India's New Policy Likely to Secure Good Market for Nepal's Hydropower Sector

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India's New Policy Likely to Secure Good Market for Nepal's Hydropower Sector

The Government of India has revised its policy on energy allowing the imported hydroelectricity also to be considered as part of its renewable energy.

Publishing a notice in the Gazette of India recently, the Ministry of Electricity and Renewable Energy of India has specified the minimum share of imported hydroelectricity under its renewable energy. The notice reads that the new policy will be valid from 2024 to 2030. 

As per the new rule, the Government of India has fixed the quota of Hydropower Purchase Obligation (HPO) for licensed distribution companies and purchasers of India considering the imported hydroelectricity from neighboring countries as its renewable energy source. Until now, the HPO rule had been valid only for the hydroelectricity generated in India.

India has set the target to increase the share of renewable energy in its energy consumption to 29.91 percent by 2025, and to 43.33 percent by 2030. For this, the hydropower sector is expected to contribute 0.38 percent by 2025 and 1.33 percent by 2030.

For this purpose, India has allowed considering the output of only those hydropower plants that will start their production after March 31, 2024. The new provision talks about making it mandatory for the companies concerned to maintain the specified share of HPO within the given timeline.

Executive Director of Nepal Electricity Authority (NEA) Kulman Ghising said that if the new system of compulsory hydropower purchase is implemented, it will benefit Nepal, India and Bhutan.

The NEA has been exporting surplus electricity to India during the rainy season. The NEA has been selling around 110 MW of electricity to the Indian company NTPC Vidyut Vyar Nigam Ltd (NVVN) through competitive bids in the day-ahead market of IEX and under the medium-term power agreement. NVVN is selling the electricity purchased from Nepal in the state of Haryana.

The Nepal Electricity Authority has received approval for the export of 632 MW to India. 

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