resilience is the
capacity of a system to absorb disturbance and reorganize while undergoing change so
as to still retain essentially the same function, structure, identity, and feedbacks
(www.resalliance.org).
As mentioned in the section 1 of this report, a significant portion of the household energy
comes from traditional sources and for which virtually no or very insignificant amount of
money needs to be paid by rural people. Furthermore, they are less exposed to the
benefits of modern technologies and also are constrained by low purchasing power. In
this situation, to bring changes in the energy consumption pattern, a complete set of
measures targeted to above three dimensions is pertinent.
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2011 Bhutan Climate Summit: Nepal Thematic Road Map
Figure 1: Three dimensional climate resilient energy planning
Reduce vulnerability


Subsidy to adopt modern
energy services
Make legal and policy
arrangements in favor of
vulnerable people
Increase resilience Enhance adaptive
 Use of alternative energy



Energy based livelihood
enhancement 
Use of energy saving
technology and
appliances
Access to market




capacity
Exposure visits
Awareness rising
Knowledge sharing
Network building
The above Fig. 1 presents the glimpse of activities that can be undertaken for achieving
three different but interrelated objectives.
3.
Issues/challenges, gaps/barriers and opportunities
3.1.
Issues and challenges
There are multifold issues and challenges facing climate change and energy sector. The
major ones are listed below:









Mainstream climate change adaptation into key organizations
Reduce fuel wood consumption per household by promoting efficient and clean
cooking technologies
Substitute the consumption of petroleum products with renewable energy and
bio-fuels
Manage demand side of energy through the use of energy efficient technologies
and appliances
Increase access to alternative energy services of the low income people residing
in remote areas
Make alternative energy technology affordable to the ultra-poor people
Connect micro hydropower with the national grid when grid services extend to
the areas served by micro hydropower
Make micro hydropower financially sustainable by increasing load factor through
the promotion of productive end uses especially in cottage and micro industries,
Manage used lead acid battery
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2011 Bhutan Climate Summit: Nepal Thematic Road Map



3.2.
Make alternative energy technology instrumental to income generation,
employment creation and poverty reduction
Manage subsidy and program management funds for promoting alternative
energy technologies and increasing access
Increase access to credit to renewable energy users.
Gaps and barriers
Policy and legal reforms supporting to institutional strengthening/restructuring and
integrated/coordinate action and joint fund mobilization are prerequisites for the
implementation National Adaptation Programme of Action of Nepal. If we do not consider
the government policies developed with respect to environmental impact assessment,
the only important policy initiative regarding climate change is the Climate Change policy
2011, adopted by the government of Nepal. So is the case in energy sector. The major
thrust of the government was just increase access of the energy to the people. But in the
context of climate change, government needs to priorities the climate proofing energy
technologies for up scaling. For enhancing energy security with the development and
adaption of climate proofing technology, there is a need for overcoming certain barriers
mentioned below:
Policy and regulatory barriers: Incomplete legal framework for government interventions
in the renewable energy sector; Incomplete regulations regarding RE (e.g. lack of
implementation modalities, by-laws and guidelines related to the Rural Energy Policy
and Smart Subsidy Policy; Weak enforcement and knowledge of national RE policies
and the Rural Energy Policy in particular at district and village level; lack of a
government endorsed framework for Public Private Partnership (PPP) models in the RE
sector (including revenue sharing models). Mainstreaming climate change adaptation
into key organizations and designing and implementing such programs remain difficult to
achieve without overcoming policy and regulatory barriers.
Institutional (capacity) barriers: Inadequate capacity of central level institution (AEPC) to
take ever growing responsibilities with the expansion of the renewable energy sector and
to introduce sector wide approach in renewable energy development; Lack of experience
with comprehensive integrated energy planning processes at district and village level;
inadequate capacity within district and local governments to regulate, develop,
implement and monitor RE projects; lack of a network between energy
companies/distributors of RE systems and (micro-) finance institutes; limited sharing of
best practices in RE amongst different stakeholders and projects/programmes; lack of
harmonization/cooperation between different RE projects/programmes in Nepal.
Financial barriers: High costs of RE systems; high dependency on donor funds; lack of
knowledge of available financing/incentive schemes to finance RE technologies; lack of
knowledge within (micro-) finance institutes on market opportunities in the RE sector and
how to develop loan-products for the RE sector; risk aversion of finance institutes;
insufficient capital within micro-finance institutes to finance RE applications; lack of
knowledge on how to set up a framework for future carbon finance activities to create a
sustainable financial environment; and limited availability of credit to user groups. Costs
of climate proofing energy technologies may prohibit its wide-scale adoption if innovative
financing mechanisms are not put into place.
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2011 Bhutan Climate Summit: Nepal Thematic Road Map
Technical barriers: Lack of detailed information on the potential sites and feasibility of
RE systems; limited experience with the technical, economic and environmental aspects
of RE; insufficient capacities of hydropower system manufacturers, installers and
maintenance technicians regarding hydropower plants between 100 KW and 1 MW.
Information and awareness barriers: Low level of awareness about RE technologies and
lack of information on the costs and benefits of various RE systems; inadequate
capacities to compare different RE options and to select the most feasible option for the
local situation. Inadequate climate change projection information upon which to base
assessment of climate effects on energy security.
3.3.
Opportunities
Various factors play an important role in the promotion and up-scaling of RETs which
include RE policies, stakeholders’ interest for participation, government approach,
implementing modalities, funds, micro-finances and the awareness level of the
communities. Following are the enabling factor contributing to the promotion of the
climate proofing energy technologies:








4.
the high priority given by Government of Nepal and development partners to the
development of alternative energy services
the increased global priority to alternative energy development in the context of
climate change,
the huge possibility of alternative energy to take advantage of Clean
Development Mechanism other carbon finance schemes
The interest of the Nepali private sectors to be involved for the development and
promotion of alternative energy technologies.
Good RE potential, especially small hydropower, to harness in the country.
Good scope for implementation of energy efficiency measures and RE
applications linking with CDM benefits through bundling and individual projects.
New initiatives at the programme/projects could take advantage of the
networking and partnership built the private–public-community sector.
New initiatives could be developed based on the experiences and lessons from
“good practices” that are already available and documented within and outside
the country
Roadmap of alternative energy technology development
The adaptation priorities in the energy sector focus on better and more accessible
information and technology, stronger and more adaptable institutions, and natural and
human-made infrastructure to maintain energy production base, and expand and
integrate transmission and distribution networks.
4.1. The goal
The overall goal of climate change adaptation from the viewpoint of energy security is
the sustainable management and supply of clean energy to the people with the energy
price being at a level that will not adversely affect the economic performance of the
economy.
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2011 Bhutan Climate Summit: Nepal Thematic Road Map
4.2. Objectives
To ensure sustainable supply of clean energy to meet growing demands of the people
through developing and promoting efficient energy technologies.
4.3. Strategy
The strategy of climate resilient planning focuses on the increasing use of renewable
energy, substitutions of climate deteriorating energy with clean energy, energy efficiency
and demand side management of energy. All these strategic interventions aim to reduce
vulnerability, increase resilience, and enhance adoptive capacity.
The broader strategic focus of alternative energy development will be to create capacity
and comfortable environment for the up scaling, expansion and replication of successful
renewable energy programs of the past and taking up new programs primarily aiming at
war against darkness, wider application of renewable energy for creating livelihood
options in line with the national and global priority and addressing climate concerns by
helping country to come gradually towards low carbon growth path. In this pursuit, the
specific strategic focus in next decade will be on:







Strengthening RE Institutional capacity at different levels of Government
hierarchy, civil societies and private sector institutions across renewable energy
technologies and among various stakeholders engaged in RE development
Policy and regulatory framework designed to facilitate PPP for the development
of grid interactive micro and micro hydro, solar photovoltaic, biomass and wind
energy, inclusive development of the RE sector, continuous support for
standalone system, harmonization of RE policy and approaches policy and
approach to adapt the federalism oriented strictures and intuition
Enhancing project financing by demolishing barriers to the mobilization of
available fund, attracting financial institutions of the country and enhancing their
project appraisal capacity, creating conducive environment for investing on RE
sector, and simplifying financial transaction by the use of modern information
technology
Increasing support to livelihood through productive end use promotion by mainly
focusing on local demand and local resources, promoting application of energy in
household works, business, schools, health instituting and community centers
through value chain approach.
Program for scaling up by creating capacity for scaling up of the capacity of
existing and new power projects, developing grid interactive solar energy system,
promoting institutional solar, and intensifying carbon reducing cooking
technologies.
Strengthening link existing between energy and climate change by promoting
climate proofing energy solutions to the consumptive and productive use of
energy services, and by making CDM and other carbon finance mechanisms the
important sources of income to fund renewable energy programs in Nepal.
Promoting research and development activities for the development of affordable
efficient climate proofing energy technologies and devices to achieve energy
efficiency and their adaptation mechanism
15
2011 Bhutan Climate Summit: Nepal Thematic Road Map
4.4.
Prioritized activities for climate change adaptation
4.4.1. Priority action related to RE institutional capacity strengthening









4.4.2.







4.4.3.



Develop partnership modality for the involvement of private sector like Federation
of Nepalese Chambers of Commerce and Industries (FNCCI), Confederation of
Nepalese Industries (CNI) and Association of District Development Committees
of Nepal (ADDCN) and National Association of Village Development Committees
in Nepal (NAVIN) in increasing access to climate proofing energy services
Extend support to ADDCN and NAVIN for institutionalization
Restructure AEPC to make it able to seek higher level international cooperation,
deliver national targets, and lead Nepal to low carbon growth path
Conduct study to assess the feasibility of hybridization of solar home systems
with wind energy
Intensify advocacy and public awareness programs on applications and cost and
benefits of RE, CDM and climate change mitigation among policy makers,
communities, private sector, and local government bodies
Develop Capacity of Private sectors on project development, manufacturing,
installation, manage credits
Conduct orientation on energy , environment and climate change to the staffs
Establish of well equipped workshop by turbine manufacturing companies for
fabrication and installation of larger schemes
Strengthen monitoring capacities at all levels
Priority action related to Policy and regulatory framework
Develop and Implement climate resilient energy planning guidelines.
Prepare and get approved integrated district RE plans;
Prepare and get approved framework and implementation guidelines for PPP
models including possible revenue sharing schemes;
Design and implement the smart subsidy system for RE applications (based on
geography, economy and need ) ;
Design and implement feed-in-tariff policy and grid connection framework both
for Micro-hydro (MH) and solar energy and conclude power purchase agreement
with Nepal Electricity Authority.
Prepare and introduce guidelines and technical design manuals for scaling up of
renewable energy services.
Prepare and introduce mechanisms to improve cooperation/harmonization in
integrated energy planning, monitoring and quality assurance between different
RE projects/programmes
Priority Action related to RE project financing
Build strong partnership with private sector like FNCCI, CNI and ADDCN and
NAVIN for their involvement in implementing energy and climate change projects
Build capacity of Banks and Micro-finance Institutions (MFIs) to appraise credit
proposal and develop financial instruments targeted to RE development
Establish network between energy companies/RE system distributors and MFIs/
Banks for smooth operation of the RE systems
16
2011 Bhutan Climate Summit: Nepal Thematic Road Map



Establish framework for carbon finance activities for enhancing financial
sustainability of RE investments
Conduct training courses for (micro-) finance institutions, commercial banks on
financing RE applications
Support in the development of a framework for carbon finance activities to
enhance financial sustainability of RE investments
4.4.4. Priority action related to livelihoods enhancements







4.4.5.






4.4.6.






4.4.7.
Consolidate proven energy based livelihood packages so far available in Nepal
Provide training to the entrepreneurs to establish enterprises for income
generating activities from end use application based on the availability of the
products
Enhance livelihood of the users/entrepreneurs through business literacy training
and enterprise development.
Provide incentives as well as technical support for the establishment of
enterprises
Develop Rural Information and Communication Centre as an enterprise in market
centers.
Strengthen community resource centre , and community radio as important
resource centre
Conducted Innovative study/ pilot initiation related to electricity based new enduses and enterprise
Priority actions related to scaling up of RE services
Increase the capacity of ongoing and new micro hydropower projects
Develop and Install grid interactive solar systems
Replicate widely the Institutional solar systems
Promote community biogas plants
Promote ICS and biogas programs extensively in Terai regions
Promote and upgrade Improved water mills
Priority action related to linking energy and climate change
Maintain the balance between fuel wood demand and supply for rural household
energy through plantation
Scaling- up of biomass energy technologies (quantity, quality, and coverage) for
less fuel wood consumption
Scale-up of biomass energy technologies (quantity, quality, and coverage) for
less fuel wood consumption
Strengthen local level forest institutions and their governance implementation of
adaptation priorities of community forestry user groups
Sensitize Community forestry user groups on economic and carbon financing
potentials
Make rural people more aware of sustainable biomass energy technologies
Priority action related to research and development
17
2011 Bhutan Climate Summit: Nepal Thematic Road Map








4.5.
Conduct research on innovative financing mechanism suitable to Nepal
Conduct research on improving subsidy policy
Develop energy efficient devices for households, industries, transport and others
Involve academic institutions in research and development
Develop monitoring and evaluation techniques for monitoring the impact of
Renewable energy development on carbon emission reduction.
Compile/generate baseline data on energy and Climate Change
Implement the policy of third party evaluation of energy development projects
Conduct research on end use promotion of RE services
Quantitative targets
The quantitative target for the 10 years (2012-2021) has been projected based on the
progress achieved until the end of Three Year Interim Plan (2010) and the expected
achievement of first two years of Three Pear Plan (2011-2013), sub-sector capacity, the
resource potential of particular alternative energy and the plans of other complementary
or substitute energy resources development.
The mini and micro hydropower development target for the first five years of planning
period is 42 MW and for the second period 62 MW. Overall target is 104 MW for Ten
years. In case of solar home systems, the plants will be installed in 245 thousand
households in first five years and 300 households in second five years, thus totaling 545
thousand households. Among the cooking technologies, the biogas plants will be
installed in 165000 households in first five years and 135000 households in second five
years. Over the 10 year period additional 300 thousand households will have biogas
plants. In case of ICS and metallic stoves, the first five year plan is to built in 823
thousand households and in second five year plan period in 850 households and within
10 year plan period 1.673 million households (Table 4).
18
2011 Bhutan Climate Summit: Nepal Thematic Road Map
Table 4: Quantitative Targets of 10 yearly Development of Alternative Energy
2021
Total
of
secon
d5
Years
Grand
total of
10
years
2012
2013
2014
2015
2016
Total
of
First 5
Years
MW
5
5
10
10
12
42
12
12
13
13
12
62
104
Unit
s
40000
45000
50000
50000
60000
24500
0
60000
60000
60000
60000
60000
30000
0
545000
Biogas
Unit
s
30000
30000
35000
35000
35000
16500
0
30000
30000
25000
25000
25000
13500
0
300000
ICS and
Metallic
stoves*
Unit
s
10300
0
10500
0
20500
0
20500
0
20500
0
82300
0
180000
18000
0
18000
0
15500
0
15500
0
85000
0
167300
0
RE
Techno
logy
Energy
for
lighting
Mini/
Micro
hydro
Solar
home
system
Energy
for
Cooking
Unit
s
2017
2018
2019
2020
*The projection of Metallic stoves is only 5000 units each year. The rest is ICS.
The access to renewable energy services has been projected based on the population
projection data of Central Bureau Statistics of Nepal and cumulative growth of renewable
energy services. The data shows that in the first year of the 10 year plan (2012), the
percentage of households electrified by renewable energy technologies (mini/micro
hydro and solar) is 13.6 percent, but the coverage percentage will reach to 30.56
percent in the in the last year of the planning period (2021). Likewise, the households
having access to biogas and cooking stoves in 2012 will be 16.78 percent, which will
reach to 43.38 percent in 2021 (Table 5).
Table 5: Access to Energy services to Households
Energy
Technology
Mini/ Micro
hydro
Solar home
system
RE
Electrification
% of HH
electrified
Biogas
ICS and
Metallic stoves
HH RE
Solutions for
Cooking
% of HH with
cooking energy
CBS
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
425000
477500
552500
627500
707500
787500
867500
957500
1047500
1127500
301152
346152
396152
446152
506152
566152
626152
686152
746152
806152
726152
823652
948652
1073652
1213652
1353652
1493652
1643652
1793652
1933652
13.46
14.99
16.95
18.84
20.92
22.92
24.85
26.88
28.83
30.56
281286
311286
346286
381286
416286
446286
476286
501286
526286
551286
623649
728649
933649
1138649
1343649
1523649
1703649
1883649
2038649
2193649
904935
1039935
1279935
1519935
1759935
1969935
2179935
2384935
2564935
2744935
16.78
18.92
22.87
26.67
30.34
33.36
36.27
39.00
41.23
43.38
5394170
5495153
5596463
5698532
5801359
5905205
6009809
6115172
6221294
6328175
19
2011 Bhutan Climate Summit: Nepal Thematic Road Map
Projected HH
The development of major renewable energy services will have very positive impact on
carbon emission reduction. Within 10 years period, the developed renewable energy
technologies –the mini/micro hydro, solar home systems, domestic biogas plans and ICS
will be able to reduce 3588, 1798.5, 13800 and 6022.8 thousand tons of CO2 emissions
respectively in their life period (Table 6).
Table 6: Carbon Emission reduction by lighting and cooking technologies (In thousand
tons)
RE
Techno
logy
Energy
for
lighting
Mini/Mic
ro hydro
Solar
home
system
Energy
for
Cooking
Biogas
ICS and
Mettalic
stoves
Emission
reduction
rate
2.3ton CO2
eq/kW/year
0.22 ton
CO2
eq/plant/ye
ar
2.3ton CO2
eq/plant/ye
ar
1.2 ton CO2
eq/plant/ye
ar
2012
2013
2014
2015
201
6
Total
of
First
5
Years
172.5
172.5
345
345
414
1449
414
414
448.5
448.5
414
2139
3588
132
148.5
165
165
198
808.5
198
198
198
198
198
990
1798.5
1380
1380
1610
1610
161
0
7590
1380
1380
1150
1150
1150
6210
13800
370.8
378
738
738
738
2962.
8
648
648
648
558
558
3060
6022.8
2017
2018
2019
2020
2021
Total of
second
5 Years
Grand
total of
10
years
Note: For the calculation, the life time of Mini/micro hydro has been assumed 15 years,
solar 15 years, biogas 20 years and ICS 3 years.
4.6
Resource estimate (budget)
The financial resources requires for the development of renewable energy technologies
have been estimated based on the current development cost. The resource estimate
includes the cost for subsidy and program cost for all renewable energy technologies.
For the total 10 year period, a total of Rs. 34.70 billion will be necessary to meet above
renewable energy development targets. On average, the resource requirement comes to
be around Rs.3.5 billion a year (Table 7).
Table 7: Financing Requirement for Alternative Energy development (Rs. In Millions)
RE Technology
2012
2013
2014
2015
2016
Total
of
First
5
Years
Energy for lighting
1558
1598
2650
2650
3180
11635
2017
2018
2019
2020
2021
Total of
Second
5 Years
Grand
total
3180
3180
3405
3405
3180
16350
27985
20
2011 Bhutan Climate Summit: Nepal Thematic Road Map
1237.5
1237.5
2250
2250
2700
9675
2700
2700
2925
2925
2700
13950
23625
320
360
400
400
480
1960
480
480
480
480
480
2400
4360
Energy for Cooking
592.4
604
791.5
791.5
791.5
3571
686.5
686.5
609
581.5
581.5
3145
6716
Biogas
ICS and Metallic
stoves
465
465
542.5
542.5
542.5
2558
465
465
387.5
387.5
387.5
2093
4650
127.4
139
249
249
249
1013
221.5
221.5
221.5
194
194
1053
2066
Grand Total
2150
2202
3442
3442
3972
15206
3867
3867
4014
3987
3762
19495
34701
Mini/Micro hydro
Solar home system
4.7.
Implementation Arrangements
The rural energy systems development and the overall climate change initiatives are
both under the purview of the Ministry of Environment (MoEnv).The alternative energy
development programs and associated climate change programs are implemented
through AEPC. The AEPC is taking lead in planning, policy, coordination, monitoring and
fund mobilisation activities in the sector. The government will move towards sector wide
approach (SWAp) in RE sector promoting donor harmonization. Government of Nepal
has established Climate and Carbon Unit (CCU) in AEPC.
At the central level
Renewable Energy Central Coordination Committee (RECCC) and establish Central
Renewable Energy Fund will be created.
AEPC will continue to work through the District Development Committees (DDCs) to
implement district level rural energy programmes. A comprehensive Rural Energy Policy
was promulgated by the Government of Nepal (GoN) in November 2006. It highlights
the role of the private sector in expanding energy solutions and replacing inefficient and
unsustainable use of biomass energy with cleaner energy sources, as well as the role of
community-managed energy service delivery and the promotion of productive uses of
energy for poverty alleviation. District Development Committee (DDC) is the focal
agency in the district. The District Energy and Energy Section (DEES) established under
DDC for coordination, planning, resource mobilization and implementation of rural
energy activities will be responsible for the implementation of project activities. For this,
the DDC will constitute and operationalize various institutions such as District Energy
and Environment Committee (DEEC), District Energy and Environment Management
Committee (DEEMC) and District Energy Fund (DEF). District Energy Fund (DEF) will be
created and/or strengthened under DDC in all programme districts to channel financial
resources for rural energy development.
At the local level various community organisations and groups, as always will be active
to implement the RE program at the grassroots level with required level of partnership.
In addition to the government channels, AEPC will work in partnership with NGOs,
Private Companies, Nepal Federation of Community Forestry Users, Financial
21
2011 Bhutan Climate Summit: Nepal Thematic Road Map
Institutions etc. to take the targeted program to the beneficiary communities and areas.
The Ministry of Environment will work with the Universities and Research institutes to
conduct research on developing affordable RE technologies and Energy efficiency
projects.
4.8.
Financials
At a first glance, it seems that the renewable energy development of Nepal is highly
donor dependent. But very fact is that sector in totality has been equally benefitted from
the fund of donors, government, communities and private sectors. And this trend will
continue more or less the same way in the near future. The government investment is
around 20 percent of the total public investment in renewable energy development.
Various bi-lateral and multilateral development partners, such as, Denmark, Norway,
Germany, Netherlands, Canada, United Nations Development Programme (UNDP),
World Bank (WB), Asian Development Bank (ADB), European Union (EU), etc. have
supported Nepal for the RETs promotion. Similarly, various government bodies, private
sector, non-governmental organization (NGOs), and community based organization
(CBOs) have played vital role in financing RE projects. The involvement of communities
in terms of equity participation in case of micro-hydro power projects and individuals in
case of solar home system, biogas and improved cooking stove is very noteworthy.
Until the end of 2012, many ongoing RE programs will be completed. Prospective
development partners have begun to prepare the framework of cooperation with the
consultation of stakeholders. While, UNDP is planning to support for capacity building
and livelihood enhancement, the World Bank in close coordination with ADB is doing
home works to bring a renewable energy up-scaling programme. Likewise in the
2010/11 budget, one billion rupee has been assigned to expand the micro-hydropower
as a campaign by mobilizing local resources through active involvement of local bodies.
The micro hydro will be implemented in areas not possible to extend the national grid but
feasible of micro hydro in all hill and mountain regions. And the same favor to the sector
is expected in the years to come. So, new avenues of partnership are ahead. The
current initiatives to form Renewable Energy Central Coordination Committee (RECCC)
and establish Central Renewable Energy Fund will also make conducive environment for
partnership. Furthermore, the climate change agenda translated into climate resilient
planning has also opened up new area of partnership.
Promotion of renewable energy will require special policy interventions, such as feed-in
tariffs and renewable purchase obligations. The market-based CDMs, offering incentives
for new investments in renewable energy and energy efficiency, may be the best option
for Nepal.
22
2011 Bhutan Climate Summit: Nepal Thematic Road Map
4.9.
Risk analysis
The risks and uncertainties are still prevalent in Nepalese societies as there has been
very slow progress in constitution making and peace building. Moreover, the
continuation of the caretaker government for several months and crisis of confidence
among major political parties have raised the degree of uncertainty. All these have
delayed the process of approval of legal and policy document which are so crucial to
make improvement in institutional set up and policy environment. The lack of elected
local government bodies and unstable security situation owing to fluid political situation
may hamper programme implementation through DDC.
The RE programs will be
implemented through inclusive and participatory dialogues with the local communities
and political parties for setting priority at the district level with regards to selection of
energy projects. Furthermore, the livelihood related programs will be conducted in close
partnership with the business communities of the districts (chamber of commerce and
other associations), which also adds to the social capital of the program. Networking and
partnership at local level is important from both the angles of smooth implementation of
program and its sustainability.
4.10.
Monitoring and review
Monitoring and Evaluation practices In Nepal have focused mainly on the delivery of
physical and financial quantitative targets rather than socio-economic impact
assessments or even productive use of the services rendered. The National Planning
Commission (NPC’s) Poverty Monitoring and Analysis system (PMAS) included two
energy related indicators: the percent of population with access to electricity, and
average per capita electricity consumption. These two indicators show only coverage
and quantity of energy use. These indicators do not help in understanding the
distributional aspect with respect to income, social and gender perspective not they do
indicate the types of uses of energy and their impacts.
The Monitoring and Evaluation (M/E) component of the programme will be built on the
work done by the Monitoring & Evaluation of Energy for Development (M&EED)
International Working Group led by Global Village Energy Partnership (GVEP) and
Electricité de Francé (EDF) as well as on Department for International Development
(DFID) of UK Government, International Atomic Energy Agency (IAEA), and the World
Bank (WB) work on guidelines and methodologies for energy indicators for sustainable
development. The selected indicators should clearly indicate the progress regarding the
contribution of energy to the livelihood enhancement and contribution to the
achievement of Millennium Development Goals (MDG). Thus the monitoring and
23
2011 Bhutan Climate Summit: Nepal Thematic Road Map
evaluation system will be concerned not only with the process and outputs but also with
the impacts on the targeted goals and targeted communities/areas.
In order to facilitate the monitoring and evaluation of the future program, baseline
information related to selected indicators should be generated from the past project
sites. The survey results will provide knowledge about the delivery, use and
effects/impacts of the current energy program; identify gaps and direct future actions.
The monitoring exercises will be made coordinated, consultative and participatory
involving the DDCs, Village Development Committees (VDCs) and local communities.
The results of monitoring will become inputs for regular and mandatory program review
and evaluation.
Different hierarchies of the government and institutions will monitor different indicators
and will be compiled at AEPC to prepare complete picture of progress. Evaluation by
independent team of experts commissioned by Ministry of Environment will evaluate the
program from third party perspective.
24
2011 Bhutan Climate Summit: Nepal Thematic Road Map
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