Case for an Off-Grid Renewable Energy Fund in Nepal & Myanmar

Case for an Off-Grid Renewable Energy Fund in Nepal & Myanmar

Solar water pumps being installed. Photo by: Gham Power

 

Access to electricity is fundamental for a country’s overall growth. Yet in countries like Nepal and Myanmar where majority of the population live in sparsely populated off-grid rural areas, access to electricity may seem a distant reality; extending the national grid in these areas is not always physically and economically viable. Despite the tremendous potential for solar energy to meet the energy supply shortage in both countries, solar has barely made it into the countries’ energy mix. Nepal and Myanmar continue to rely heavily on fossil fuels that are expensive and unreliable energy alternatives that threaten to accelerate rising temperatures in the sensitive Himalayan range.

One reason for this is because solar energy is highly capital intensive and needs upfront financial support. Under these circumstances, the involvement of private sector players becomes even more crucial. In 2015, the NIIC Fund of One to Watch (OTW) invested in Gham Power Nepal Private Limited, a local developer leading the solar revolution in Nepal that had completed over 2000 projects with 2,500 kW installed capacity to date. The company was founded in 2010 and has positively impacted 10,000+ lives with 2920 tonnes in CO2 reduction.

As the need to promote off-grid renewable solar energy becomes increasingly important locally and globally, OTW established the Off-grid Renewable Energy (ORE) fund – an impact-oriented solar energy investment fund with a vision to save the Himalayas from climate change and support livelihoods – with six Dutch impact investors and domiciled as a cooperative in the Netherlands.

The fund aims to curtail the shortfall in electricity supply, improve livelihoods, support entrepreneurial development and fight climate change in Nepal and Myanmar by financing projects involving experienced local solar developers who also share the same passion and are driven towards facilitating access to energy, capacity and scalability to frontier and remote solar markets. ORE focuses on guiding high potential and ambitious solar energy developers to grow into larger scale market leaders. Throughout the life span of the fund, ORE will enhance the capacities of these solar developers so that quality projects can be implemented in Myanmar and Nepal.

 

Photo by: Gham Power

 

The core strategy of ORE is to accelerate local solar developers who take the lead in sourcing for projects that fit within the investment criteria and invest in solar assets. At present, ORE is inching closer to finalizing the due diligence process with a local developer in Myanmar. With the on-boarding of this developer, ORE will align its activities with Myanmar’s National Electrification Project (NEP) in installing MGs in remote areas.

In line with market and country needs, solar developers will roll out specific product lines in Myanmar and Nepal. While ORE is focusing on mini-grids (MG) to cater to communities living in off-grid locations in Myanmar, ORE in Nepal will be prioritizing projects on Commercial & Industrial (C&I) systems that are connected to the national grid. The competitiveness of this product relies on the fact that this solution will reduce costs by 45% compared to energy tariff of the national grid.

Additionally, solar developers will also offer Agro-Processing (AP) solutions in the form of solar water pumps that rural communities can purchase by making affordable monthly installments. This will empower smallholder farmers by enhancing their ability to generate increased incomes and improving productivity at a cost-effective rate while displacing expensive and polluting fossil-fuel systems. The installations of MGs, C&Is and APs will also directly curb carbon emissions and reduce the use of diesel and petrol.

The ORE team has now successfully raised over a million euros for the fund. In the coming months, the team will be directing its efforts to reach out to existing investors and generate an interest among prospective investors who are keen on creating environmental and socio-economic impact through their investments. We welcome individual and institutional actors who are equally passionate to promote renewable energy in emerging markets to collaborate with us. To learn more about ORE and how you can play an active role in improving the livelihoods of off-gird communities in Nepal and Myanmar, contact Matthijs van Rijn, Renewable Energy Business Analyst at matthijs@onetowatch.nl.  

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