The paper then attempts to describe the subsidy reforms to make the renewable energy available to wider rural population and highlight some observations on issues and impacts. Th low level of commercial energy consumption reflects the low level of industrial activities, which has changed little over the last decade. In the renewable energy sub-sector, Nepal is rich especially in hydropower but the development of renewable energy in general and hydropower in particular has been meager.
Electricity demand is primarily for lighting purposes only.
On the other hand, in the rural areas, excessive burning of biomass energy has deteriorated the natural environment and the poor combustion technology is responsible for the indoor pollution. The problem in both rural and urban areas is further exacerbated by high population growth. Although majority of the Nepalese rely on biomass energy sources, expenditure on non-renewable energy sources such as petroleum products drain the country's limited foreign exchange reserves. While this expenditure is growing annually, renewable energy remains largely undeveloped. All these problems, therefore, call for the development of renewable energy.