CROSS BORDER POWER TRADE

ELECTRICITY DEMAND/SUPPLY

Independent Power Producers’ Association, Nepal

(IPPAN)
Nepal Power Exchange Limited
Nepal - Existing Power Balance ( 25th May 2021)
PEAK LOAD – 1302 MW TOTAL CONSUMPTION – 26456 MWh

DOMESTIC GENERATION – 14526 MWh

IMPORT

7700 MWh 6826 MWh 11930 MWh

29% 26% 45%

 -
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000

GOVT

PRIVATE

20202019
TOTAL 1281 MW

GOVT

PRIVATE

2021
2020
TOTAL 2236 MW

GOVT

2021
2022 PRIVATE

TOTAL 3339 MW

GOVT

PRIVATE
2022
2023

TOTAL 4687 MW

GOVT

PRIVATE
2023

TOTAL 5249 MW
2024
POWER GENERATION – 2020 / 2025

GOVT

PRIVATE
2024
2025

TOTAL 6717 MW
 Government Under Construction Projects – NEA and subsidiaries
NEXT FIVE YEARS

Operation
S.N Developers Project Name Capacity(MW)
Date
1 Upper Tamakoshi Hydropower Ltd. Upper Tamakoshi 456 2021
2 Chilime Hydro Power Company Ltd. Rasuwagadhi 111 2021
3 Sanjen Hydropower Company Limited Sanjen 43 2021
4 Sanjen Hydropower Co.Limited Upper Sanjen 15 2021
5 Middle Bhotekoshi Jalbidhyut Co. Ltd. Middle Bhotekoshi 102 2021
6 Nepal Electricity Authority Rahuganga 40 2022
7 Tanahu Hydropower Limited Tanahu 140 2024
Total 907
 Nepalese Private Sector Projects
2613 MW under construction (120 Projects )
2870 MW to start construction (137 Projects )
Capacity Operation
Major projects in pipeline (2022) Project Name
(MW) Date
Upper Solu Hydroelectric Co Ltd Solu 23 2020
Manang Trade Link Pvt. Ltd. Lower Modi 20 2021
Himalayan Power Partner Pvt. Ltd. Dordi Khola 27 2021
Liberty Hydropower Pvt. Ltd. Upper Dordi A 25 2021
Robust Energy Pvt. Ltd. Mistri Khola 42 2021
Sasha Hydropower P Ltd Khani Khola 30 2021
Peoples Hydropower Co P Ltd Super Dordi 54 2021
Nyadi Hydropower P Ltd Nyadi 30 2021
Green Ventures Pvt. Ltd. Likhu-IV 52 2021
Pan Himalaya Energy (P) Ltd Likhu - 1 51 2021
Solu Hydropwoer P Ltd Lower Solu 82 2021
Sahas Urja Ltd Solu Dudhkoshi 86 2022
Sanigad Hydro P Ltd Upper Kalangad 38 2022
Swet Ganga Hydropower & const Ltd Lower Likhu 28 2022
Sanima Middle Tamor Hydropower P Ltd Middle Tamor 73 2022
Peak Demand Estimates
Total Peak Demand 2020 2025

Actual Peak Demand 1408 MW 2270 MW

( assuming 15% growth rate)

Nepal Electricity Authority 2225 MW 4078 MW

( annual report 2019)

Water & Energy Commission 3384 MW 5787 MW

(electricity demand forecast 2014-2040)
 DEMAND/SUPPLY POSITION : 2019-2024
8,000

7,000

6,000

5,000

4,000

3,000 sti mate

d NEA e
De ma n %G ROWTH
Demand 15

TOTAL 5249 MW
TOTAL 3339 MW
2,000
TOTAL 1281 MW

TOTAL 6717 MW
TOTAL 2236 MW

TOTAL 4687 MW
PRIVATE
1,000

PRIVATE

PRIVATE
PRIVATE
PRIVATE

PRIVATE

GOVT

GOVT
GOVT

GOVT

GOVT

GOVT
-
20202019 2020
2021 2021
2022 2022
2023 2023
2024 2024
2025

SURPLUS ( NEA ESTIMATE) 11 701 1,625 1,881 3,014

SURPLUS (15% GROWTH) 652 1,517 2,592 2,840 3,947
 POWER BALANCING
• Increasing Domestic Consumption
• Will increase gradually
• Generation timing and consumption timing differs
• Develop cross border power trade market
• Must for grid stability and load balancing ( import/export)
• Permanent surplus has to be sold across border
• 83000 MW potential has to have buyers beyond borders
Power Consumption Pattern & Growth
Power Consumers 2019-2020

Household 2699 gwh ( 36%)

Industry 3174 gwh ( 42%)

Transport 24 gwh ( 0.3%)

Commercial 725 gwh ( 9.7%)

Others 808 gwh

Total Consumption 7430 gwh

 EXPORT OF POWER
With India releasing its CBET Guidelines/Regulation/procedure, Nepal needs to
formulate its Power Import/Export guidelines immediately
Short term market
• Allow NEA and private sector to reach indian power exchange freely
• Present Indian CBET procedure allows free access
• Daily power sales at INR 3.5-5 per unit

Long Term PPA

• Permit private sector to enter into PPA directly with Indian/Bangladesh buyer
• PPA Available in Indian market at 16% IRR on actual cost, presently hydro tariff for
long term is INR 4.5 plus. HPO is INR 5.5 with 5% escalation.
• PPA Available in Bangladesh market at attractive rates
• Both India and Bangladesh want green firm hydropower
• Explore ASEAN countries via Indian transmission network
 Nepalese hydropower – Cheapest in region
Wet Energy 4.8 per unit 70% Rs. 3.36
Dry Energy 8.4 per unit 30% Rs. 2.52
Average - IPP projects Rs. 5.88
NEA own generation Less than Rs. 2

NEA avg sale price Rs. 10.6

Difference Rs. 4.72
Incentivize NEA vide budgetary support to reduce the margin and
provide power to industry at lower rates
CURRENT DEVELOPMENTS
• REGULATORY : Indian has come up with CBET guidelines, regulation and procedures. This
opens up bilateral and multilateral trade.
Indian has introduced hydropower purchase obligation ( HPO) wherein 0.5 – 2.5% of total
power purchased by each state has to be from Hydro. But imported hydro is excluded from
that.
• INFRASTRUCTURE : Nepal charged a 400KV 1000 MW carrying capacity transmission line
in Feb 2021. Other lines are also under development. Butwal Gorakhpur and other lines
require fast construction. Dedicated transmission lines to Bangladesh needs to be
worked on.
• BUSINESS CASE/COMMERCIALS : Clean stable hydropower ensures carbon free, stable 24
hrs power at competitive cost – 6 cents plus. With fossil fuel dominated
indian/Bangladesh, Nepal/Bhutan has strong business case. North east india corridor
towards Mynmar and beyond ASEAN.
Nepalese private sector wants to go hand in hand with NEA to develop regional power
market and develop domestic power market.
Budget 2078 – Power Demand
• Transport ( electric vehicle)
• Current Consumption 24 gwh (0.3% of total)
• To increase to 2000 MW in 10 years
• Reduce import duty to 0%
• Household ( induction stove)
• Current consumption 2699 gwh ( 36%)
• To increase to 5000 MW in 10 years
• Induction stove import duty to be reduced from 10% to -25% ( subsidy)
• Industry ( reduce tariff)
• Industry power tariff to reduce from Rs. 9 avg to Rs. 7 avg
• Will promote industrialization and increase 5000 MW in 10 years
• Rs. 2 per unit avg loss to NEA be compensated by budgetary support for rural
electrification/concessional grant funds to NEA at same cost as govt gets
Power trading
• Increase competition and bring efficiency
• NEA alone may not be able to create entire market
• Provide trading licenses to 3-4 entities in public and private sector
• Promote Domestic and Cross border power trade
Existing companies
• Power Trading Company Limited

• NEA – 51%, Vidyut Utpadan – 15%, Rastriya Prasaran Grid – 15%, HIDCL – 15%
• Established in 2017 a
• Waiting to get approval ( license) and take over business of NEA power trade
department
• Delay in approval by Government is leading to confusion and derailing NEA
unbundling process
Nepal Power Exchange Limited
• Established in 2018 with objective to lead domestic and cross border
power trading
• Total Capital of Rs. 2 billion, paid up Rs. 10 crore
• Represented by almost entire private sector
• Nepalese Private Sector – 45% ( majority IPPAN members)
• Indian Energy Exchange – 15% ( MOU signed at power summit 2019)
• International Finance Corporation – 10% ( under discussion)
• United Group, Bangladesh – 5% ( under discussion)
• Banks/Financial Institutions – 10%
• General Public – 15%
Nepal Power Exchange Limited
• Signed investment MoU with Indian Energy Exchange ( india’s largest
power exchange)
• Entered into understanding with IFC, USAID and JICA for support
• Signed MOU with four hydroprojects in Tamor Basin 500MW
• Applied to Ministry of Energy for export approval to Bangladesh vide
dedicated transmission line
• Application rejected citing lack of act/laws
Nepal Power Exchange Limited – Rejection letter by DOED
Power trading – Next steps
• Request Ministry of Energy to provide approval to NEA Power Trading
Company Limited and IPPAN Nepal Power Exchange Limited to start
trading
• Ministry of Energy should immediately release Cross Border Power
Trade Guidelines
• ERC should urgently enact regulations for power trading, wheeling
charge etc.
• License for trading should be transparent and provided to already
registered entities in waiting
• It has been heard in media that adhoc approval to a bank ( Nepal
infrastructure bank) is being taken up by cabinet. Such actions should
be brought in transparent manner with equal opportunity to all.
Thank You!