Future of Nepal’s Electricity: long-term policy suggestions

Main points

  • Electricity supply and demand varies at different time intervals
  • Electricity supply side is heavily based on renewable sources increasing the challenges of creating reliable electricity system
  • Demand side management programs, storage systems, trade agreements with India can be some of the long-term solutions

Let’s start with few questions: What determines the supply and demand of electricity? Does the demand remain same throughout the year? What about the supply? Is it possible, technically and economically, to generate electricity as required to serve the load? These are few questions to consider before thinking about developing a reliable and adequate electric system.

In this post, I discuss issues that Nepal’s electricity sector may face in future. One of the previous posts discusses the short-term solutions of current power shortage problems. Moreover, the recent post talks about electricity sector’s possible issues in the future.

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Nepal’s Electricity Crisis: Are there any short-term solutions?

Nepal is facing severe power crisis at the moment. Even with the proper planning, it takes several years to develop necessary infrastructures for power generation and transmission. With Nepal’s never ending political turmoil, Nepal Government’s plans of reducing power shortages may take few more years than anticipated. Let’s explore some short-term plans of reducing power shortage. Besides increasing generation, are there any other ways to reduce power shortages in Nepal?

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Nepal’s Generation Sector: Is it too hydropower-centric?

In my last post, I discussed the scope and opportunities in Nepal’s hydropower industry. I will talk about Nepal’s electricity sector in the next few blogs. Electricity sector can be divided into three main areas – generation, transmission, and distribution. This post will primarily focus on the generation part.

As mentioned in my previous blog post, the total installed capacity of Nepal’s power system  in 2010 is 700 MW; and most of it comes from hydropower. Nepal’s government allowed private investment in the generation sector through Hydropower Policy of 2005. Independent Power Producers (IPP) have actively participated in hydropower development since 2005. In 2010, the total share of IPPs was 166.81 MW, about a quarter of the total installed capacity. There are numerous projects that have received license for constructing new plants. Department of Electricity and Development[1] has already issued license for 60 such projects with the cumulative capacity of around 1400 MW! That’s more than Nepal’s installed capacity. Moreover, there are many projects that have obtained licenses for feasibility study.[2] Should we be focusing just on hydropower for electricity?
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