The story of power position in Nepal is that of highest potential and lowest consumption. The electricity demand in Nepal is increasing by about 10 per cent every year and close to 40 per cent of the Nepali population has access to electricity through grid and off-grid systems. The main load centre is the central zone which includes the Kathmandu Valley. Nepal owns a number of hydropower plants with a total installed capacity of around 650 MW which includes several small and medium hydropower plants owned by Independent Power Procedures (IPP). A significant amount of energy is also supplied by thermal (Diesel) and solar photovoltaic power plants besides the micro hydro plants in hilly areas.

There is a huge power demand-supply imbalance which is evident from load shedding implemented over the last several years now. At present, Nepal Electricity Authority (NEA) is supply -deficit. While the peak power demand in wet season is more or less met by the supply, the deficit during the dry season is very high resulting in power outage for as much as 16 hours a day in the capital itself. According to a forecast, the power misery due to supply-deficit is likely to continue till at least 2013-14, when, among others, Upper Tamakoshi (456 MW) is expected to be commissioned.

Constraints

There is no denying that lack of development of indigenous energy sources has resulted in an over-dependence on fuel import. This drains a significant portion of the nation’s foreign exchange earnings and poses threats to long-term energy security and to the environment. Pradhan reasons, “We can’t always depend on imported energy so we have to develop hydropower as it is the cheapest form of energy. There is no alternative to hydropower.” The government doles out billions of rupees to buy petroleum products when prices get higher whereas the subsidy given to other energy sources pale in comparison. There should be a level-playing field without any discrimination. “The state’s attitude is the major hindrance towards attracting private sector investment in renewable energy,” alleges Shrestha. He adds that the government should let petroleum products compete with other energy products instead of being biased towards it.

Another problem is that of major differences in opinion among the energy experts who don’t seem to agree on practically anything. A disagreement among experts also puts the government in a lot of difficulty. A common agenda for producing 3,000 MW is the need of the hour, probably leaving disagreements for the future. Shrestha explains, “I personally believe there are people in Nepal who have a lot of knowledge and an idea regarding the energy sector but disagreement takes precedence among them. My request to these experts is to first ensure a position where we can generate about 3,000 MW for basic need.”

Potential

Bio-gas potential is immense from the perspective of Nepal’s renewable energy sector. More than 250,000 bio-gas plants have been established so far mostly in remote areas where there is no electricity. A six cubic meter bio-gas plant can generate thermal energy equivalent to one standard LPG cylinder in about 24 days. In other words, bio-gas is providing 250,000 LPG cylinders worth of energy in Nepal. This is certainly an achievement that can be taken forward. Cow dung was used for operating bio-gas plants earlier, however, a lot of experimentation has led to a state where anything bio-degradable is equivalent to cow dung. Therefore, it is viable to increase the number of bio-gas plants in Nepal.

Nepal receives ample solar radiation with approximately 300 days of sun a year. The development of solar energy is thus reasonably favourable in many parts of the country. As per a report by Alternative Energy Promotion Centre (AEPC) under the Solar & Wind Energy Resource Assessment in Nepal (SWERA), the commercial potential of solar power for grid connection is 2,100 MW. Solar panels are a highly feasible option for families using minimum energy for lighting purposes and can be installed for Rs 3-4,000 per household.

The third largest indigenous biomass source of energy in terms of consumption is agricultural residue in Nepal which directly comes from the agricultural crops. It is therefore indicative that more than two-thirds of the total energy requirement of the country can be supplied solely from agricultural residues while considering the heating value of the resources. More than 70 per cent of the waste coming out of big municipalities is bio-degradable. This can be processed at big bio-gas plants and used for generating energy rather than sending it to landfill areas. However, for this to happen, the waste has to get collected in a segregated manner by applying ways to sort bio-degradable waste right at the source. It requires discipline though to make the users dump ‘right waste’ in designated containers themselves. Shrestha cites the example of sewerage treatment as a serious practice in most cities of the advanced countries where water is drained back in the river after taking out the energy and purifying it. He emphasises that waste management is absolutely crucial in the
present context.

The major impact of power outage is on industry as it needs 1,100 gigawatt hours (GWh) of energy for the industrial sector which is about 40 per cent of the total electricity produced by NEA. It has close to 1.77 million subscribers of which 1.2 million households consume minimum energy for lighting purposes. “If we could equip these households with 100W solar panels, we can easily save 500 GWh which can be diverted to industry,” Shrestha calculates. He adds that the government must take initiatives to this effect by providing tax relief and subsidy of some kind to the households and help the nation’s industries avert collapse. On the other hand, NEA won’t be affected adversely because the industries will be there to make up for its ‘apparent loss’.

Nepal has over 6,300 rivers and rivulets and thousands of hills and valleys. The perennial nature of Nepali rivers and the steep gradient of the country’s topography provide ideal conditions for the development of some of the world’s largest hydroelectric projects. “If we could block the water in these valleys, we can conserve the rainwater and it can be a huge asset,” Pradhan advises. Hydropower could be the engine of growth for Nepal as it would offer opportunity to create employment, alleviate poverty and provide basic services including good governance. The development of this sector can be a potent contributor for transforming villages, cities and societies in Nepal into prosperous and inclusive economic zones.

Looking Forward

Nepal’s imports have increased by Rs 25 billion due to severe power cuts (Rs 12 billion-diesel, Rs 3 billion-electricity import, Rs 2 billion-battery, Rs 5 billion-inverters and generators, rest on other means of energy like candles etc). The country is already facing a trade deficit of Rs 300 billion, which makes it mandatory for Nepal to find measures towards minimising imports. Pradhan says foreign investment can come for the hydropower sector as it is the only area in Nepal for which investors don’t have an alternative. “The FDI for other sectors may get diverted to other countries due to various reasons such as low wages, security environment and tax free policies. However, in order to exploit the water resources of Karnali River, for example, they have to come to Nepal,” he elucidates.

Pradhan further recommends not to link water resources to nationalism. He elaborates, “Saudi Arabia makes oil available at the cheapest rates to its people and sells surplus oil for national development. We should also adopt this policy:

The water unused today will go in waste; this is a time bound business.” He asserts hydropower is a sustainable source of energy for Nepal as well as for the region and has the potential to minimise imported energy. He says if Nepal can focus on water management, it can not only eradicate its domestic power woes but also play a regional and global role energy-wise.

Recent developments indicate that our focus will be on reducing load shedding in the next five years or so. “My observation is that energy crisis will continue in the next five years,” says Dr Shrestha. He adds the energy sector does not hold out a very bright future and will have many problems but Nepal can certainly make some valuable progress in attaining energy independence. He also warns experts and authorities against depending on a single energy source such as hydropower and instead asks them to work for an appropriate energy-mix. “We must determine our total energy-mix scenario over the next five, 10 or 20 years now,” he asserts.

Power Projects Licenses

(List updated June 03, 2011)

Issued Licenses

 Survey License for Generation (Below 1 MW)

Total capacity for 202 projects = 149.769 MW

 

Survey License for Generation (1 to 25 MW)

Total capacity for 220 projects = 1505.661 MW

 

Survey License for Generation (25 to 100 MW)

Total capacity for 57 projects = 2966.68 MW

 

Survey License for Generation (Above 100 MW)

Total capacity for 34 projects = 10854.12 MW

 

Construction License for Generation

Total capacity for 61 projects = 1385.806 MW

 

List of Applications

 

Application for Survey License for Generation (Below 1 MW)

Total capacity for 758 projects = 642.976 MW

 

Application for Survey License for Generation (1 to 25 MW)

Total capacity for 581 projects = 3932.34 MW

 

Application for Survey License for Generation (25 to 100 MW)

Total capacity for 69 projects = 3840.89 MW

 

Application for Survey License for Generation (Above 100 MW)

Total capacity for 45 projects = 16798.72 MW

 

Cancelled Licenses

 

Cancelled Survey License for Generation

Total capacity for 71 projects = 2596.117 MW

 

Cancelled Construction License for Generation

Total capacity for 3 projects = 23.5 MW

 

GON Reserved Licenses

GON Reserved Survey License for Generation

Total capacity for 27 projects = 1627.699 MW

Source: Department of Electricity Development, Ministry of Energy