Nepal’s hydropower potentials are legendary. But the ground reality is that just around 22 percent of the country’s population enjoys access to electricity through Nepal Electricity Authority (NEA) grid. The installed capacity is one of the lowest in South Asia at just over 600 MW. Even as the demand for energy is rising at the rate of 10 percent, no big project aimed at domestic consumption is under construction at this juncture apart from one. Although the country needs to add at least 50 MW every year to cope with the demand, the authorities have not moved in this direction. A brief load-shedding in early March this year indicated that the days of uninterrupted power supply could be over if the situation persists. As such, the expectations of exporting energy to India also appear far-fetched.
By SANJAYA DHAKAL
Nepal’s hydropower sector reflects a classic irony. Despite its potentials to emerge as major clean energy producer in this power-starved Indian subcontinent, misplaced priorities and inadequate efforts have resulted in a situation where only 22 percent of the total population of this country enjoy the access to electricity through Nepal Electricity Authority (NEA) – the state-owned corporation – networks. Just around 40 percent population – mostly from urban and semi urban areas – are estimated to have access to grid electricity – 7 percent of them consume alternate energy like solar power, biogas and so on, according to the National Planning Commission (NPC).
The per capita consumption of electricity in Nepal is abysmal at 60 kWh/annum. The total installed capacity is 609 MW including 141 MW produced by Independent Power Producers (IPP) compared to 43,000 MW that is feasible for generation.
The energy demand in the country is said to be rising at the rate of almost 10 percent. As such, Nepal needs to add at least 50 MW of power every year. However, apart from the 70 MW strong Middle Marsyangdi project, which is expected to complete in 2007, there are no other big projects currently under construction – indicating tumultuous days ahead.
According to load forecasts for Integrated Nepal Power System (INPS), the energy demand in 2004 of 2321.5 GWH will increase to 3172.9 GWH in 2007; 3936.4 GWH in 2010; and 7933 GWH in 2020.
The Tenth Plan (2002-2007) aims to increase the installed capacity to 842 MW by the end of the plan period serving 55 percent of the population and raising the per capita consumption to 100 kWh.
Just after the formal commissioning of the 144 MW strong Kali Gandaki A project, the country could enjoy around 650 million units of surplus power. But the initial euphoria could fast giving away to gloom if big projects are not developed swiftly.
At present, according to Arjun Prasad Shrestha, director general of the Department of Electricity Development (DoED), there are projects totaling 90 MW under construction including Middle Marsyangdi (70 MW), Upper Modi (14 MW), two small hydro projects totaling 900 kW plus two private projects totaling 4.1 MW.
As demand is slowly outstripping the supply, Nepal is at the crossroads of opportunities as well as challenges. Apart from Marsyangdi, there are two other projects that are in the pipeline – Kulekhani III (40 MW) and Chameliya (30 MW). However, they are not going to be completed any time soon because they are to be financed by donors and undertaken by the government. The NEA officials agree that in the next ten years, they don’t see big projects coming in operation.
“Looking at the power projects planning at the moment, I see a dark future ahead. Currently, the projects like Budhi Gandaki (600 MW), Upper Karnali (300 MW) and West Seti (750 MW) are in the priority. None of them are targeted at domestic consumption. The NEA does not seem to have its separate project planning. Its priorities have been overshadowed by that of the government,” said Rajendra Dahal, editor of Himal fortnightly and prominent writer on water resources. “I see that Nepal will fall into the similar trap of load-shedding as was experienced in late 1980s and early 1990s.”
Export of Power
Export of power to India has been a major preoccupation of Nepalese power planners. With so much energy in hand, they say, there is no reason why Nepal should not go for equitable export arrangements with India – which is going to have an insatiable demand for the same.
“We have the energy and they have the demand. There is no reason why the two countries should not compliment each other,” said Janak Lal Karmacharya, managing director of the Nepal Electricity Authority (NEA).
“Nepal has the commercially feasible potential of 43,000 MW. And we have limited internal market – Nepal’s own forecasted requirement by the fiscal year 2020 is only 1820 MW at the rate of 7.5 percent growth; requirement by the fiscal year 2027 will be 7000 MW, i.e. 16.28 percent of commercially feasible potential,” adds Karmacharya.
As far as India is concerned, it currently has the installed capacity of 1,10,000 MW. “By the year 2025, they will require 3,00,000 MW. They have 12 percent deficit in power at peak demand and 7 percent deficit in energy at peak demand,” said Karmacharya.
Experts say that Nepal is appropriately placed to export power to Nepal. It is the northern region of India, bordering Nepal like Bihar, UP, Delhi etc, that are most power deficient.
“We have a market available next door. The present capacity of Uttar Pradesh (UP) is 8000 MW and its demand is rising at the rate of 7-8 percent or more. Likewise, Bihar State has the present capacity of 3000 MW and its demand is rising at the rate of over 6 percent,” said Arjun Prasad Shrestha. “Besides, we already have power exchange arrangements through which around 50 MW is being exchanged. So, there will be no problem in transmission.”
But due to various reasons, the potentials of power export could not materialize. The much touted Pancheshwore project is still in the lurch. “We need to separate water-sharing and power issues first. With water-sharing comes rivers and with rivers come issues of sovereignty. What we could do is separate this issue from pure commercial venture of power development. If we are able to do that, then there will be no controversies,” said Karmacharya.
Of late, there has been some development in this direction. The Power Trading Corporation (PTC) of India has signed Power Purchase Agreement (PPA) with the Snowy Mountaineering Engineering Corporation (SMEC) of Australia in order to buy electricity from the 750 MW West Seti Project of Nepal. Nepalese government had granted the license to build and operate the project to SMEC for 30 years on lease. This project, which is going to be biggest one in Nepal, is also the first one that is fully export-oriented.
Likewise, the National Hydropower Corporation (NHPC) of India and NEA are in the final stages of signing a Memorandum of Understanding (MoU) to develop the 300 MW Upper Karnali project in a joint venture basis.
Indian media has reported that the NHPC is planning to complete the project within three to four years. Nepalese side will contribute 49 percent equity in the US$ 500 million project. In fact, the NHPC is wanting the capacity of the project raised to 480 MW with additional investment. Initial reports say that the NHPC proposes to buy the power from the project by paying energy royalty of Indian Rs 0.16 per unit exported. Likewise, the per unit cost of the power will be around Indian Rs 2.12.
“If the huge water resources of Nepal are exploited and harnessed properly in a sustainable manner, it will induce less harm and bring fortune to not only the people of Nepal but the whole South Asia region,” said Shrestha.
The Nepal government is looking at the increasing commercial investments from the private sector to realize its energy potentials – a marked shift from the donor-driven project developments. “Indeed, private sector if the only vehicle for growth but the government needs to rationalize its policies if it wants private investment in this sector,” said Dr. Sandeep Shah, manager of the Bhotekoshi Project – a project that has joint investment from the Soaltee Group of Nepal and Panda and Harza energy of the United States.
While the arguments for export-oriented projects are strong; the arguments for the development of indigenous projects are not weak either.
The successful completion of Chilime (20 MW), Modi (14 MW) and Piluwakhola (6 MW) have shown that indigenously built small and medium hydropower projects can provide the best alternative for generating energy for domestic consumption.
According to former director of NEA Gobinda K.C., the NEA currently has a sufficient pool of experts and technical manpower to construct projects up to 100 MW. “There is a lot of internal capital available if one looks for it seriously. The internally-built projects will be sustainable as well as cost-effective,” he said. The indigenous projects will reflect the real cost of electricity and help bring down the current level of electricity, which is said to be one of the highest in the region at US cents 9.9 per unit.
Alternate Route
Many experts also view that Nepal needs to focus on developing alternative sustainable energy sources like solar and wind energy in order to benefit rural population. The diverse and rugged topography of the country means that full grid connection of each and every household of each and every villages is practically impossible.
The terribly low proportion of population having access to central grid is also because villages in Nepal are mostly inaccessible and far-flung. Perched atop difficult hills, village communities can hardly expect to connect their households to the central grid.
“As such, we need to have an indigenous strategy tailor-made to help rural communities, if we want to achieve the aim of full energy supply,” said Surya Man Shakya, chief of the Solid Waste Management at the Local Development Ministry and the Director of Research and Development, Pokhara University’s School of Environmental Management and Sustainable Development.
Out of the total energy consumption by fuel type in the country the whopping 75.78 percent is occupied by fuel wood alone. The electricity occupies only 1.47 percent in total energy consumption with petroleum products occupying over 9 percent and so on. This data shows that majority of population have still not used electricity as their primary energy source.
“Our villages and communities are so diverse and so unique that no single solution can work for all of them. Attempting to join all the villages to a central grid is next to impossible. We have to customize our efforts aimed at every single village,” said Shakya. “This is where alternative sources like solar, wind and others can play vital role.”
“At present, 30,000 rural households are being connected to national electricity grid every year. In contrast distributed energy systems supply 45,000 new households every year with access to biogas, micro hydro or SHS,” said Shakya. “Around 300,000 rural house holds have access to grid electricity while 500,000 families have access to distributed energy systems.”
According to him, Nepal has immense potential of tapping solar energy. The country has, on average, 6.9 sunshine hours per day totaling 2482 sunshine hours per year. The solar energy potential here is around 4.5 kwh/sq. m./ day. “In South Asia we are next only to Pakistan in terms of this potential,” he said.
Likewise, although there has been no proper wind mapping as yet, places like Jumla, Khumbu, Mustang, Palpa, Ramechhap and Karnali-Chisapani have the potentials, said Shakya.
The Tenth Plan of the government (2003-2008) also recognizes the importance of solar energy. It aims to generate 3.7 MW of solar energy benefiting 52 districts with 52,000 Solar Energy Systems distributions. Likewise, it aims to install 2700 units of solar dryer/cooker in 20 districts.
The Tenth Plan also has the objective of implementing 100 solar drinking water supply and small irrigation projects in 15 districts. It also plans to do wind rose mapping in 20 districts and generating 20 KW of electricity from wind.
Experts and environmentalists agree that Nepal, too, should reorient its focus on developing solar and wind power in pocket areas to provide sustainable energy to rural households. “When we cannot provide hydroelectricity to remote corners of the country, we could at least develop pocket projects of solar/wind power there. For instance, providing clean energy to places like Khumbu will substantially bring down the practices of felling trees for fuel wood and will arrest the deforestation of precious high altitude ecosystem,” said an environmentalist.
The alternative energy can prove to be a boon to vast rural hinterlands of Nepal if properly utilized. Only a two-pronged strategy of developing big hydropower for urban consumption and exports and developing small-scale alternative sources like solar, wind, micro-hydro for rural consumption can help Nepal achieve its lofty objectives.
Planned & Proposed:
Medium & Large hydropower 22372 MW
Small Hydropower 7.40 MW
Current NEA share:
10 medium scale projects totaling 389 MW
42 small hydro schemes totaling 19 MW
Private sector:
144 MW from 8 projects
Under construction: 90 MW
NEA: Middle Marsyangdi (70 MW) Upper Modi (14 MW)
Two small hydro projects totaling 900 kW
Private: Two projects totaling 4.1 MW
(Source: DoED)
Water Resource Strategy 2002
Plan for short, medium and long term period (2002-2027)
Strategic output in the hydropower sector: “Cost-effective hydropower developed in a sustainable manner”
Indicators
– By 2007: 25% households supplied, 820 MW capacity developed (400 MW for export)
– By 2017 : 38% households supplied, 2230 MW capacity developed (2230 MW for export)
– By 2027 : 60% households supplied and Nepal is exporting substantial amounts of electricity to earn national revenue.
Investment
– Planned expenditures at 2000 prices for the 25 year period = NRs. 496 billion
(excluding large multipurpose projects)
– Major source: Commercial loans and private sector developers
– Rural electrification will require subsidies from the government : depends on foreign aid
(Source: DoED, NEA)