In Nepal, a large section of the rural population has no access to an electricity supply. Sixty three percent of households instead rely on oil-based or renewable energy. This report looks at the work of the Alternative Energy Promotion Centre (APEC), a government institution which is regarded globally as a leading advocate of the expansion of community and private led renewable energy technologies in rural areas. It features findings from a study which was set up to design and establish an evaluation system for APEC. The purpose of this was to more systematically the impact of micro-hydro installations (MHs) (for example, water wheels) on rural livelihoods. Also importantly it enables APEC to more effectively measure the results of the renewable energy programmes against the objectives. The report shows that in rural areas even though fuel wood is still the most commonly used energy form, that MH devices have great value and are commonly used as an alternative to kerosene for lighting. APEC hope to further develop the use of MH in rural areas with their 10th five year plan setting a target of generating electricity equivalent to 10 MW from MH and access to off grid schemes for over 12 per cent of the population. This push is also driven by the many benefits of changing over to MH, for lighting in particular, as it is seen to have a positive effect on household economics, education, health and women’s empowerment outcomes. It also has a much less damaging effect on the environment than kerosene. Overall the move to off-grid electricity in rural areas is promoted as a very positive step but that service delivery needs to be effective, and people need to be taught how to get optimum usage out of the device so that it is cost effective and not wasteful.