Towards Self-sufficiency in Electricity

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Towards Self-sufficiency in Electricity

After ending power cuts, Nepal  looking to tap its hydropower export potentials.

BY Newbiz team

Nepal is edging closer to its long-awaited goal of achieving self-reliance in green electricity. Last year, the country achieved a significant milestone in the energy sector, aligning with the nation's aspirations. These accomplishments have instilled a great deal of confidence in the potential of the energy sector, particularly in the production of green electricity, to drive national prosperity. The country has made substantial progress in electricity production and is now actively exploring opportunities to export its surplus energy to neighbouring countries. Furthermore, this increased production has brought about a remarkable transformation for Nepal, shifting it from a country plagued by power cuts to one that can optimise local energy consumption to its fullest capacity.
According to the late statistics released by the Nepal Electricity Authority (NEA), the Alternative Energy Promotion Center (AEPC), and private sector power producers, Nepal currently has an installed capacity of over 2,600 MW. Out of this total capacity, 2,515 MW is connected to the national grid, while 84.53 MW is designated for off-grid supply.
Nepal's total installed electricity generation capacity stood at 2,191 MW, indicating a growth of over 500 MW in the past year. The generation of 11,064 GWh in 2022, a three-fold surge from 4,258 GWh in 2013, has enabled Nepal to achieve self-sufficiency in electricity production. 
Of the total installed capacity of 2,600 MW, the projects operated by NEA and their subsidiaries are generating 1,122.40 MW, while the private sector has contributed with power plants with a combined capacity of 1,370.54 MW. Moreover, small hydropower projects are producing 4.53 MW, and alternative energy sources have contributed 80 MW, both of which are categorised under off-grid supply.
Thirty-two privately-run companies started power generation between mid-April 2022 and mid-March 2023. These projects utilised both hydropower and solar plants for electricity generation. According to NEA, the largest private sector investment project that commenced operations during this period was the Solu-Dudhkoshi project with a capacity of 86 MW. While 523.319 MW was generated from 28 hydropower plants, the remaining 28.8 MW was produced by four solar plants.
Further, nine projects with a combined capacity of 157.47 MW are in the trial phase. These include three solar plants with a total capacity of 18.8 MW and six hydropower plants with a combined capacity of 138.67 MW.
The country is projected to generate an additional 800 MW  in the current fiscal year. This will bring the total production capacity to over 3,400 MW. Notable hydropower projects expected to commence operations by the end of the fiscal year include Rasuwagadhi (111 MW), Sanjen and Upper Sanjen (57.3 MW), Madhya Bhotekoshi (102 MW) and Super Dordi (54 MW).
Furthermore, projects with a total capacity of 3,300 MW are currently in various stages of construction. Moreover, 240 projects have completed feasibility studies for the production of 11,716 MW of electricity and are awaiting the execution of power purchase agreements.
Domestic Consumption
When it comes to per capita electricity consumption, Nepal falls significantly behind developed countries such as Canada and the United States. Canada's per capita consumption stands at 16,405 kilowatt-hours (kWh) per year, while the United States exceeds it with over 12,314 kWh per capita per year. Leading the list are countries like Iceland and Norway, with per capita consumption of 52,980 kWh and 27,529 kWh per year, respectively. In contrast, as of mid-April 2022, Nepal's per capita electricity consumption was a mere 325 kWh. The government has set a target to increase this figure to 700 kWh by 2024.
Notably, there has been a noticeable shift towards using electricity for daily household activities in Nepal. Additionally, there has been a significant decrease in the import of liquefied petroleum gas, indicating an increasing trend in hydropower consumption for cooking purposes.
According to the Nepal Oil Corporation (NOC), the import of Liquefied Petroleum Gas (LPG) has experienced a significant decrease in the first eight months of the current fiscal year 2022/23. The import has decreased by 19.2 million kg, which is equivalent to 1,352,112 cylinders, compared to the total consumption of the previous year. This reduction in LPG imports has resulted in savings of Rs 1.91 billion for import-dependent Nepal during the review period.
“The increasing use of electric stoves in urban areas  has the potential to gradually replace LPG,”  NOC spokesperson Binit Mani Upadhyaya said.
Export prospects
The year 2079 BS, which began in mid-April 2022, was a crucial milestone for Nepal, a nation rich in water resources, as it embarked on exploring new avenues for electricity exports. In a remarkable departure from the previous year, when cross-border energy trade was solely conducted at the government level, Nepal took a groundbreaking step by initiating the sale of its electricity to the Indian market through a bidding process at the Indian Energy Exchange (IEX). This marked Nepal's first foray into selling its electricity through this platform, creating fresh opportunities for cross-border trade and bolstering bilateral energy cooperation between the two countries.
Nepal generated significant revenue by exporting electricity to India during this period. Between June and December 2022, the country earned Rs 11 billion by selling electricity to its southern neighbour, with rates ranging between Rs 6.58 and Rs 12.15 per unit. Nepal’s earning form electricity exports ranked as the third-largest from the export of a single commodity in the fiscal year 2021/22
Nepal began exporting 39 MW to India through the Indian Energy Exchange (IEX) in 2021 as per the Nepal-India Power Trade Agreement signed in 2014 during the visit of Indian Prime Minister Narendra Modi to Nepal. Nepal is the first foreign country to engage in electricity trade through the IEX.
Moreover, as of November 2022, Nepal has obtained approval to export 408 MW of electricity from eight projects, with an additional power generated by the 22.1 MW Chilime Hydropower Project, according to the NEA.
Nepal is eagerly awaiting the signing of a long-term intergovernmental agreement with India. The objective of this agreement is to facilitate the sale of Nepal's surplus power to its southern neighbour. The agreement is expected to be signed during the upcoming visit of Prime Minister Pushpa Kamal Dahal to India. Dinesh Ghimire, Secretary at the Ministry of Energy, Water Resources, and Irrigation, said that the government has proposed a 25-year agreement to the Indian side. “Discussions regarding the long-term intergovernmental agreement are currently underway at the ministry,” he added.
Furthermore, Nepal is actively exploring the potential of exporting electricity to Bangladesh, as there has been expressed interest from Dhaka in purchasing its hydropower. While Bangladesh has been primarily relying on coal, fossil fuels, and natural gas to meet its energy demands, it has set a target to reduce its carbon emissions by 22% by 2030. At the same time, Nepal is seeking to expand its cross-border energy trade beyond India.
Bangladesh has already approved the purchase of 50 MW of electricity generated by Nepali power plants. India has hinted that it would facilitate the export of 50 MW of electricity from Nepal to Bangladesh, subject to specific conditions. If everything proceeds as planned, both countries aim to commence bilateral energy trading from the rainy season of 2023.
Nepal has also been considering building dedicated transmission lines via India to facilitate electricity exports to Bangladesh. 
Bangladesh has shown interest in purchasing 500 MW generated by Upper Karnali Hydropower Project (900 MW) subject to approval from the Indian government. Additionally, Bangladesh is also considering investing in the Sunkoshi-3 (683 MW)  and Khimti Shivalaya (1,547 MW) hydropower projects, and purchasing electricity produced by these power plants.
The private sector in Nepal has played a commendable role in addressing the power crisis, contributing to the national economy through royalty payments, generating employment opportunities, and contributing to government tax revenue. However, despite their significant contributions, the private sector has not been granted permission to engage in energy trade on their own.
Nonetheless, the private sector remains optimistic. “Since power production in the country has been growing, the government needs to open the door for the private sector at some point. It is better to do it sooner than later,” said Ganesh Karki, a vice-president of the Independent Power Producers' Association of Nepal (IPPAN).
Potential of alternative energy
The government has set an ambitious target of generating 15,000 MW by 2030, with around 10% expected to come from alternative energy sources. Among these alternative sources, solar power projects have been attracting increased investment and attention in recent years.
While solar power was initially used primarily for household electrification, it is now being developed for commercial purposes as well. Kulman Ghising, the managing director of the Nepal Electricity Authority (NEA), has emphasised the importance of utilising an energy mix to ensure sustainable energy security, and solar power plays a significant role in this strategy.
To promote the development of solar power, the NEA has built a solar plant having capacity of 25 MW in Nuwakot. The plant is operating at 50% capacity. Additionally, four other solar projects with a combined capacity of 20 MW are currently generating power. Moreover, the Kathmandu Upatyaka Khanepani Limited operates a solar power plant with a capacity of 680 KW in the Kathmandu Valley. These initiatives demonstrate Nepal's commitment to the expansion and utilisation of solar power as part of its overall energy mix.
The Bishnupriya Solar Farm is currently producing one megawatt of power, while the Ridi Hydropower Project has a grid-connected solar power component generating 8.5 MW in Rupandehi. Furthermore, the Mithila Solar PV Power Project in Dhanusha contributes an additional 10 MW to the national grid.
Likewise, NEA is planning to build a six-megawatt solar plant in barren land owned by the Gandak Hydropower Project in Nawalparasi, nine-megawatt solar plant in Middle Marsyangdi Hydro Project in Lamjung, as well as in the land of Jhuprakhola Micro-hydro Project in Surkhet.
Furthermore, the NEA expects the Duhabi Solar (8 MW), Baki Block Solar-1 (10 MW), and Bhrikuti PV Solar (8 MW) projects to commence production by the end of the current fiscal year. The Department of Electricity Development has also received applications for surveys from 33 solar projects with a combined capacity of 408 MW.
Commitment for zero-carbon emission
During the UN Climate Conference held in Glasgow in November 2021, Nepal made a commitment to achieve net zero emissions by 2045. This means Nepal aims to balance its greenhouse gas emissions with the amount of emissions it can remove or offset. Additionally, the country pledged that 15% of its total energy demand would be met through clean energy sources.
Another important commitment made by Nepal is to maintain a 45% forest cover by 2030. Forests play a crucial role in absorbing carbon dioxide and mitigating climate change impacts. Nepal also expressed commitment to ensure that 5-10% of its energy will come from mini- and micro-hydro power, solar, wind, and bio-energy renewable energy plants.
To keep these promises made to the global community, Nepal needs to focus on producing more hydropower while also increasing its accessibility and affordability at the grassroots. This also calls for harnessing the potential alternative energy apart from hydropower, while the country is moving in a right direction with a notable growth in production of hydroelectricity and solar power and green hydrogen of late. 
Biraj Singh Thapa, chief of Green Hydrogen Lab of the Kathmandu University, said they have started preparations for installing a 100 MW green hydrogen plant by 2024. 
Nepal aims to increase its reliance on clean energy sources to meet 15% of its energy demands by 2030. As part of this effort, Nepal submitted its updated Nationally Determined Contribution in December 2020, outlining plans to generate 5,000 MW of electricity from hydropower using its own financial and technical resources by 2030. The conditional target is to generate 15,000 MW of electricity by 2030, with 5-10 percent coming from sources such as solar, wind, and bioenergy.
Nepal faces significant challenges in ensuring a reliable supply of hydroelectricity, particularly in the face of climate change and natural disasters. The country faces multiple challenges that threaten the country's energy security, and the development of its hydroelectric sector is vulnerable to the impacts of climate change, which can have significant economic consequences. The country is also highly susceptible to natural disasters such as floods, earthquakes, and landslides, which can increase capital and operational costs, result in lost revenue from plant stoppages, and lead to loss of property and human lives.
Currently, 96.2% of Nepal's installed capacity is from hydropower, 3.7% from thermal and only 0.1% from solar plants. Despite this, only 68% of the 8.8 GWh electricity consumed in Nepal in 2021 was generated domestically, with the remaining 32 percent being imported from India.
The primary challenge confronting Nepal's energy sector is the fluctuating nature of hydropower generation. While the country experiences an abundance of electricity during the wet season, it faces a shortfall during the dry season, necessitating substantial imports of electricity from India. Additionally, the development of export-oriented hydropower projects demands an annual investment of $0.5-1.0 billion, a considerable amount that poses difficulties for Nepal due to its limited capital resources. 

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