Nepal | September 30, 2020

Study explores opportunities and challenges to export power

Himalayan News Service
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Source: ICF's study on Indian Power Market

Source: ICF’s study on Indian Power Market

Kathmandu, October 2

As Nepal has targeted to export greater amount of energy to India by 2022 by developing mega hydropower projects, the export price of Nepali hydroelectricity is expected to stand at Rs 9.89 per unit by that time.

A study commissioned by the Investment Board Nepal regarding the power market of India has said that purchasing power of Indian distribution utilities has gone down by about 45 per cent in 2015 as compared to 2009. This is because the government of India has been gradually removing the subsidies offered to distribution utilities.

In fiscal 2013, the aggregate loss of the distribution utilities of India stood at INR 1.05 trillion. With the government subsidy worth INR 360 billion for that fiscal, the aggregate loss was brought down to INR 690 billion, said the study.

The loss (without subsidy) is estimated to hover at around INR 1.5 trillion in 2015. The study said that there is less room for distribution utilities to purchase electricity at higher rates owing to huge loss and removal of government subsidy that was being extended to them.

On the other hand, cheap imported coal will be the huge source of energy for India. Its contribution to total power generated in India stands at around 36 per cent and generation of electricity from coal has been increasing. India has been setting up coal plants in the coastal areas of the southern part of the country.

But the northern part of India will be a market opportunity for the power producers in Nepal. Demand for energy has been increasing in northern India — Baraily, Lucknow, Gorakhpur, Muzaffarpur, and even in Delhi. As per the study, it would be costly to install coal plants in the northern parts by ferrying coal via rail. So, Nepal should tap the northern market.

On the other hand, India’s commitment to reduce carbon emission under the climate change initiative will provide an opportunity for Nepal’s hydro electricity.

The study conducted by the US-based ICF International for the Investment Board Nepal has suggested that Nepal could take advantage of cheap coal-based electricity by importing it from India to meet dry season needs.

And in the future also, the Indian market will offer Nepal to manage its seasonal load-shedding and excess power generation by selling in the wet season and purchasing in the dry season as most of the projects in Nepal are based on run of the river (RoR). Currently, the country has been importing 200 MW power from India every day.

The study has further said that Nepal’s ability to tap the potential offer of Indian power market for development of its hydro resources depends critically on its ability to develop an extensive network of cross-border transmission networks to India. Both the countries have recently developed Dhalkebar-Muzaffarpur 400 KV transmission line for power trade.

Nepal expects to export 2,000 to 3,000 megawatt of hydroelectricity to the Indian power market per day by 2022. There will be room to export 18,000 megawatts of power from Nepal to
India by 2031-end.

A version of this article appears in print on October 03, 2015 of The Himalayan Times.

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