Exporting Hydropower

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Exporting Hydropower

Nepal can reduce trade deficit by exporting hydropower to the Indian market, which is striving for green energy, and beyond.


After successfully selling surplus electricity in the Indian market during the rainy season and the recent signing of a 50 MW power purchase agreement (PPA) with Bangladesh at the Nepal-Bangladesh Joint Steering Committee meeting, Nepal has made its way into the competitive energy market of South Asia. Bangladeshi Prime Minister Sheik Hasina's request to Indian Prime Minister Narendra Modi made during her official visit to India to facilitate market access for the power produced in Nepal and Bhutan has further strengthened Nepal's aspirations to gain electricity market access in Bangladesh and beyond.

Technically, Nepal can establish an electricity market in Bangladesh by using two different transmission infrastructures: either by a dedicated line extending from Eastern Nepal to Bangladesh through Indian territory or by directly loading electricity onto India's transmission lines to transmit it to the destination country. However, India's ultimate permission is necessary to turn Nepal's ambition into a reality when expanding the electricity export market beyond India.

Given the projected yearly power production and the completed or near-completion stages of numerous substations and transmission lines from major river corridors and basins connecting Nepal to the Indian power transmission highways, it is likely that Nepal will be able to reduce its currently level of trade deficit by exporting hydropower to the Indian market, which is striving for green energy.

For hydroelectricity to be a profitable commodity in the regional market, it is important to have quality assurance that meets international standards: a reliable supply to meet market demand, as it has dominant role compared to other alternative energy sources. A business plan without the prerequisite of standard quality assurance will fail to meet market demands and fail to comply with power purchase terms and conditions.

As hydropower generation does not consume any water in the process, a steady supply of clean water at the plant location is necessary to run the hydropower plant efficiently and generate the estimated amount of energy to be sold in the energy market. However, in the case of run-of-the-river power generation, which is the case for most of Nepal's production, having enough water for full capacity production can be challenging due to the prioritisation of water use and the impact of climate change on water depletion at the source.

The prevailing water use rules prioritise the utilisation of naturally available water for drinking purposes for humans and animals, followed by irrigation of crops. Drinking water and irrigation are the two major sectors that consume the majority of freshwater globally, and their demands increase with population growth. There have been many water sharing conflicts in the past and present, ranging from community-level conflicts in local rivers to national-level conflicts in trans-boundary rivers, all arising from the desire for more water.

It is interesting to note that one kilogram of rice production requires as much as 2850 litres of fresh water for irrigation, and one litre of milk from a cow requires 1369 litres of water. In highly populated regions of the world, there may come a time when there is a trade-off between water for food and water for power generation, in which case the utility of water in power production will naturally decline in priority. In our country, with the seemingly abundant supply of fresh water from the snow-covered Himalayas, such water utilisation priorities do not easily arise at the national level.

However, there are several issues at the community level where farmers divert water away from power-generating areas for drinking and farming purposes, rendering hydropower plants redundant. For example, locals in Rainastar of Lamjung in western Nepal vandalised an under-construction hydropower project on Chepe River recently due to insufficient water in the Rainastar Irrigation Project, which was built nearly 30 years ago with the World Bank loan, because of the hydropower project construction. Many run-of-the-river power houses are likely to face similar water shortage issues in the future due to our current practice of selecting projects without proper knowledge of seasonal water availability and without taking into account water diverted for farm and drinking water purposes from the particular location.

Water sharing coordination committees equipped with a database of water availability, both in terms of time and space, can effectively resolve water sharing issues to ensure the smooth operation of water resource utilisation projects, including hydropower plants. This can only be achieved if regulations prioritise commercial hydropower production as the first use of water. The fresh water flow from the Himalayas is crucial for the livelihoods of those who live here, and its importance in providing for drinking water, sanitation, and agriculture will only continue to grow as the population increases. To effectively harness river water for power production and establish regional marketing networks, a participatory approach is necessary, starting from the community level and extending to the national and regional levels.

Depending on the reliability of water availability, the location of community settlements, and their water use practices, the priority of using water for either power production or human consumption shall be determined by regulations. This will determine whether a location will have only a power plant, be limited to drinking and agricultural use, or have the possibility of both. As water is a measurable commodity, and its division based on usage is reasonable, existing water use conflicts at the local level can be resolved through cooperation when water volume measurements, taking into account seasonal fluctuations, are performed from the rivers where water sharing conflicts between commercial power generation and drinking and agricultural use are arising as sensitive issues at the community level.

(Adhikari is an engineer and served Nepal government in various high level capacities.)

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