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Furthermore, most of the development priorities identified by The United Nations Development Assistance Framework for Nepal (UNDAF Nepal (January 2008 - December 2012) and The Common Country Assessment of the United Nations Agencies (UN CCA) in Nepal are still highlight the need to enhance / promote energy sector because its progress in the past still remains slow.During the three year interim plan (2007/OA- 2009/10) of Nepal due to the political instability, poor governance and delayed progress in peace process like other development sectors, energy sector also gained slow progress. The Country Programme Action Plan (CPAP) of UNDP Nepal has also set various targets for the generation of renewable energy to enhance the living conditions of the rural population. Current Three Year Development plan (TYP) (2010/11 - 2012/13) has set and objective for the alternative energy sector to improve living standard of rural people, increase employment opportunities and productivity, reduce dependency on tradition energy resources, and attend sustainable development through the integration of the alternative energy with the overall socio-economic activities.

Despite 10 decades of electrification efforts, only 56.1 percent of the population of Nepal has been reported to have access to electricity. The report of the Labor Force Survey 2008 recorded that still 6.9 percent of urban and 51.5 percent of rural population have no access to electricity. More than 4/5 of the population lives in rural areas, where due to poverty and difficult geography, access to energy services is lower than the minimum needed for meeting basic household energy needs. The overall energy consumption of Nepal is largely dominated by the subsistence use of traditional forms of energy such as fuel wood, agricultural residues and animal waste. The share of traditional biomass resources, commercial energy resources and renewable energy resources are 87%, 12% and 1% respectively (Nepal Energy sector Synopsis Report 2010). In rural Nepal, more than 92 percent of total cooking energy consumed is traditional biomass of which fuel wood constitute 75.1 percent (Nepal Labor Force Survey 2008). Surveys show an average of 3-4 hours per day spent by women in fuel wood collection; health costs of the traditional fuel cycle include mainly respiratory and eye diseases from indoor air pollution, and prolapsed uterus from load carrying. Deforestation remains a serious local problem in many mountain and hill areas and only 29% of the country remains forested, compared to 37 % in 1990. Electricity accounts for only 0.1% of energy consumed in rural areas and only 48.5 % of Nepalese living in rural areas have been reported to have access to electricity, compared to 92.1 % living in urban areas (Nepal Labor Survey, 2008). Shortages and unavailability of electricity for social uses such as drinking water, lighting for education, media for information, and refrigeration for health clinics; as well as for productive uses such as water pumping for irrigation, agro-processing, and income-generating applications, is an obstacle to meeting the related Millennium Development Goals (MDGs).

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