A large portion of the investment in hydropower goes overseas for electromechanical components, such as turbines and generators. While design trademarks for these components are usually provided by European companies, the manufacturing is mostly carried out in countries where the labour cost is cheaper
According to the Nepal Energy Sector Synopsis Report of 2022, published by the Water and Energy Commission (WECS), the energy mix in Nepal is still dominated by traditional energy types. The share of the highest used fuel, including fuelwood, agricultural residue and animal waste, is still 66.26 per cent of the total energy mix in 2021. Nevertheless, this figure has decreased from 87 per cent in 2009.
The share of diesel and coal is also significant, 10.14 per cent and 9.34 per cent respectively, whereas electricity contributed only 4.22 per cent (2% in 2009) of the total energy consumption in 2021.
With the recent efforts made by the government to increase electricity consumption by prioritising EVs and electrical cooking appliances, the energy mix is expected to be more balanced within the next decade.
From the perspective of electricity, the current peak demand, mentioned in the annual report of the Nepal Electricity Authority 2022, is 1,748 MW, and 1,964 MW including its export. The completion of the UpperTamakoshi project lifted the installed capacity of Nepal significantly last year, with a total of more than 2,070 MW. However, since production ceases in the dry season, some power still needs to be purchased from India.
The total power purchased from India this year was 1,543 GWh, which decreased from 2,806 GWh last year. Nepal is now allowed to export up to 364 MW of electricity to India, which is expected to grow in the coming years. Currently, in Nepal, about 2,780 MW of hydropower plants are under construction, and more than 1,550 MW are at different stages of development.
The hydropower development process will continue to grow in Nepal for the next several decades.
There is an unparalleled opportunity for the investors, manufacturers and related companies. Hydropower professionals in Nepal have been successful in building their competencies in many sectors of this field, including structural, mechanical, environmental and electrical engineering, as well as financial and project management aspects.
A large portion of the investment also goes over-seas for electromechanical components, such as turbines and generators. The design trademarks for these components are usually provided by European companies, which are distinguished experts in this field, but the manufacturing is mostly carried out in countries where the labour cost is cheaper, such as In-dia or China. This is because the procurement system in Nepal for such products is very competitive, and the bidders need to compromise on several factors to reduce the cost.
The quality of the design is also usually compromised, and instead of tailor-made iterative design practice, the company picks from its design library, which might not consider any specific issuefrom the power plants.
Although hydropower is one of the biggest markets in Nepal, it has not been considered a potential country for big industries.
Lack of uninterrupted supply of raw materials, unavailability of modern equipment and skilled manpower in this field are some of the challenges thatmake investors reluctant to start such companies.
A few years back, uncertainties related to the supply of electricity were also predominant in Nepal, nevertheless, the reluctances due to electricity problems are not very significant nowadays. Industries are encouraged to produce through the dedicated grid, which can be an important factor for industrialisation in Nepal in thefuture.
Nepali hydropower plants are characterised by the unique challenge of sediments. With excessive sand in the rivers during the monsoon season, it becomes difficult for the turbines to remain intact without any wear for long.
The design of the turbines in these conditions needs to be driven so as to minimise the wear, rather than implementing foreign designs, where the problem is not related to sediments.
A tailor-made design of the turbines needs to be implemented for hydropower plants, which can provide strength to the manufacturing company if it is based in Nepal. This is because the design works can be carried out inside Nepal at minimal cost, which makes it possible to make the design process more iterative. Computer simulation is an effective tool nowadays, which can be rigorously used to optimise the efficiency and wear of turbines. State-ofart laboratory facilities now exist even in the universities of Nepal, and many activities are being conducted in collaboration with international universities, which are pioneers in hydropower education.
These industries can develop a cooperation model with such universities to endorse applied research for a sustainable future.
With such specialties, it is also possible for a company to export its product to neighbouring countries where the problem of sediments is equally challenging.
On a final note, Nepali investors need to come out of the mindset that only products that have an international trademark are of high quality. Instead, similar or higher quality products can be manufactured, at the same or cheaper cost, inside Nepal, provided that the right modality of investment is made.
Nepali industries are already thriving in the repair and maintenance sector, as well as in manufacturing turbines for micro-hydro power plants. It is high time to capture the turbine manufacturing market, not only because of the data mentioned above about the present under-construction sites in Nepal but also because of the possibilities of refurbishing the old turbines, whose utility will expire after several years of operation.
Chitrakar and Lama are associated with Kathmandu University
A version of this article appears in the print on December 16, 2022, of The Himalayan Times.
