Future Energy Supply Possibilities and their Implications on Nepal’s Energy Security

Abstract

Nepal is 100% dependent on imported petroleum products as it has no as yet viable proven reserve. The import of petroleum is increasing at an alarming rate (15.2% annually) which is creating not only a burden on the national economy but also raising the issue of energy supply security and environmental degradation. In this study, eleven distinct significant indicators have been used to evaluate the energy security status of the country. Since there is no such detailed quantification of indicators carried out in previous research, this study can be a significant input to policymakers and planners. It also explores the policy intervention measures to improve energy security status in the context of a developing country that is increasingly dependent on imported commercial fuels. Five different scenarios have been developed considering 2017 as a base year and 2040 as an end year with different economic growth rates 4.5%, 7.2% and 9.2% as main driving parameter. Two additional policy intervention scenarios (Policy-I and Policy-II), prioritizing electrification to enhance energy security, have been analyzed. The energy demands have been projected using the Model for Analysis of Energy Demand (MAED), while the Low Emission Analysis Platform (LEAP) tool has been used to analyze the supply, the energy supply requirement, fuel import dependence, cost, as well as the size of power plant requirement under different scenarios. The results manifest that there would be a reduction in Total Primary Energy Supply (TPES) requirement by 1.14% and 8.7% under policy-I and Policy-II scenarios respectively in the year 2040, compared to the reference scenario (7.2%) resulting in improved energy security, economic vulnerability, and GHG mitigation. It indicates that the use of indigenous renewable energy resources mainly hydro is indispensable for ensuring the energy security of Nepal.