July 07, Kathmandu.
There is no doubt that the country's largest Upper Tamakoshi, built on Nepali investment, will give substantial benefits to Nepal. But if proper management of power consumption increases and export is not done, the project will also become a challenge for the rainy season.
After the formation of Tamakoshi, the government has seen only two options to increase domestic consumption or export cheaply. But Prime Minister KP Sharma Oli, inaugurating the project on Monday, said electricity should not be sold cheaply to its consumers. He said that multi-dimensional benefits would be obtained when electricity is consumed within the country.
NEA estimates that 500 MW of electricity will be added to the system including Tamakoshi by next August. At present, it has an installed capacity of 1400 MW. According to Hitendra Dev Shakya, executive director of the Nepal Electricity Authority, the installed capacity will reach 1800 MW by August.
As there will be enough water in the rivers and streams till November, most of the projects can run at full capacity for 24 hours. At that time, NEA has no choice but to consume the electricity generated within the country or export it outside the country. Failure to do both works risks wasting millions of dollars.
NEA is not in a position to increase consumption at a high rate immediately. According to Shakya, the internal demand is only 900 MW at night. Accordingly, Shakya says that the remaining 900 MW of electricity will have to be exported after the onset of winter.
Water can be stored by shutting down the 100 MW plant in Kulekhani during the rainy season. NEA is urging the concerned bodies to take diplomatic initiative with India so that electricity is not wasted due to non-export.
It is mentioned in the budget of the coming Fiscal Year 2078/79 through the ordinance that 1629 MW of electricity will be added to the national grid by completing various projects. To meet the domestic demand even in the dry season, the budget has generated 456 MW from Upper Tamakoshi, 111 MW from Rasuwagadhi, 56 MW from two projects in Sanjen, 37 MW from Upper Trishuli Three B, 40 MW from Rahughat, 102 MW from Madhyabhotekoshi and 155 MW from private sector projects. There is a projection.
If electricity is connected to the transmission line as per the production target, it has to be exported even during nighttime. For that, the government has given pre-approval to the Electricity Authority to sell electricity in bidding in India's 'day-ahead and 'term ahead markets. Last February, a 'Conduct of Business Rule' (CRB) was issued to allow Nepal to buy electricity.
However, NEA fears that India will lose tens of millions of rupees due to delay in giving permission. The Nepal Electricity Authority (NEA) has not been able to get export and sale permission even after months of seeking permission to sell excess electricity in the Indian Energy Exchange market. It is unclear how to manage the excess electricity generated during the rainy season.
In the first phase, NEA had proposed to sell the 456 MW Upper Tamakoshi and 45 MW Bhotekoshi projects in the Indian Energy Exchange market during the rainy season. Despite sending the required documents for that, India is still silent.
On April 20, India had given permission to the Nepal Electricity Authority to purchase and import electricity from the Indian Energy Exchange market. Accordingly, NEA has started purchasing electricity from the Indian market at a competitive rate when needed. India has delayed selling Nepal's electricity in the same market. Officials at the Ministry of Energy say that despite talks with India to allow power exports at the Energy Secretary level, India has not given good news.
NEA is participating in various bids called in India to sell electricity in the bidding competition. However, it has not been successful. The Nepal Electricity Authority (NEA) had failed to bid Rs 4.80 per unit in the tender called by the Indian government to buy 25 MW of electricity in the same fiscal year.
The company that offered 4.16 Indian Rupees per unit won the tender. At present, the proposal to sell 40 MW of electricity to Punjab through the same process for three months during the rainy season has been selected but no agreement has been reached. Nepal had last offered to sell electricity to India at 3.25 to 3.80 Indian rupees. However, even trying to sell cheaply, the competition is fierce.
Immediate challenge if not able to export
When the river level decreases in winter, the electricity from India has to meet the demand. According to NEA officials, the dependence on-peak hours will be lessened after the arrival of Tamakoshi. As 456 MW of electricity can be generated in the peak hour by stopping water in Tamakoshi reservoir for 4 hours, evening and morning power management will be easier.
During the rainy season, except for the 'peak hour', the electricity generated in Nepal almost meets the domestic demand. At night, as the consumption decreases, the plant has to be shut down and electricity has to be wasted.
If the Indian exchange market is not allowed to export electricity before the rainy season, it is likely to lose more electricity this year than last.
In the rainy season of 2076 BS, NEA had sent more than 800 million rupees of electricity to India. Electricity consumption in India has also declined since the Corona epidemic began last year.
In the previous rainy season, up to 300 MW of electricity was wasted in Nepal. Concerns have been raised that a large amount of electricity will be wasted during the rainy season.
When it rains, the water level in the rivers increases with the production of electricity. At that time, all the projects can be operated at full capacity. In such a situation, projects have to be shut down due to a lack of night consumption.
NEA has been shutting down the production units of its projects as the production is more than the demand. It is considered to be an 'energy spill'.
NEA has to compensate the private producers for their energy spill as they have entered into a purchase agreement in the 'take or pay' model. Therefore, NEA has to waste electricity by shutting down its own projects.
Weak consumption and policy
Due to the ban, factories and hotels have not been able to run at full capacity. Due to this, the electricity demand has not been able to increase. In this situation, there is a big challenge to prevent NEA from wasting a lot of electricity in the next few months.
The government's plan to consume more electricity during the rainy season is in limbo. Till last fiscal year, per capita, electricity consumption was 260 units. The target was to increase per capita energy consumption by 90 units to 350 units in the current fiscal year. However, it is unlikely to reach 300 units by the end of this year. NEA, which has 24.72 million electricity consumers, has estimated that the per capita electricity consumption will reach only 290 units by the end of this fiscal year.
The white paper issued by the Ministry of Energy, Water Resources and Irrigation on 25 April 2075 has set a target of increasing the per capita electricity consumption to 700 units within 5 years and 1500 units within 10 years. Going forward with the current policy, such a target is not likely to be achieved based on a normal growth rate.
As there is no policy to encourage per capita energy consumption in the country, the issue of increasing consumption has been limited to paper. To increase electricity consumption, Finance Minister Bishnu Poudel has reduced taxes on induction cookers, electric vehicles and electrical equipment at normal rates through the budget of the coming fiscal year 2078/79 BS. NEA executive director Shakya says that there is no alternative to export the wasted electricity as the immediate consumption will not increase only based on such a policy.
While preparations are being made to export electricity to India, plans to increase domestic consumption have not been prioritized. Experts in the energy sector have been saying that the government's tendency not to bring an integrated action plan to implement the policy has limited the issue of increasing electricity consumption to speeches.
The government had announced in the budget speech of the current fiscal year 2077/78 to encourage an increase in electricity consumption. "Additional concessions will be given to the use of electric household appliances including electric stoves, electric vehicles, industries that consume electricity and industries that consume more energy while saving electricity," the then finance minister said. It was said in the budget brought by Yuvaraj Khatiwada. Nobody has yet started work to implement this declaration.
In the budget of the current fiscal year, the government had adopted a tax policy that was in conflict with its own declaration and policy by increasing the tax on electric vehicles. Although the budget for the coming year has corrected it to some extent, it does not seem to be enough to increase consumption.
How to increase consumption?
Experts say that if domestic consumption can be increased, there will be no compulsion to sell electricity cheaply and there will be more profitable by increasing electricity consumption in the country.
Former Executive Director of Nepal Electricity Authority, Kulman Ghising, says that if the domestic electricity consumption can be increased, the country's economy will become more active and industry, business and employment will increase.
"Increasing power consumption within the country should be the first priority to strengthen the economy," he said. "We should not delay in bringing an effective integrated action plan for that." He believes that the profit from selling electricity within the country will be bigger and more important than the income from selling electricity abroad. However, he said that the export of electricity should also be started immediately.
Former Energy Secretary Anup Kumar Upadhyaya says that electricity consumption has not increased as expected due to a lack of an interventionist plan to implement the existing policy.
"As the size of the economy grows, so should the consumption of electricity," he said.
According to Upadhyaya, emphasis should be laid on electrical infrastructure to increase electricity consumption. Without reliable distribution lines, adequate transmission lines and other infrastructure, electricity consumption will not increase.
To increase electricity consumption, the tariff rate should be reduced as much as possible. Former Energy Secretary Upadhyaya says that concessions should be given to increase the use of electrical appliances including induction cookers. Encouraging cooking with electric stoves will increase the peak demand for electricity in the evening and in the morning, he said. "For this, electric stoves should be distributed with the participation of local levels as well."
According to Upadhyaya, there is another place to increase electricity consumption in the cottage industry. For this, all the three levels of government can work together to increase the use of electricity and add packaging facilities in the village mills, he said. "The ministry of the industry should take such an initiative," he said.
Former Secretary Upadhyaya says that all the agencies should work by making a plan as the electricity consumption in hotels and resorts will increase if tourism activities can be increased in villages.
NEA's former executive director says that electricity consumption will increase if it can be explained that cooking with electricity is cheaper than gas.
Another sector that can increase electricity consumption quickly in agriculture. "Irrigation corridors can be constructed by extending distribution lines to large farms in the Terai, which will immediately consume 2-3 hundred megawatts of electricity," says Ghising.
Ghising sees a huge increase in electricity consumption even if 'agricultural cold stores' can be set up in villages. "Cold stores are essential in the village. Even if such infrastructure is built by giving grants to the local level, electricity consumption will increase," he says.
Experts believe that the government should take initiative to set up data centres for foreign companies related to information technology. As such data centres consume more electricity, investment should be made by ensuring reliable broadband, says Ghising, a former executive director.
"Currently, the ongoing nationwide rural electrification is bound to increase electricity consumption. Now, the Ujyalo Nepal program should be run in municipalities across the country, 'says Ghising.
Electric vehicles increase power consumption when charging at night. However, experts believe that the government should take a policy of concession in customs duty, excise tax and road tax on electric vehicles.
