Life-cycle Impacts and Economic Costs of Small-scale Renewable Energy Technologies in Nepal

Abstract

Hundreds of thousands of small-scale renewable energy technologies (RETs), mainly micro hydropower plants (MHP), solar home systems (SHS), and household biogas plants, have been installed and are in use in Nepal since the last 30 years. Over ten government and development agency co-funded projects have promoted and developed the sector for these RETs. All of these projects were implemented with the objective of increasing access to energy for the rural population to improve livelihoods and promote economic growth. These RETs are promoted as environment-friendly but the analysis of their environmental costs and benefits have been limited to only the operational or use phases. The life cycle assessments of these popularly used RETs in Nepal are missing. Hundreds of local companies in Nepal are involved in the manufacturing, importing, assembling, transporting, installing and constructing equipment, parts and plants for these three RETs. It is important to understand how and where these companies are sourcing their materials, the amount and mix of energy used in the supply chain, and the end of life treatment of the materials and equipment used. The goal of this research was to identify the life-cycle global warming impacts of these three RETs -- micro hydropower plants (MHP), solar home systems (SHS), and household biogas plants, translate them to economic costs using carbon costs, and assess if these added costs affect the economic viability for each RET. The impact of site (where the RET is installed) on economic viability was examined by looking at the contribution of local manufacture/assembly, transportation, and installation/construction on global warming impact and associated economic costs. My primary research question was whether the carbon costs of life-cycle global warming impact affect the economic viability of the three small-scale RETs. The hypotheses I examined were that the life cycle global warming impact affects the economic viability of these three small-scale RETs and that this influence is site-specific. The knowledge gained from this research is expected to help improve sustainability in Nepal’s clean energy sector. The research method included life cycle assessment (LCA) of the three RETs to estimate global warming impacts. Data for the LCA was collected from the Ecoinvent 3.3 database, literature and case studies. A number of carbon prices for Nepal were considered and economic analysis was conducted to estimate the economic impacts. Uncertainty analysis was conducted using Monte Carlo simulation and sensitivity analysis was conducted to study site-specific economic impacts of global warming. The LCA results showed that household biogas has the highest climate change impact of 331 kgCO2e per MWh of generation at plant, followed by SHS with 110 kgCO2e per MWh and MHP with 30 kgCO2e per MWh. At the currently realistic carbon price of US$ 10 per tCO2e, addition of carbon costs does not cause any of the three RETs to become economically infeasible, hence rejecting the primary hypothesis. However, at a carbon price of US$ 100 per tCO2e, the household biogas plant becomes economically unviable. Transportation of equipment and materials from local origin market to plant site was the topmost contributor to climate change impact for MHP and SHS and third-most contributor for biogas, hence partially supporting the secondary hypothesis.