High anticipation for accomplishing a significant energy target in accordance with the country’s ambitions characterized the previous year. The successes of the previous year have substantially reinforced the belief that the growth of the energy industry can bring prosperity to the country. After producing a respectable quantity of power, Nepal has started to seek for opportunities to sell the extra energy to its neighbors. In addition, the adequate output has caused a paradigm change, moving Nepal from a load-shedding nation to one that can maximize domestic consumption.
According to the most recent figures provided by the Alternative Energy Promotion Center (AEPC), the Nepal energy Authority (NEA), and private sector power providers, the nation now has an installed capacity to generate around 2,700 MW of energy. 84.53 MW of the total capacity is reserved for off-grid supplies, while 2,492.95 MW is linked to the national grid.
Nepal’s total installed power producing capacity as of mid-April 2022 was 2,191 megawatts, an increase of more than 500 MW over the previous year. Due to this development, Nepal’s power output is now self-sufficient, with 11,064 GWh produced in 2022, up from 4,258 GWh in 2013—a threefold increase.
The NEA-operated firms and its subsidiaries have been generating 1,139.44 MW of the 2,689 MW total installed capacity, while the private sector has erected power plants with a capacity of 1,392.92 MW. Off-grid supply also includes the production of 4.53 MW and 80 MW, respectively, from minor hydropower projects and other energy sources.
A total of 552.119 MW of energy, produced by both hydropower and solar plants, was delivered by 32 privately-run power projects between mid-April 2022 and mid-March 2023, according to NEA figures.
The 86 MW Solu-Dudhkoshiproject, according to NEA, was the biggest private sector investment project to go online at the time. Out of the 552.119 MW total provided, 523.319 MW came from 28 hydropower facilities, while the last 28.8 MW came from four solar plants.
In addition, nine projects with a combined output capacity of 157.470 MW are now in the test production stage. This contains six hydropower units with a combined capacity of 138.67 MW, three solar plants with a combined capacity of 18.8 MW, and one geothermal plant.
The country’s entire production capacity will reach more than 3,000 MW by the end of the current fiscal year, according to projections. By the conclusion of the fiscal year, significant hydroelectric projects such the 111 MW Rasuwagadhi, 57.3 MW Sanjen and Upper Sanjen, 102 MW Madhya Bhotekoshi, and 54 MW Super Dordi are anticipated to be operational.
Furthermore, 3,300 MW worth of projects pushed by the NEA and the private sector are now under development at different levels. In addition, 240 projects that will generate 11,716 MW of energy have completed feasibility studies and are awaiting the execution of power purchase agreements. Nepal lags significantly behind in the statistics when compared to wealthy nations like Canada and the US, where the annual per capita power usage is 16,405 kWh and over 12,314 kWh, respectively. With annual per capita energy usage of 52,980 kWh in Iceland and 27,529 kWh in Norway, respectively, these two countries are at the top of the list. In comparison, Nepal’s per capita power usage was just 325 kWh as of mid-April 2022. By 2024, the government wants to raise this number to 700 units.
In Nepal, there has recently been a discernible movement toward utilizing electricity for routine household tasks. The import of liquefied petroleum gas has also significantly decreased, which indicates that domestic hydropower usage is increasing.
The import of LPG declined by 19.2 million kg (1,352,112 cylinders) in the first eight months of the fiscal year 2022/23 compared to the total consumption of the previous year, according to data from the Nepal Oil Corporation. As a consequence, during the review period, Nepal, a country reliant on imports, saved Rs 1.91 billion on LPG imports. According to NOC Spokesperson Binit Mani Upadhyaya, “The growing use of electric stoves in Nepal’s urban areas could eventually replace LPG, which is currently consumed in significant amounts.”
increasing likelihood of international trading in energy
The Nepali year 2079 BS marked a turning point in Nepal’s exploration of new potential for energy exports. Nepal is a nation rich in water resources. For the first time, Nepal began selling its power to the Indian market via a bidding procedure at the Indian Energy Exchange (IEX), in contrast to the previous year when cross-border energy commerce was conducted at the government level.
Similar to how India has profited greatly from Nepal’s export of power. The nation earned Rs 11 billion from June to December 2022 by selling power to its southern neighbor at prices ranging from Rs 6.58 to Rs 12.15 per unit. In the fiscal year 2021/22, this power export revenue ranked third among all export revenues.
Following the signing of the India-Nepal Power Trade Agreement in 2014 during Indian Prime Minister Narendra Modi’s visit to Nepal, Nepal exported 39 MW of power to India under the IEX. Notably, Nepal is the first country that borders India to take part in the IEX.
Since November 2022, the Indian government has granted Nepal’s request to increase the cap, according to NEA, allowing the landlocked nation to export up to 408 MW of power produced by eight projects.
The most recent development is that Nepal anticipates concluding a long-term intergovernmental deal with India to sell its surplus energy to its southern neighbor during Prime Minister Pushpa Kamal Dahal’s planned trip to India. The government is presenting a 25-year deal to the Indian side, according to Dinesh Ghimire, Secretary in the Ministry of Energy, Water Resources, and Irrigation. “The long-term intergovernmental agreement is currently being discussed at the ministry,” he said.
Similar to how Bangladesh has shown interest in buying energy from its northern neighbor, Nepal is looking into the prospect of selling electricity to Bangladesh. While Bangladesh has been predominantly using coal, fossil fuels, and natural gas to cover its energy demands, it has set a goal to cut its carbon emissions by 22% by 2030. In the meanwhile, Nepal is attempting to increase its international energy trade outside India.
The purchase of 50 MW of energy produced by Nepali power plants has been authorized by Bangladesh. In addition, India has suggested, under certain restrictions, that Bangladesh get 50 MW of energy from Nepal’s hydroelectric projects. If all goes according to plan, the two nations want to start selling energy bilaterally in 2023 during the rainy season.
Additionally, Nepal has been eager to export power to Bangladesh through specially constructed transmission lines via India.
Bangladesh has indicated interest in buying 500 MW of the 900 MW of energy that the Upper Karnali Hydropower Project is capable of producing, pending Indian government clearance. Bangladesh is also thinking about financing the construction of the 683 MW Sunkoshi-3 and the 1,547 MW KhimtiShivalaya hydropower projects and buying the energy generated by these facilities.
Alternative renewable energy possibilities
By 2030, the government wants to generate 15,000 megawatts of power, and alternative energy will make up around 10% of that total. Solar power projects are gaining more investment among the numerous alternative energy sources.
Solar energy was first largely utilized to electrify homes, but it is now also being developed for business purposes. The NEA has planned to deploy a combination of energy sources, including solar power, to provide sustained energy security, according to KulmanGhising, the managing director.
In Nuwakot, the NEA has started a 25 MW solar plant that is now running at around 50% of its potential. In addition, a total of 20 megawatts of electricity are being generated by four other solar projects. Additionally, a solar power facility with a 0.68 megawatt capacity is run by the Kathmandu Upatyaka Khanepani Management Board in the Kathmandu Valley. These initiatives show Nepal’s dedication to expanding solar energy as a component of its energy mix.
Similarly, the Mithila Solar PV electricity Project generates 10 megawatts of electricity in Dhanusha, the Ridi Hydropower as a grid-connected solar power project generates 8.5 megawatts of power in Rupandehi, and the Bishnupriya Solar Farm produces one megawatt of power.
On the arid territory controlled by the Gandak Hydropower Project, the NEA also intends to build solar power facilities with installed capacities of around 6 MW in Pratappur Rural Municipality-7 Suryapura, Nawalparasi (BardaghatSusta West). According to Ghising, a solar power plant with an installed capacity of around 9 MW will also be built on the property held by the Jhuprakhola Micro-hydro plant in Surkhet and the Middle Marsyangdi Hydro Project in Lamjung.
By the conclusion of this fiscal year, it is anticipated that the Duhabi Solar (8 MW), Baki Block Solar-1 (10 MW), and Bhrikuti PV solar (8 MW) projects would begin operating. According to their records, the Department of Electricity Development has received survey applications from 33 solar projects with a total capacity of 408 MW.
commitment to carbon neutrality
Nepal pledged to achieve net zero emissions by 2045 at the UN climate summit held in Glasgow in November 2021. By 2045, Nepal would have produced no more greenhouse gases than it had prevented (i.e., net zero). In a similar vein, the nation pledged that 15% of its overall energy consumption will be met by renewable energy sources. Another pledge was to keep the forest cover at 45% by 2030.
Nepal has promised to make sure that between 5 and 10 percent of its power generating capacity comes from renewable energy sources including solar, wind, and bio-energy.
Nepal has to concentrate on generating more hydropower while also improving accessibility and affordability at the grassroots level if it wants to maintain its commitments to its international partners. Since the nation is heading in the correct way with a noticeable increase in production of hydroelectricity, solar power, and green hydrogen in recent years, this also calls for using the potential alternative energy sources other from hydropower.
By 2024, a 100 MW green hydrogen plant would be installed, according to Biraj Singh Thapa, director of the Kathmandu University’s Green Hydrogen Lab. Nepal wants to enhance its dependence on renewable energy sources to satisfy 15% of its energy needs by 2030. Currently, hydropower only accounts for 2% of the nation’s energy production. Nepal filed its revised Nationally Determined Contribution as part of this endeavor in December 2020, describing intentions to produce 5,000 megawatts of hydropower using its own financial and technical resources by 2030. By 2030, the conditional goal is to produce 15,000 megawatts of power, with 5–10% of the energy coming from renewable sources including solar, wind, and biofuels.
Future hydroelectricity supply reliability is a major worry because of a number of issues, including climate change. Nepal confronts several obstacles that put its energy security in jeopardy, and the growth of its hydropower industry is susceptible to the effects of climate change, which may have serious economic repercussions. The nation is also very vulnerable to natural catastrophes like floods, earthquakes, and landslides, which may raise capital and operating expenses, cause plant closures that cost money, result in property damage, and claim lives.
Currently, solar power plants make up only 0.1 percent of Nepal’s installed capacity, 3.7 percent of its thermal capacity, and 96.2 percent of its hydropower capacity. Despite this, only 68% of the 8.8 GWh of power utilized in Nepal in 2021 came from local sources, with 32% coming from India.
The unpredictability in hydropower production is the main issue confronting Nepal’s energy industry. The country imports a substantial amount of power from India during the dry season due to limited output during the rainy season. Furthermore, given Nepal’s limited cash resources, export-oriented hydropower projects would need a yearly investment of an extra $0.5 to $1 billion, which will be challenging.