Kathmandu, July 27

Nepal Electricity Authority (NEA) has called for power purchase agreement (PPA) with developers of peaking run of the river (PRoR) projects on ‘take or pay’ basis under government’s plan to develop 10,000 megawatts of electricity in 10 years.

The NEA board meeting a few days back decided to seek PPA for PRoR projects as the quota for run of the river-based projects has run out since last week. Under the ‘take or pay’ provision, NEA has to pay for the power generated whether or not the power off-taker can expand market to sell the energy.

NEA introduced ‘take or pay’ PPA since February this year for up to 10,000 megawatts of power that is going to be generated within 2026. It has fixed a quota of 30 per cent (3,000 megawatts) of the aforementioned quantum of electricity for run of the river projects, 20 per cent for PRoR projects (2,000 megawatts) and 50 per cent (5,000 megawatts) for storage projects.

The Ministry of Energy (MoE) decided to extend ‘take or pay’ PPA to projects that have signed grid connection agreement with NEA since February 18, 2016, after the ‘Energy Crisis Prevention and Electricity Development Decade’, a 10-year vision document of the MoE was endorsed by the Cabinet.

The quota for the run of the river projects under ‘take or pay’ PPA is over now after PPA was signed with 18 new projects with total capacity to generate 310 megawatts to be developed by independent power producers. The quota has been filled as NEA has included all the projects under construction, those that have already been developed and also those NEA projects that are in the pipeline in the scheme.

The number of applications for RoR projects is increasing because such projects are considered as low-cost projects, but the power utility has closed the ‘take or pay’ PPA for RoR projects. “Henceforth NEA can sign PPA with RoR projects only on ‘take and pay’ basis, according to Prabal Adhikari, spokesperson for NEA, who also heads the Power Trade

Department at NEA.

While NEA has set a quota of 2,000 megawatts for PRoR projects, it has included the already completed NEA projects like 144MW Kaligandaki, 70MW Middle Marsyangdi, 50MW Upper Marsyangdi, 30MW Chameliya, 22MW Chilime and 24MW Trishuli. Because of this, there is only limited quota for PRoR projects, according to Adhikari.

NEA has said that PPA for storage projects will be opened after deducting the capacity of existing projects like Kulekhani.