Excess electricity generation from hydroelectricity plants of Nepal can potentially displace the costlier thermal power generation of India, according to a study report.
About 65 percent of the electricity consumed in India is generated by thermal power plants run by coal. The Indian government has embraced a policy of switching to renewable energy.
A study commissioned by the US Government has stated that such replacement of thermal power will, however, depend on the level of Nepal’s hydropower development as well as the level of coordination for power exchange between the two countries.
Production cost in combined India-Nepal system could fall by US$106 million per year, or 0.3 percent, if Nepal harnesses its energy-potential rivers, according to the a study report entitled ‘Cross-Border Energy Trade between Nepal and India: Assessment of Trading Opportunities’ which was unveiled recently.
The report authored by five scholars of National Renewable Energy Laboratory, a government entity under the US Department of Energy, also projected that the increased hydropower capacity would allow Nepal to increase its annual exports to India by 60 percent.
However, the report has stressed for elimination of institutional hurdles between the countries to materialize potential benefits and put regulatory coordination in place between the counties.
“Nepal’s domestic load cannot absorb all the increased hydro generation, and institutional hurdles between it and India make it uneconomic for Nepal to generate power for export during significant periods of the year such that 45 percent of available energy from hydropower is curtained,” reads a summary of the 42-page report.
Talking with selected media persons in Kathmandu on Thursday, David Hurlbut, energy analyst and one of the authors of the report, said: “Basically, we found that there are benefits for cross border trading of electricity among Nepal, India, Bangladesh and Bhutan.”
However, the degree of such benefits depends on regulatory coordination among all the participating countries, according to Hurlbut. He added that many things needed to happen before opening of markets for high volume cross border trading to occur.
Hurlbut further stressed on coordinated efforts between the countries. He added: “Once the information and transmission systems are in place, Nepal Electricity Authority and grid operators need to have agreements between them and also work on various details of scheduling, load forecasting, and financial settlements. It may take long to get all the processes in place. But once you do it, the benefits shall increase significantly.”
The study has used several prior analysis of cross border electricity transmission in South Asia to explore potential trading opportunities among India, Nepal, Bangladesh, and Bhutan.
This study has come when the government of Nepal is going to build a cross border transmission line – Hetauda to Butwal and Gorakhapur via Naubise Damauli – between Nepal and India connecting potential places of hydropower generation to the power points of India that can transmit huge volumes of power. This is a project to be implemented with American grants.
The US Government is expecting regulatory coordination between the countries for power exchange through the to-be-built transmission line. Such regulatory mechanism will also form the basis for power transmission of Upper Karnali to Bangladesh as well as power transmission to India from the power plant Arun -3, which is under construction.