Until 2017, Nepal was a powerless country, with outages lasting up to 18 hours a day. Although the government currently possesses excess energy, it does not have a solid plan for exporting electricity. This results in daily electricity waste ranging anywhere between 200MW and 600MW at various times of day and night.
An estimated 800MW of electricity, or perhaps more, could be squandered during the Dashain holiday, which begins on October 12 and will last for a week. This is because all government offices, schools, and companies will be closed during the celebration.
The most immediate export opportunity is with India, and the Nepal Energy Authority had written to the Indian Ministry of Power approximately a month and a half ago to request clearance for electricity exports from the country. At this time, there has been no answer.
NEA spokeswoman Suresh Bahadur Bhattarai said, “The authority has made a request to India’s Power Ministry for the purpose of exporting electricity from Nepal, stating how much energy from which hydroelectric projects we may export.” “We have not yet received a response.”
It has been proposed by the power utility that electricity generated by hydropower projects such as the Upper Tamakoshi Hydropower, the Upper Bhotekoshi Hydropower, the Marshyangdi, the Trishuli, and the Devighat, with a combined generation capacity of 621.1MW, be exported after receiving approval from the Indian government.
According to Bhattarai, “We are currently awaiting authorisation from the Indian government to sell electricity since we have been obliged to stop down production from some power plants because the electricity produced would otherwise go to waste.”
As of August, Nepal has become an energy surplus country, thanks to the completion of the Upper Tamakoshi Hydropower Project, which generates 456 megawatts.
Nepal, according to the authorities, currently has excess electricity even during peak hours, which are often between seven and eight o’clock at night. The peak hour demand is 1,500 megawatts (MW). Current electricity generation capacity in the country is 2,000 megawatts per day, with 1,900 megawatts (MW) coming from hydroelectric projects.
Kul Man Ghising, managing director of the authority, stated that only 900MW-1,100MW of electricity is consumed during the night, when there is little demand for electricity. When the demand is at its lowest, 1,200MW-1,300MW of electricity is consumed during the day.
Because they have no way to export their electricity, several power plants have reduced their electricity generation, which experts say is a paradox in a nation like Nepal, which was plagued by power outages only a few years ago and is now free of them.
When projects have the ability to generate electricity at their maximum capacity, Ghising believes that not utilising that capacity is a waste of energy.
In monetary terms, according to Ghising, the amount of electricity wasted in the last month and a half amounts to around Rs1.8 billion if the average selling price per unit of electricity sold is Rs9.5.
In the event that Nepal is unable to export electricity to India or raise domestic consumption by late November, Ghising believes that such waste will continue until the end of the year, when power plants will be able to function at full capacity due to the drying up of rivers during the winter.
Earlier this year, India opened its power exchange market to Nepal, but only for the purpose of purchasing electricity from it. However, the southern neighbour has not yet granted Nepal permission to sell energy through the 400kV Dhalkebar-Muzaffarpur Cross Border Transmission Line, which runs from Nepal to India.
According to officials, it took India four years to open its power exchange market to Nepalese consumers.
Nepal was the first country outside of India to engage in the Indian Energy Exchange (IEX), out of all of India’s neighbours. It was announced on November 11, 2020, that the first 400 kV Cross Border Transmission Line between Nepal and India, running from Dhalkebar to Muzaffarpur, would be charged at the 400 kV voltage level. According to the National Electricity Authority, this prepared the way for power import and export from and to India through the IEX.
Small-scale electricity trading agreements with India are currently in place on two different levels of sophistication.
One such system is the power exchange mechanism between the Indian states of Bihar and Uttar Pradesh. Under this arrangement, two countries can purchase electricity from each other when the need for electricity arises. The price for obtaining power through the 132kV transmission line has been set at INR6.18 per unit, and the price for purchasing electricity through the 33kV transmission line has been set at INR6.65 per unit.
“We only purchase electricity during the winter, and this approach has proven to be beneficial for us because it is similar to obtaining electricity from a reservoir project,” Ghising explained.
The authority has approved a maximum tariff of Rs12.40 per unit for reservoir-type hydropower projects, which is the highest rate in the country.
In accordance with Ghising, Nepal is currently selling between 150 and 200 megawatts of electricity whenever the Indian side requests it.
Nepal has also been purchasing electricity from India under short-term power purchase agreements through the Dhalkebar and Tanakpur regions, according to the Indian government. Officials, on the other hand, claim that this method is insufficient for large-scale power exchange with India.
In order to conduct large-scale electricity trading, Ghising believes that grid and market synchronisation with India is the only viable option.
Nepal’s authority officials are concerned that India is delaying approval for the country to participate in bids to sell power generated from at least one of the five proposed projects because of the delay in receiving clearance from the country.
Ghising stated that importing electricity from Nepal would be less expensive for India because the electricity pricing on the Indian Power Exchange market has risen to as high as INR20 per unit due to increased demand for electricity in the face of a coal scarcity in the country, according to Ghising
‘We can offer a price in the range of INR5 per unit, which will not only be less expensive for India, but it will also help to balance electricity prices in the country and so help to strengthen the Indian economy,’ Ghising explained. The purchase of Nepal’s power by India is a win-win situation for both countries, according to the statement.
He further stated that, because hydropower is a clean energy source, purchasing Nepal’s electricity would also help India achieve its own goal of significantly increasing the share of renewable energy sources in the country’s energy mix.
Nepal’s power utility body participated in a bidding process to sell 40MW of electricity to the Indian state of Punjab in May, despite the fact that the Indian Power Ministry has not yet opened its doors to Nepal’s electricity on the Indian power market and allowed Nepal to participate in daily bidding processes to sell electricity in the Indian power market.
Bhattarai, the NEA’s spokesperson, explained that it was a different system and that Nepal had been granted permission to participate in the bid just once. Nepal participated in an auction held by the Punjab State Power Corporation Limited to deliver electricity to the province of Punjab for the period July to October. The auction was held to determine who would supply electricity to Punjab.
The Nepalese government has been identified as a potential supplier, according to NEA officials, but the Punjab State Power Corporation Limited has not yet made a decision on the topic.
Because of abundant water flow in rivers, the months of July through October are the busiest for selling electricity because all hydroelectric plants are operating at full capacity.
Because of low water levels in rivers, Nepal is forced to import electricity from India during the winter months. Power plants in Nepal are only operating at 30-40 percent of their capacity during this time.
During the winter months, Ghising estimates that the country will have to import approximately 10% of its electricity from India this year.
Ghising believes that the country will not have to rely on imported electricity even in the winter of 2022-23 because of the increased amount of electricity that is anticipated to be evacuated to the national systems from several new hydropower facilities currently under development.
According to Ghising, if Nepal is unable to export energy or if more enterprises do not open in order to utilise the electricity, there would be more surplus energy in the following year.
According to him, an additional 300MW to 400MW of electricity is likely to be added to the national grid by the end of next year, depending on the weather.
The authority has no choice but to export electricity because the local market is not increasing fast enough to accommodate the increased electricity production, according to authorities at the power utility. This is done in order to avoid energy waste.
Despite the fact that the government has encouraged individuals to use electrified kitchenware and that the authority is planning to transfer additional power to manufacturers, experts believe that this will not be enough to ensure that all available energy is consumed for a number of years.
The scenario has also caused concern among private-sector electricity developers.
According to Krishna Prasad Acharya, president of the Independent Power Producers’ Association of Nepal, “we are concerned about whether the authority will purchase electricity from private sector developers, and even from those who have not signed a power purchase deal with the authority.”
According to him, the authority has signed power purchase agreements with private sector developers for approximately 2,500MW of capacity, and many of the projects are currently under construction, while projects with a combined capacity of 7000MW are awaiting approval to sign power purchase agreements with the authority, according to the authority.
According to Acharya, even those who have not signed the agreements have made significant investments in surveying, land purchase, and environmental impact assessments. His statement stated that if the authority fails to sign power purchase agreements under the excuse of being unable to sell electricity to India, “their investment will be a waste of time.”
As explained by Acharya, the government’s failure to consider consumption and export while concentrating on growing energy output is a policy flaw on their part.
In a white paper on energy published in 2018, the government established a programme of producing 15,000 megawatts (MW) over the next ten years, however no policy was introduced to increase demand and consumption in tandem with this policy.
“As a result, the current condition of excess energy has developed,” Acharya explained.
According to private sector developers, the government should allow the private sector to participate in power trading, which would pave the way for more electrification of the country as well as increased consumption of electricity.
A former president of the Independent Power Producers’ Association, Nepal, Shailendra Guragain explained that the private sector can sell electricity in the country and also coordinate with Indian power purchasers to obtain the necessary approval from Indian authorities for selling power to the Indian markets. The grouping encourages private sector involvement in Nepal’s hydropower sector.
Several government officials have stated that they intend to bring up the issue of the delay in approving Nepal’s request to export electricity at a meeting of the Joint Working Group on Energy Cooperation, which is chaired by joint secretaries from Nepal and India, as well as the Joint Steering Committee on Energy Cooperation, which is chaired by the respective energy secretaries from the two countries.
Madhu Bhetuwal, spokeswoman for the Ministry of Energy, Water Resources and Irrigation, said, “We have forwarded a request to the Indian side for conducting these talks between the Dashain and Tihar festivals.”
Dashain begins on Thursday [October 7], while Tihar is celebrated for five days starting on November 3, with the first day being Dashain.
“There has been no response from the Indian side.” Bhetuwal stated that if India does not allow the sale of electricity before the conference, “we would bring this issue up at the next meeting of these bilateral mechanisms.”
It is possible that a big breakthrough in energy commerce between Nepal, India, and Bangladesh may occur by the end of this year, according to a senior executive of an Indian business with an interest in Nepal’s hydropower industry.
“Negotiations are currently underway for a trilateral deal,” the official told the Post, who asked to remain anonymous because he was not permitted to speak to the media.
In late 2019, GMR Energy and Bangladesh signed a memorandum of understanding for the sale to Bangladesh of 500MW of electricity generated by the 900MW Upper Karnali Hydropower Project, which has yet to begin operations.
Nepal will receive 108MW of electricity for free out of the total capacity of 900MW.
“The Nepal government has also inquired as to whether GMR would be interested in selling the 108 MW of electricity that Nepal will receive as a result of the project to Bangladesh,” according to a source familiar with the situation.