Gham Power has developed a solar micro-grid (35 kW Phase 1 and 37 kW Phase 2) that was inaugurated on 13th – 14th March 2016 in Khotang / Okhaldhunga by the Honourable Mr. Vishwendra Paswan, Minister for Population and Environment for Nepal.
This is one of the few solar micro-grid projects in Nepal and has been made possible through an innovative financial model that includes:
- Grant capital from Asian Development Bank, DOEN Foundation and GSMA Mobile for Development Utilities Innovation Fund;
- Equity from the community as well from Gham Power (the power service provider); and
- Debt finance from a local bank.
Following the inauguration, at the ADB Investor Forum in Kathmandu, it was mentioned that investing in micro-grids is considered high-risk due to several concerns such as high administrative cost associated with due diligence, uncertainty associated with revenue collection, under-utilisation of power generated and other leakages and losses during operations.
Gham has been able to secure debt financing by mitigating some of these perceived risks using mobile technology and infrastructure. While other aspects of the business model and financial structure have been equally important in raising funds, the three main risks being addressed using mobile technology and infrastructure are listed below.
Risk of payment defaults by users
Gham Power has installed prepaid meters from SparkMeter for all consumers. Much like for prepaid telecom connections, consumers need to top up their accounts as per their desired plan in order to consume energy. Since the consumers always pay in advance, it eliminates the consumer default scenario.
Risk of underutilisation of capacity
Gham Power has signed a Power Purchase Agreement (PPA) with Ncell, for the micro-grid to supply energy to two Ncell towers in Harkapur and Chayasmitra. This is a first of its kind PPA between an off-grid energy service provider and telecom operator in Nepal. The telecom towers will be the anchor load for the micro-grid and generate steady revenue for Gham Power. To further ensure optimum utilisation, Gham Power has enlisted over 90 businesses that will have productive loads beyond basic lighting. These include existing establishments such as a poultry farm, shops and small hotels as well as new ventures such as a computer centre, water pumping and rice grinding.
Risk of revenue leakage
Gham Power is using the eSewa mobile payment platform to collect consumer payments. As a result, when a consumer pays an eSewa agent, payments are immediately transferred to Gham’s bank account. When working in remote areas such as Khotang and Okhaldhunga, where the nearest bank is a day’s travel by road, energy service providers can experience several weeks’ delays before consumer payments are reflected in their accounts. This delay is often associated with losses due to accounting errors and leakages. By using eSewa, Gham Power has been able to prevent such possible leakages.
As more operational data becomes available, the individual impact of using mobile payments, prepaid meters and telecom towers as an anchor load will be quantified, as will the spillover effect of these features on the financial viability of the project.
However, it is already promising to see how mobile technology and infrastructure are unlocking innovative models of energy service provision in Nepal.