Rapid growth in Nepal’s electricity production sets stage for increased exports

KATHMANDU: In recent times, there has been a significant debate in Nepal about electricity export, making it the most discussed topic along with electricity production. The Nepal Electricity Authority has earned an income of NPR 15.24 billion by selling electricity to India during the fiscal year.

Nepal began exporting electricity to India from the previous year. Although Nepal aimed to export 1000 of electricity daily to India, India only granted permission for 622 megawatts. An important agreement for energy trade was reached between Nepal and India on Wednesday.

During the visit of Prime Minister Pushpa Kamal Dahal to India in june 2023, a long-term agreement on electricity trade was agreed upon. Indian Prime Minister Narendra Modi had announced to import 10,000 megawatts of electricity from Nepal in ten years.

Approximately 622 megawatts were permitted for export in the competitive market of India. Currently, Nepal’s demand in the peak season is about 1,800 megawatts, and the production has reached around 2,800 megawatts this year. During this time, when Nepal was not exporting one thousand megawatts to India, sometimes up to 600 to 800 megawatts of electricity was being imported.

It is estimated that around 900 megawatts of electricity will be added to the national grid by the upcoming monsoon. Looking at this, it is estimated that Nepal’s installed hydroelectric capacity will reach 4,000 megawatts, surpassing domestic demand, and an additional 2,000 megawatts will be available for export during the rainy season.

The agreement between Nepal and India for the past 25 years has made the path clear for electricity trade. The 10,000-megawatt electricity trade agreement has made it easier for electricity produced in Nepal to be easily sold in the Indian market.

Nepal and India have reached a significant agreement on energy trade between the two nations. The agreement signed on Wednesday will allow Nepal to export 2,000 megawatts of electricity daily to India.

According to the government’s plan, an estimated 28,713 megawatts of production capacity is expected by 2035. Many large projects are expected to be completed by that time. The target for domestic demand is 13,468 megawatts by the fiscal year 2035. Additionally, it is expected to export 10,000 megawatts to India daily and 5,000 megawatts to Bangladesh.

Kul Man Ghising, the Managing Director of Nepal Electricity Authority, emphasized that the pathway to exporting Nepal’s potential electricity to India is now accessible. He urged both the government and the private sector to grab this opportunity for the enhancement of esteemed possibilities.

In the competition of the Indian market, Nepal had received permission to export up to 622 megawatts. Nepal, in recent times, has been making efforts to attract foreign investment in hydropower, even if not from China and Pakistan. Despite the absence of Chinese and Pakistani investments, Chinese contractors, even in projects constructed by Nepali companies, can create complications for India to pull out of.

The estimated hydroelectric production capacity of Nepal is 72,544 megawatts according to a recent study by Run of the River (RoR). However, a complete study, including storage, estimates a capacity of 120,000 megawatts. The study did not include resrvoir projects. So far, the government has not prepared a detailed study including reservoir projects.

Nepalese hydropower projects are attracting the interest of Indian investors, who have been looking for opportunities in Nepal’s hydroelectric projects. Even projects that could not move forward despite being excluded in the past are gaining attention from Indian investors. While India is keenly interested in making quick projects and selling electricity in India’s large market, Nepal’s hydroelectric projects are under the watchful eyes of Indian investors for a long-term agreement.

The estimated production capacity of hydropower in Nepal is 72,544 megawatts, with the highest in Koshi Pradesh at 22,619 megawatts. Gandaki Pradesh is estimated to have 14,981 megawatts, Karnali Pradesh with 13,722 megawatts, and Bagmati Pradesh with 10,568 megawatts. Similarly, Sudurpashchim Pradesh has 7,722 megawatts, Lumbini Pradesh has 2,677 megawatts, and Madhes Pradesh has an estimated production capacity of 275 megawatts.