The Rural Energy Fund

Rural Energy Fund (REF) has been established as stipulated by the "Renewable (Rural) Energy Subsidy Delivery Mechanism, 2006 of the Government of Nepal as follows:

In order to arrange the GON and donor's fund involved in ESAP's for subsidy to the Biomass Energy Technologies, solar energy (SHS and SSHS), micro hydro and other programmes, the  existing Interim Rural Energy Fund (IREF) is expanded into Rural Energy Fund (REF).

The REF will remain under the supervision of the Alternative Energy Promotion Development Board. The REF may consist of one or more funding mechanism as required by various ongoing and future programmes. If the Government of Nepal allocates the fund for Renewable (Rural) Energy particularly for Electrification (MHP, SHS etc.) other than matching fund, this fund will be put in REF and disbursed as per procedure of REF.

The IREF as mentioned above was established in 2001 to administer subsidy to Micro Hydro and Solar Energy (Solar Home System) and was financially supported by Danida.  Norway joined IREF in supporting its cause in Dec 2003.  Since then the IREF has administered disbursement of subsidy which has benefited more than 70,000 rural households in installing Solar Home Syetem and 30,000 households in installing and operating micro hydro schemes in Nepal whose total installed capacity stands at about 3000 kW.  The ESAP portion of REF is aiming at supporting more than 0.8 million household during ESAP's 2nd Phase starting January 2001 by end 2007.  The target breakdown for ESAP is as follows:

Solar Home Syetem : 150,000 HH/system

Micro Hydro / Mini-grid electrification: 150,000 HH (approximating at about 20,000 kW) 

High altitude improved biomass stove :  a)  100,000 HH with subsidy

                                                             b)  400,000 HH without subsidy

Updated: 22 Nov 2006