Carbon Offsettting Micro Hydro

Carbon Offsetting Micro Hydro Project Wins Award

For decades, Nepal and its development partners have talked up the country’s hydro potential aiming at medium to large scale projects. At the other end, with less fanfare, the country’s micro hydro sector has been enabling economic growth and social development across the country. This week, the Nepal Village Micro Hydro Project (NVMHP), a carbon offset project that has met the energy needs of far-flung rural villages through clean energy has been recognised internationally for its contribution towards the reduction of greenhouse gas emissions.

The World Bank’s Global Partnership of Output-Based Aid (GPOBA) project has awarded the Inn-OBA-tions Award to the NVMHP for the most innovative use of results-based financing linked to mitigating greenhouse gas emission. The micro hydro project is implemented by the autonomous government body Alternative Energy Promotion Centre (AEPC).

NVMHP, a bundled micro hydropower project comprising of 450 plants with a 15MW capacity, was launched as a carbon offset project in 2007 by the World Bank to help remote mountain communities access clean and reliable electricity and replace the use of kerosene, diesel, wood, and batteries as energy sources. Under the project, more than one hundred thousand (133,154) households from over 50 districts, mostly in the hilly and mountainous districts, who were not connected to the national grid have benefitted.

“This is a big recognition for us. It has opened doors to collaboration with development partners to promote, develop and use renewable energy technologies to better the lives of millions of people in the country,” said Prem Pokhrel, Sr. Programme Officer, Climate and Carbon Unit under AEPC. The award announced in January, this year, was presented to AEPC on  May 11 in the capital.

Nepal registered NVMHP as a Clean Development Mechanism Project under the United Nations Framework Convention on Climate Change (UNFCCC) in 2010 and since then has received USD 0.65MN (approximately NRs. 6,696,040) as revenue from the sale of carbon credits to the World Bank. The results-based carbon revenue collected from the NVMHP  is being reinvested into new micro hydro plants and the rehabilitation of existing ones states Pokhrel.

The project is estimated to have reduced CO2 emissions by 93,437 tonnes since 2010.


This acknowledgment of our efforts will also help Nepal to become a viable market for carbon financing in the renewable energy sector.

Prem Pokhrel, Sr. Programme Officer, Climate and Carbon Unit, AEPC

In an attempt to power remote mountainous districts that will not be connected to the national grid anytime soon,  the government through AEPC and various developmental partners has been investing in and developing mini as well as micro hydro projects. The first micro hydro project with an installed capacity of 5KW was built in 1962. Currently, about 25 MW of electricity is generated in rural districts from micro and mini hydro projects.

Sixty percent of the total population, particularly those living in the remotest parts of the country, are still deprived of access to electricity.