The Nepal Electricity Authority (NEA) has extended the deadline for submitting bids for developing solar plants and supplying electricity till March 13 amid solar manufacturers showing unwillingness to participate in bids complaining about the price cap on solar power.
Issuing a tender notice on November 28, the state-owned power utility had invited bids from the solar manufacturers setting the deadline for February 26. In an addendum notice, the NEA extended the deadline till March 13 while also notifying the bids will be opened at 2 pm on the same day.
The NEA plans to buy a maximum of 100 MW of power from such solar plants proposed to be developed by the private sector at 16 locations across the country.
This is for the first time that the state-owned power utility sought to buy solar power through bids. It is the biggest move by the NEA to buy grid-connected solar power with just 44MW of solar power being connected to the national grid till the last fiscal year 2021/22.
In January last year, NEA decided to purchase solar energy only through a competitive bidding process, ending the fixed rate regime of the previous three years. NEA officials say the move is also aimed at bringing down the prices of solar power amid declining prices of solar power over the last decade.
In March last year, the state-owned power utility decided to cap the maximum rate to be offered to solar power generators at Rs5.94 per unit. Earlier, NEA used to sign power purchase agreements with solar power developers at a fixed rate of Rs 7.30 per unit.
Solar power manufacturers have however long been complaining that the price cap imposed by the NEA was impractical and the solar projects could not be developed within the price limit.
“NEA only saw prices drastically coming down in neighboring India,” said Ram Bahadur Bhandari, Managing Director of Suryodaya Urja, a company involved in larger solar plants in Nepal. “But it failed to see the facilities being provided by the Indian government such along the scale of solar plants in India.”
According to him, solar developers in India develop high-capacity solar plants which give economies of scale helping to reduce per-unit cost. “The Indian government has also been generous to provide cheap or free lands to develop the solar plants and offer tax concessions.”
As per the tender notice, bidder(s) can propose a maximum capacity set for specific locations ranging from 10MW to 30MW based on the location. They however cannot propose to deliver less than 1MW at the delivery point.
The bidder can choose any solar photovoltaic power generation technology. As per the notice, the developer will also be responsible for evacuating power from the plant to the nearby NEA substation.
Nepal has a long way to go to realize its potential in solar energy. According to the Nepal Energy Sector Synopsis Report-2022, the country has the potential to generate around 2,100MW of solar electricity.
Nepal also aims to generate a total of 15,000 MW of electricity by 2030 of which 5-10 percent will be generated from mini and micro-hydropower, solar, wind, and bio-energy projects.
“The policy of NEA has not been friendly to promote solar energy,” said Bhandari. “So, we have abandoned our plan to develop a solar plant in Bardiya despite buying lands for the same because of the price cap imposed by the NEA.”
