Cooperation in the energy sector is one of the major agendas of the Prime Minister’s visit to India, according to officials.
After the then Prime Minister Sher Bahadur Deuba visited India in April last year, the southern neighbor had allowed Nepal to export 325 MW of electricity from 39 MW earlier. With the advent of monsoon, water levels in the rivers are expected to rise soon enabling Nepal’s run-of-river type projects to boost their energy production. “We may be able to export more power regularly if the country sees the continued rainfalls in the days to come,” said the NEA official. On Friday last week, NEA sold 100 MW of electricity in the evening as power production rose due to the rainfalls but exports were discontinued on Saturday and Sunday. Monsoon in Nepal typically begins in mid-June and the country will see excess production of power on a regular basis. NEA expects the country’s power generation capacity to rise to 2,853 MW by the end of the current fiscal year. By the end of the next fiscal year in mid-July 2024, Nepal’s electricity generation capacity is expected to rise further to 4,507 MW and to 5,251 MW by mid-July 2025. Nepal’s domestic demand for power is expected to grow to 2,280 MW in mid-July 2024 and 2,568 MW in mid-July 2025, NEA has forecasted. This clear disparity between domestic demand and the generation of power has forced Nepal to find the outside market as long as domestic demand grows substantially with increased economic activities and industrial growth. Nepal is seeking not only the Indian market but also the Bangladeshi market as well and seeking India's help to send Nepal’s power to Bangladesh too. A private sector developer said that even if India gives the approval to sell more electricity in the Indian market, the possibility of spillage of power continues. Currently, Nepal has been allowed to sell power only in the day-ahead market of India’s exchange market. The day-ahead market means that Nepal can sell electricity once quantity and price are determined a day ahead of the trading day. But Energy Ministry officials say that the southern neighbor is positive for Nepal's entry into its real-time trading market as well. In such a market, Nepal can sell electricity anytime when there is a possibility of excess power in the country. “In the real-time market and day-ahead market, buyers may not buy Nepal’s electricity or may seek power at a very cheap price depending on availability of power supply in the market,” said the private power developer. “That’s why, a long-term power purchase agreement with India buyers is a must to ensure that electricity is not wasted in Nepal.” NEA had sought to sell electricity in a six-month deal but it didn’t not sign any agreement citing the lower prices offered by the potential buyers. But it didn’t make any efforts to sell power under a long-term deal this year. According to the private power developer, NEA should have sought bids from the Indian companies for a longer-term power purchase agreement. NEA resumes electricity export to India Nepal has resumed electricity export to India after the surge in domestic power production. According to the Nepal Electricity Authority (NEA), it sold 600 MW hours of electricity to the day-ahead market of the Indian Energy Exchange on Saturday. With the water level in the rivers increasing with the start of pre-monsoon rainfall, the power generation from domestic hydropower plants has increased of late. NEA officials say the power generation from domestic power plants is currently around 1,300 MW. As most of the power production in the country is based on run-of-the-river hydropower plants, Nepal usually exports electricity to India during the wet season during which electricity production is at the fullest. Nepal has been selling electricity to India’s power exchange market since November 2021. NEA stopped power export to India in the second week of December last year following decrement in the water level in the rivers. The run-of-the-river type hydropower projects usually produce less than 40 percent of their installed capacity as water levels in the rivers decrease significantly during the dry season. NEA Spokesperson Suresh Bhattarai said that the power utility has resumed electricity export to the southern neighbor. “With the start of the pre-monsoon, power generation has been gradually increasing, enabling NEA to export excess electricity to India during night time,” he said. NEA has also stopped importing power from India from Friday. “The domestic demand has also been met due to the increase in domestic power generation,” said Bhattarai. NEA is targeting to export 1,200 MW this wet season to India. The authority has been selling electricity in the day-ahead market of Indian Energy Exchange Limited through daily bidding. Currently, the southern neighbor has allowed Nepal to sell 452.6 MW of electricity generated by 10 hydropower projects in the Indian power market. But the approvals given to the 10 hydropower projects need to be renewed every year. NEA has forwarded the list of additional projects including the 452 MW Upper Tamakoshi Project, the electricity of which it plans to sell to India. If the southern neighbor accepts the new list, the state-owned power utility will be able to export power according to its target. Nepal earned over Rs 11bn by supplying excess power to India from early June to mid-December, 2022. Nepal first started exporting power to India in early Nov 2021 through a competitive bidding process. But after exporting for a few weeks, Nepal stopped selling power to India in December amid a reduction in power generation in the dry season. Exports resumed in 2022 with the start of the monsoon in early June. The NEA has sold 1.35bn units of electricity to India since then and earned Rs 11.16bn. The power was sold at a rate between Rs 6.58 and Rs 12.15 a unit. NEA has reported that it earned Rs 2.83bn from exports from July to the end of the last fiscal year 2021/22 and an additional Rs 8.32bn since the start of the new fiscal year 2022/23. The authority has set a target of Rs 16bn within the current fiscal after resuming exports in May.
