The Nepalese power sector is growing rapidly in line with the government’s commitment to light up every household in the country by 2023. As of 2020-21, about 85 per cent of total households in the country have access to electricity, based on the number of consumers. The Nepal Electricity Authority (NEA), the vertically integrated state-owned power utility in Nepal, is aggressively focusing on network expansion to increase electricity access and provide reliable power to consumers. Generation capacity addition and digitalisation are also its top priorities. A key achievement in the Nepalese power sector in 2021 was the full commissioning of the 456 MW Upper Tamakoshi hydroelectric project (HEP) – the country’s largest hydropower plant – in October 2021. In another milestone, Nepal became the first country among India’s neighbours to participate in electricity trading at the Indian Energy Exchange. As the country is inching towards producing surplus power, the Indian Central Electricity Authority recently gave the green signal to Nepal to export 325 MW of electricity to India, in addition to the 39 MW that had been approved earlier. Nepal also recently joined the India-led International Solar Alliance to promote sustainable energy in the South Asian region.
In Nepal, the Ministry of Energy, Water Resources and Irrigation is the apex government body that governs the development and implementation of energy as well as its conservation, regulation and utilisation. Meanwhile, the Department of Electricity Development is responsible for assisting the ministry in the implementation of overall government policies related to the power/electricity sector. The major functions of the department are to ensure transparency of the regulatory framework, and to accommodate, promote and facilitate the private sector’s participation in the power sector by providing “one-window” service and licences to power projects.
The NEA has the primary responsibility to generate, transmit and distribute adequate, reliable and affordable power by planning, constructing, operating and maintaining all generation, transmission and distribution facilities in Nepal’s power system, both interconnected and isolated.
The Electricity Regulatory Commission Act came into force on December 5, 2017. It was enacted with the objectives of maintaining a balance between the demand and supply of electricity by making the generation of electricity, transmission, distribution or business simplified, regular, systematic, and transparent; regulating the electricity tariff; protecting the rights and interests of electricity consumers; and making electricity services reliable, available to all, qualitative and secure.
As of 2020-21, the country’s total installed capacity stands at 1,451.34 MW, having grown at a compound annual growth rate (CAGR) of 11 per cent from 855.88 MW in 2015-16. This includes both independent power projects (IPPs) and NEA projects. Of the total installed capacity, hydro accounts for the largest share of 96.23 per cent, followed by thermal with 3.68 per cent and solar with the remaining 0.09 per cent. During 2020-21, the plant factor declined and stood at around 51 per cent vis-à-vis 56 per cent in the previous year.
The total electricity generation from NEA’s hydropower plants, including small power stations, stood at 2,810.74 GWh in 2020-21, a decline of nearly 7 per cent over the 3,021.04 GWh recorded in the previous year. This was mainly due to the lean dry season, monsoon floods that led to the shutdown of many HEPs, and extended maintenance shutdowns in certain plants. The total power purchased from IPPs in Nepal stood at 3,241 GWh in 2020-21, an increase of 8.4 per cent from 2,991 GWh in the previous year. Meanwhile, energy imports from India increased by 63.5 per cent to 2,826.2 GWh from 1,729 GWh during the same period in the previous year. Nepal also exported 44 GWh of electricity to India during 2020-21.
The total energy in the system increased by 14.7 per cent to 8,878 GWh from 7,741 GWh in the previous year. Of the total available energy, NEA’s own generation contributed 31.7 per cent, whereas that imported from India and domestic IPPs accounted for 31.8 per cent and 36.5 per cent respectively.
The country has a total transmission line length of 4,054.6 ckt. km as of 2020-21, having increased at a CAGR of 6.85 per cent over the last five years. The majority of the country’s transmission line length (77 per cent) is at the 132 kV voltage level, followed by the 66 kV voltage level (13 per cent), the 220 kV voltage level (8 per cent) and the 400 kV voltage level (2 per cent). Nepal’s transformer capacity stood at 6,434 MVA, and the number of substations stood at 61 in 2020-21.
During 2020-21, about 604.74 ckt. km of transmission lines at 132 kV and above voltage levels were added to the system. Similarly, a total of 2,134.2 MVA substation capacity was added, including upgradation of existing substations. Transmission losses in the country increased to 4.64 per cent in 2020-21 from 4.51 per cent in 2019-20.
Nepal’s distribution line length stands at 176,650 ckt. km as of 2020-21. Of this, 3 per cent (6,019 ckt. km) is at the 33 kV level, 24 per cent (41,550 ckt. km) is at the 11 kV level and 73 per cent (129,081 ckt. km) is at the 0.4/0.23 kV level. Nepal’s distribution transformer capacity stands at 3,623 MVA and the number of distribution transformers stands at 37,163.
The total number of consumers in Nepal increased to 4.53 million in 2020-21 from 4.22 million (excluding 0.55 million consumers under Community Rural Electrification) in the previous year, recording a growth of 7.4 per cent. The domestic consumer category accounted for the largest share of 93 per cent (or 4.21 million consumers) in the total consumer base. The domestic and industrial consumer categories contributed 39.6 per cent and 38.8 per cent to the gross electricity sales revenue respectively. The lesser revenue from the industrial sector was mainly due to the effects of Covid-induced lockdowns in the country. Irrigation, commercial and other consumer categories accounted for the remaining 21.6 per cent of the gross sales revenue. Energy consumption in Nepal increased to 7,318 GWh in 2020-21, an increase of 12 per cent over 6,525 GWh in the previous year.
System losses have been estimated to have increased to 17.18 per cent in 2020- 21 as compared to 15.27 per cent in the previous year.
There are several hydropower projects at various stages of development in Nepal. These include the 900 MW Arun-2 HEP and 679 MW Lower Arun HEP by Indian public sector undertaking SJVN Limited, and the 210 MW Chainpur Seti HEP, the 180 MW Aandhi Khola Storage HEP, the 140 MW Tanahu HEP and the 150 MW Begnas Rupa Pumped Storage HEP.
In the transmission segment, a total of 2,952 ckt. km of transmission lines are under construction, with most of the length (1,165 ckt. km) at the 220 kV level, followed by 132 kV (1,031 ckt. km) and 400 kV (756 ckt. km). The total capacity of substations under construction stands at 9,200 MVA. In addition, about 4,665 ckt. km of transmission lines and 7,870 MVA of substation capacity are in the planning and proposal stages.
On the cross-border transmission and trade fronts, a second transmission line between India and Nepal, from New Butwal to Gorakhpur, is being planned. Further, two more 400 kV cross-border transmission lines, – New Duhabi-Purnia and Lumki-Bareilly – are also under review. Going forward, the two countries plan to strengthen cooperation on joint development of generation projects in Nepal, and development of cross-border transmission infrastructure and bidirectional power trade with appropriate access to electricity markets in both countries, based on mutual benefits.
In the distribution segment, the total line length under construction stands at over 3,850 km and substation capacity stands at 212 MVA (33/11 kV). Of the total distribution line length, 33/11 kV overhead lines account for 2,066 km, 11 kV underground distribution lines account for 840 km, 400 V overhead lines account for 1,894 km, and 400 V underground lines account for 1,117 km.
The NEA is increasingly focusing on underground cabling for safety, reliability and aesthetic considerations. Underground cabling is being/will be undertaken at Ratnapark, Maharajgunj, Kuleshwor, Kirtipur, Baneshwor, Lalitpur, Bhaktapur, Pokhara and Bharatpur. The NEA is also undertaking digitalisation initiatives to enhance its operational efficiency, reduce energy theft and serve its consumers better. There are plans to implement smart grids and smart metering too. The installation of smart meters has already commenced in the Ratnapark and Maharajgunj distribution centres. The NEA is also adopting enterprise resource planning and substation automation systems (SAS). As of 2021- 22, SAS was being installed in 13 grid substations. Automation of an additional 40 grid substations in different parts of the country is planned.
Net, net, Nepal’s power sector is poised for significant growth in the near future owing to various projects and plans lined up by the NEA.