Nepal’s need for large reservoir projects has opened the country to significant geo-political influence
The great breakthrough in hydroelectricity over the last century wasn’t the use of flowing water to generate electricity – it was the realisation that it was possible to store water to produce electricity exactly when you wanted it.
Of Nepal’s total capacity of 950 MW, the 92 MW Kulekhani dam (pictured left) is the only one with storage. A few plants like Chilime
and Kali Gandaki
A can operate as peaking run-of-river but this capacity is limited to a few hours.
Some reservoir-based plants are being considered. The 127 MW Upper Seti Tanahu project has started construction. Last year Nepal and Bangladesh signed a memorandum of understanding to develop 1,600 MW of pump storage hydro power plants in the Sunkosi under the Bangladesh, Bhutan, India, Nepal (BBIN) initiative.
Despite these prospects, Nepal’s storage-based hydro plant capacity is severely limited. As a result, Nepal faces two resulting challenges on electricity supply reliability. First, generation capacity is reduced in the dry months, making it difficult to meet demand in that season. One way to address this is through seasonal storage of monsoon water for use later.
Second, electricity demand peaks in the evening and morning and there often isn’t enough capacity to meet demand during these peak hours. One way to address this is through diurnal storage, where water is stored during the day and used for peak hours.
In the absence of storage, Nepal’s current approach has been to use Indian imports to manage both the seasonal variation and diurnal peaks. The net result: Rs 15 billion of electricity imports last year.
Nepal Electricity Authority (NEA
), the country’s monopoly electric utility, has created differentiated power purchase prices for storage and peaking plants. It currently offers storage plants Rs 12.4/kWh and Rs 7.1/kWh for dry and wet months respectively. Similarly, for intra-day peaking plants it currently offers Rs 8.5-10.55/kWh depending on when the plant can store water and generate.
Differentiated prices are a good start, but is not sufficient by itself. Nepal must separate its strategy for intra-day peaking and seasonal storage. These require very different policy approaches and instruments.
On intra-day peaking, one way for Nepal would be to undertake a renovation and modernisation program for existing hydro-plants that retrofits all plants with an intra-day peaking capacity. This isn’t a new approach. India, for instance, is currently examining how it can integrate at least four hours of peaking within all its existing run-of-river hydro plants
Distributed renewable energy, storage, demand side management and remote management technologies have also created many new opportunities. These solutions, already in use elsewhere in the world, can help to immediately solve Nepal intra-day peaking problem.
The challenge on seasonal storage is different and stems largely from our unitary reliance on hydro. One way to address this is by diversification: include other sources of generation (gas power plant) by leveraging opportunities in the Indian power market.
Building large seasonal storage is expensive, involving a large socio-economic-environmental footprint, and Nepal currently lacks the financial and technical resources to undertake such projects. It is dependent on international partners, most notably India and China for such projects. This has in turn opened Nepal’s hydro sector to significant geo-political influence
Development of large storage capacity will also have a large bearing on downstream water flow, particularly India. Hydro power generation and water management, in this case, cannot be separated, and such an integrated water-electricity approach must be the centre-piece of Nepal’s strategy.
Indian Prime Minister Modi is leading a $87 billion river interlinking project that would connect 60 rivers in India with the promise of improved flood control, water management, irrigation, equitable water distribution, transport and, of course, electricity generation.
Beyond the rhetoric, beyond the weight of geo-politics, the onus is on Nepal to act. We must devise our own course – for that, we first need to know what we want to do with all the resources we have.
Bishal Thapa is Managing Director of Saral Urja Nepal, an energy services company
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