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Presently, only 1% of the energy needs of Nepal are being met by electricity. The electricity grid is centered in urban and semiurban centers and the vast majority of the rural population, representing about 85% of Nepal's total population, has no access to electricity.
The present installed capacity of the national grid is 610 MW, of which 65 MW are generated from thermal plants and 545 MW from hydropower (NEA Annual Review, 2003/2004). This hydropower represents only 1.5% of the 40,000 MW of economically viable hydroelectric potential available in Nepal.
The present electricity shortage in Nepal is being met by expensive diesel power. Alternatively demand is eliminated through load shedding - cutting off power to segments of the grid during peak hours. Load shedding is extremely detrimental to the national economy. Additional capacity is required.
In rural areas fire wood still is the major source of energy consumption (74%), with animal residues providing a further 20%.
This practice is no longer sustainable, resulting in deforestation and soil erosion. Moreover, population growth is placing further stress on the land. As stated in Nepal's Eighth Five-Year Plan, alternatives to the rural energy demand must be developed. Hydro and other renewable energy technologies will play a major role in the solution.
The Nepal Electricity Authority (NEA) owns and operates the national grid. NEA operated in 2004with a total installed capacity of 610MW of which 85% is hydro based. Storage capacity accounts for only 92 MW and 4.6 MW were generated from small hydropower plants. The electrical energy available for use within the NEA system totalled 2380Gwh. The following table outlines the growth in the system capacity as the planned projects are commissioned.
| Financial Year | Project | Capacity | Total Supply |
| 1998/99 | Puwa Chilime Modi |
6 MW 20 MW 14MW |
289 MW 309 MW 323MW |
| 1999/00 | Khimti | 60 MW | 383 MW |
| 2000/01 | Kali Gandaki -A | 144 MW | 527 MW |
| 2001/02 | Bhote Koshi | 36 MW | 563 MW |
| 2003 | Indrawati | 5 MW | 568 MW |
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The existing peak demand is estimated at 470MW. At present, the NEA has to resort to load shedding, or shutting down sections of the network, to maintain voltage in the system. This mainly occurs in the dry season when the low flow in the rivers minimizes energy production.
The average growth of energy per year is 75% and 7.93% for peakload demands per NEA publication.
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Medium Term Hydropower Study Program
The NEA conducted the Medium Term Hydropower Study Program which evaluates the feasibility and viability of the seven hydroelectric projects listed below:
Feasibility studies for these projects were completed. Two of the seven projects were selected and opened for private investment and sale to the national grid.
Other
Other projects being studied by the NEA include:
Private Sector
Study licences have been given or will shortly be given to private sector concerns for the following projects:
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The Power Trade Agreement signed between India and Nepal allows for any two parties to enter into agreement to export energy. Nepal cannot utilise its vast hydro potential, therefore any large project will be dependent upon export to India. The huge population and rate of industrial growth in India is rapidly increasing demand for electricity. At present there is an 18 percent peaking shortage in India. This, in conjunction with environmental concerns and favourable economics, makes export of electricity from hydro stations in Nepal a very attractive option to Indian policy makers and industrialists.
India is a large and growing market both for manufactured goods and energy. Preferential access for Nepalese products with at least 50 percent Indo-Nepal content (both materials and labour) increases the attractiveness of Nepal as a business location. This is particularly so for manufacturing firms that propose to cater to northern India. The potential to provide excellent quality electricity could stimulate industrialisation in many regions of Nepal.
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In 1983 India and Nepal agreed to execute three major multipurpose river water projects: Karnali (3600 MW), Pancheshwar (6480 MW) and West Rapti. The recent ratification of the Integrated Mahakali Treaty means a break through in the Pancheswar export oriented mega-project. The vast majority of the power from these projects will be exported to India. The financing will likely come from international investors backed by long term power purchase agreements with India. However, the details of the implementation of these projects and other legal issues have yet to be settled by the two countries.
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The Hydropower Development Policy 2049 (1992) and the Electricity Act 2050 (1993) constitute the government's major policy to develop the nation's water resources through private sector participation.
The private hydroelectricity sector of Nepal comprises of a growing number of private companies. Among them are Butwal Power Company Ltd. (BPC), LEDCO, Bhote Koshi Power Company and a handful of small suppliers of micro and mini hydroelectric schemes.
BPC is currently the largest private power supplier in Nepal. BPC was established in 1966 as a joint undertaking of His Majesty's Government of Nepal (HMGN) and the United Mission to Nepal (UMN). BPC has built the Tinau Power plant (1 MW), the Andhi khola plant (5.1 MW) and the Jhimruk power plant (12.3 MW) and currently owns and operates the latter two. BPC was also involved in the Khimti I Hydropower Project (60 MW).
BPC Hydroconsult is a separate division within BPC, which handles design and supervises construction of BPC's own projects as well as outside contracts. Also, as a result of BPC's engagement in hydropower development, two sister companies have been created. One is Himal Hydro and General Construction Ltd., which is Nepal's leading civil contractor in the field of hydropower construction. The other is Nepal Hydro and Electric Pvt. Ltd. (NHE) which is Nepal's leading manufacturer of hydro mechanical and electric equipment for hydropower plants. NHE also produces galvanised poles and towers for transmission lines.
There are currently three hydro projects being promoted in Nepal involving foreign investment. A U.S.-Nepal joint venture has completed construction of the 36 MW Bhote Koshi project, a mixed public/private 60 MW Khimti developed on the Khimti River and one export oriented project in the offing 750 MW project on the West Seti River.
The 60 MW Khimti I project was developed by Himal Power Ltd. (HPL), a Nepalese company with major shareholders comprising BPC, Statkraft S.F. (state company of Norway), ABB Kraft AS, and Kvaerner Energy AS (Norwegian Companies). A Power Purchase Agreement (PPA) between HPC and Nepal Electricity Authority (NEA) was signed in January 1996. and currently NEA purchases all the energy from this powerstation.
The Bhote Koshi Power Company was established in June 1996 to develop and operate the 36 MW Bhote Koshi hydropower plant. The major shareholders are Himal International Power Company, Panda and Harza, the latter two are American companies. The NEA purchases all energy generated by the Bhote Koshi project through a PPA.
The Snowy Mountain Engineering Company (SMEC) of Australia is trying to developing the West Seti project, a 750 MW hydro scheme located in the Far Western Development Region. An agreement has been signed with the Nepalese government to allow the export of electricity and negotiations for power purchase agreements are ongoing with Indian utilities.
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Last modified:
8 May, 2005
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