Changing scenario of power sector in Bangladesh, Bhutan, India and Nepal sub-region: Part-V

India also launched the Mission Innovation Clean Tech Exchange alongside the 2015 Paris Climate Summit to help accelerate clean energy innovation for making it affordable, attractive and accessible throughout the world. Moreover, India has been active in the ISA for popularising the use of solar energy across the world. The ISA is a joint initiative of India and France and was launched on November 30, 2015, in Paris on the sidelines of CoP 21, with 121 solar resource rich countries lying fully or partially between the Tropic of Cancer and Tropic of Capricorn as prospective members.

The OSOWOG is another Indian initiative that focuses on a framework for facilitating global cooperation, building a global ecosystem of interconnected RE resources, especially solar which can be seamlessly shared. The move intends to provide power to about 140 countries through a common grid that will ensure the transfer of clean and efficient solar power. The idea of OSOWOG was first proposed by Prime Minister Modi during the 2018 ISA conference held in India.

The country’s solar power installed capacity reached about 67,078 MW as on May 31, 2023. India stood fourth across the world in solar PV deployment by the end of 2021. The MoNRE says at present, solar tariff in India is “very competitive and has achieved grid parity”. India is the world’s third-largest energy consuming country. Reports say the use of energy has doubled since 2000, with 80% of demand still met by coal, oil and solid biomass.

India is considered to be one of the fastest-growing economies globally. According to the CEA estimates, the country would need 3.5 trillion units (TUs) of electricity by 2036-37 to support a 7.3% economic growth rate against 1.37 TUs in 2021-24. The availability of reliable and competitively priced energy would be an important prerequisite for ensuring high rate of economic growth in India.  

As per the International Energy Agency’s “Electricity Market Report 2023”, the nuclear energy output in India is expected to rise by more than 80% over the next three years, to 83 TWh, but to remain a small component at 4% of the power mix in 2025. Coal-fired power generation increased by 7.7% in 2022, while gas-based output fell by 36% in 2022 because of higher imported gas prices. While total coal-fired generation is set rise to 2025, its share is likely to fall to 69% in the generation mix in 2025, as the share of RE reaches 25%. The report further says due to higher coal-based generation, total power generation CO₂ emissions rise by 8% from 2022 levels by 2025, despite falling CO₂ intensity.

Nepal

The remaining BBIN country, Nepal, has vast hydropower potential. It’s commercially viable potential is estimated to be 44 GW. Nepal relies heavily on hydropower which accounts for 96.20% of its installed capacity. Thermal and solar power plants contribute 3.70% and 0.10%, respectively of Nepal’s total power generation capacity. However, despite vast hydropower potential, Nepal has been able to harness only 5% of it so far. Reports say 68% of the 8.8 GWh electricity consumed in Nepal in 2021 was generated domestically, with the remaining 32% imported from India. Like Bhutan, Nepal too confronts power shortages during the winter months when the country’s river flow decreases.     

Besides hydropower, Nepal is also endowed with other RE resources. The Alternative Energy Promotion Centre (AEPC) attached to the Ministry of Environment, was set up in 1996 to promote the development and deployment of RE and alternative energy technologies in Nepal. The country has significant potential for at least four types of solar energy technologies: grid-connected PV, solar water heating, solar lanterns and solar home systems. Nepal receives 3.6 to 6.2 kWh of solar radiation per square metre per day, with approximately 300 days of sun a year, making it suitable for the development of solar power. Studies found that Nepal has at least 3000 MW of technical wind power potential that could be harnessed.

The state-owned Nepal Electricity Authority (NEA) is responsible for electricity supply through the national grid, while the Water and Energy Commission Secretariat under the Ministry of Energy, Water Resources and Irrigation (MoEWRI), is given the tasks of formulating water and energy strategy as well as implementing planning processes in the water and energy sectors. During the last one decade, Nepal’s electricity sales rose from 3% to 27%, with increased revenue from $ 19 million to $ 64.50 million. This is a positive development reducing fossil fuel consumption; but Nepal’s energy specialists say it is a marginal improvement to make a major change.

As per recent reports, Nepal’s power producing capacity has reached 2,577.48 MW as on March 2023, showing over two-fold increase from 1,050 MW in 2012. Of the total current power installed capacity, 2,492.95 MW is connected to the national grid, while remaining 84.53 MW comprises off-grid supply. The NEA operated companies and its subsidiaries are producing 1,122.40 MW, while the rest 1, 3370.54MW is being generated by private power plants. The NEA says Nepal is expected to produce an additional 800 MW of electricity in the current FY, taking the generation capacity to over 3,000 MW.

Some of the major hydropower projects, including 111 MW Rasuwagadhi, 57.30 MW Sanjen and Upper Sanjen, 102 MW Madhya Bhotekoshi and 54 MW Super Dordi are scheduled to be commissioned by this FY end. Moreover, hydropower projects with cumulative 3,000 MW under the aegis of NEA and private sector are at different stages of implementation. About 240 hydropower projects have conducted feasibility studies to generate 11,716 MW of electricity and are waiting to conclude power purchase agreements. The increased power production in the coming years will be the key driver of Nepal’s economy.

Nepal’s abundant hydropower potential makes it among the highest globally in terms of per capita and unit of GDP. However, tapping such colossal resources has been confronting numerous challenges, including lack of proper institutional structure, inadequate investment, bureaucratic lethargy, infrastructure hurdles in peripheral and inaccessible mountainous regions, and concerns about project profitability. The country’s hydropower sector is also faced with socio-political turmoil and environmental problems, threatening its energy security.   

Studies note that Nepal’s hydropower development is vulnerable to climate change with serious economic implications. In recent years, Nepal experienced a rise in extreme climate events like flooding, high sediment load, landslide-induced dam outburst flood and a few glacial lake outburst floods. The excessive use of biomass energy is another key concern for Nepal. The Government of Nepal’s 2017 Biomass Energy Strategy says around 77%  of the country’s energy consumption is supplied by traditional biomass sources, including firewood, cattle dung and agricultural residues.

However, burning of biomass substances causes health and environmental hazards. Nepal is at high risk due to the country’s fragile topography, climate-sensitive and subsistence livelihoods of the people, and their low adaptive capacity. In its efforts towards climate change mitigation, the government in October 2021 released “Long-term Strategy for Net-zero emissions” under which Nepal aims to achieve net-zero emissions from 2020-2030 and after a period of low emissions to full net-zero by 2045. Nepal also intends to engage in clean energy trade with the neighbouring countries.     

The WB’s April 2019 report titled “Nepal: Energy Infrastructure Sector Assessment” has noted that the power sector is one of the most strategically important areas of the country’s economy for two reasons. First the lack of sufficient electricity is a barrier to higher economic growth and increasing access to electricity has the potential to fetch large economic dividends. Second, Nepal’s enormous hydropower potential creates an opportunity for the country to earn revenue by exporting power to the BBIN countries.

The government has set an ambitious target of installing 3 GW of generation capacity in three years, 5 GW in five years and 15 GW in 15 years. The report further says in order to meet the projected demand in the country and utilise the country’s export potential, Nepal’s power sector investments will need to accelerate substantially to an average of $ 1.3-2.1 billion annually between 2019 and 2040. Nepal’s MoEWRI has undertaken reforms to enhance the capacity of public sector institutions and improve the investment climate in the power sector.