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    DocScanner 5 Apr 2023 14-34

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    Chapter 5 New Trend in Power Sector Reform EI. various Sources of Energy? Trend, Possibilities and Challenges Nepal's energy resources are broadly divided ino three categories ‘Traditional, Commercial and Allernative. 4) Traditional Energy: ‘The common biomass fuels that fall under the classification of traditional energy (TE) include only the solid biomass fuels derived from plants and animals, Both woody and non-woody biomass derived from shrub and grass lands, forests, agricultural lands (crop harvesting and processing ‘well as residues of animals inthe Form of | ‘excreta (mostly catle dung) are under traditional eategory. Recently the charred. materials of some wild shrubs and other loose biomass ‘materials were being compressed into biomass briquettes for enetpy. petroleum, natural gas and coal. are the major ‘commercial energy sources in use inthe country. Hydro Energy Resources Nepal's theoretical hydropower potential has been estimated about 83,000 MW and its economically and technically feasible potential of bout 42,000 MW and 45,000 MW respectively. Table te hydropower potential of Nepal Table 1 Bs ise hydropower potential in MW (Approx.) River Basin | Theoretical | Economical | Technical Sapia Koshi 22,000 [11,000 11,000, Sapta Gandaki [21,000 [5.000 7.0001 ‘Karnali and "36,000 | 25.000 26,000 Mahakali Southern Rivers | 4,000 7,000 7,000 Total 83,000 [42,000 45,000 “Tota Installed Hydropower asin FY 2075/76= 1162 MW (NEAW 368 MW, IPP ~ 560, AEPC - 34 MW) Nepal Electricity Authority (NEA) is primarily responsible for planning, construction and operations for electricity supply. Presently. there are various Independent Power Producers (IPP3), who generate electricity and under the Power Purchase Agreement with NEA sell the balk power to NEA, Fossil Fuels Nepal does not have proven fossil fuel reserves. All the petroleum products consumed in Nepal are imported from India or overseas inthe refined form for direct consumption. The import and distribution of petroleum products in the country is handled by Nepal Oil Corporation| (NOC) solely, The NOC has current storage Facilities of about 72,000 KL for alihe essential petroleum fuels which is bottled and distbuted by private companies ‘Table 1: Import (in KL) zalveat | Petat_[ eal [Rerosone [ Anan Turbine Fol [WG [2orars ——[asesrs [asesaeo| 22357 397210] 370560 ‘Table 2: Sales (in KL uzalVeat [Pett _[ Deal [Nerosne [ Abian Tub zovgrs | asarar|ssrssi | 21 Em ©) Renewable Energy Solar Energy Resources Nepal, being located in favourable latitude, receives. ample solar radiation. The average solar radiation varies from 3.6-6.2 kWhim2iday, nd the sun shines for about 300 days a year. The development of solar fenergy technology is thus reasonably favourable in many parts of the country. As per the published report of AEPC. 2008 under Solar & Wind Energy Resource Assessment in Nepal (SWERA), the commercial potential of solar power for grid connection is 2,100 MW. ‘With national average sunshine hours of 6.84ay and solar insolation intensity of about 4.7 kWhm2/day, there isa huge potential for solar thermal devices such as Solar Water Heaters (SWH), Solar Dryers (SD), Solar Cookers (SC). Wind Energy Resources Wind is still unharessed energy resource in Nepal. Due to its diverse topography and the consequent variation in the meteorological conditions. itis difficult to generalize wind conditions in the country. Specific areas have been identified as a favourable for viable wind energy generation, Studies made forthe World Bank in 1977 indicate that in the Khumbu area, average wind speed obtainable for wind ‘eneray generation is over $ mis. The Department of Hydrology and Meteorology (DHM) conducted a study in 1983 and recorded wind speed data for a number of stations. The conclusion drawn by DHM. indicates that wind could be used for electricity generation inthe hills and foririgation and pumping of drinking water inthe Terai. The study by DANGRID, a Danish consulting firm in 1992 reported that a potential generate 200 MW of electrical power with an annual energy production 0300 GWh from the wind resources along the 12km valley between Kagbeni and Chusang in Mustang District. WECS along with DHM. Alemative Energy Promotion Centre (AEPC) and Nepal ‘Academy of Science and Technology (NAST) catied out study on the Potential of Wind Resourees in Nepal in the year 1999- 2002, This ‘dy shows that there isnot high potentiality of wind energy except for some high mountainous locations ic. Thakmarpha, Khumbu and Khanjroba. Report of AEPC. 2008 under Solar & Wind Energy Resource Assessment in Nepal (SWERA), revealed thatthe omer Potential of wind power i 3,000 MW. Biogas Energy Resources Biogas-a modern form of energy derived from anaerobie digestion of animal waste mainly eatle dung. and recently also human exereta ‘mixed with cattle dung in some areas, has been the altemative source of ‘energy for cooking and sometimes for lighting in ‘mostly inthe Terai and some low Iying ‘of Nepal. Different studies have tied to assess the the country. In 1992, Wim J. van Neses (in BSP-Nepal, 2005) calculated the potential of establishing 1.3 million plants. CMS and SNV/BSP (in BSP-Nepal, 2005) assume a technical potential ranging between 1.3-2.9 million plants, the economic potential was considered ‘only tobe 60,000 plants. Ther estimate takes ito account the quantity ‘of dung that could be available for biogas and the micro-climatic Dockets where biogss production could be technically Tesi in fre pars of th county. Installed Generation Capacity of Nepal (FY 2018/19) fn [neraton ye cA fer ec [rota (em OR esos | fo bo 08m ROR 132 |= fs bso org pe pet Pines. —crhemat sf [2 prom licro Hydro, Solar, ind) [rows —Taxtaeaks Kar fa? 280 |roms (Capacity(MW) Piers EAP EPC rout feral Ba Bal eo Has babs lar 36 pa hs ind 15h TE FOX. (or nz +122 MW = (5441467) MW Planned Generation Mix by Government of Nepal Storage/Pumped Storage : 30 ~ 35 % PROR 25-30% ROR. 30-35% Others Altematives —:3~10% 52 Role of IPP (Independent Power Producer), Opportunities and Challenges Role of Independent Power Producers (IPPs) IPPs are private entities or companies that build ‘operate feelitis to generate electricity and then sll itto utility. + They provide the large capital resources needed to build or buy these plants and recover their costs fom the sale of electricity + Depending on the restructuring. model selected the role of IPPs ‘can range from representing a fraction of new generating resources tothe ownership and operation of all generation. 4 In-a vertically imegrated market (such as Nepal) the role of ‘an IPP isto generate power and sell the output under long-term contracts (Power Purchase Agreement), which can offer an altemative to the utility’s building and financing the construction ‘of anew facility. + They help to meet the rapidly growing electricity needs without imposing lage strains on nation’s internal financial capabilities 4 Reduce electricity costs through competitive pressures. Opportunities ‘4 Nepal is said to have one of the highest hydropower potentials, in the world with an electricity generation capacity of about 83,000 MW of which about 42,000 MW is said to be ‘economically feasible, These resources could be developed 10 transmit large scale benefits/profits. Challenges Political: The ing or future government may change the rules. ‘Currency: IPP payments may be in local curreney yet many IPP costs sel as fuel costs, equipment and repair costs. and cost of capital may bein US. dollars. Financial Chalten sum of capital he construction of hydropower requires large Security and Local Challenges: With growing local expectation, the security threat to hydropower projets as increased, Many projets are delayed duc to local level problems. Local people make high demands ‘such as construction of roads, bridges. schools and hospitals before the hydropower developers which are unreasonable forthe project to mee. Ivis the responsibilty ofthe Government to build such infrastructure from royalty and tax paid by developers. 5.3 Power Purchase Agreement (PPA) and Power Development Agreement (PDA) 5.3.1 Power Purchase Agreement (PPA) ‘APower Purchase Agreement (PPA) often refers (0 a long-term ‘lecticity supply agreement hetween two parties, purchaser “offaker" (often a stae-owned electricity utility) and a privately-owned power Producer. The PPA defines al of the commercial terms forthe sale of| clecricity between the two partes, inclading when the project will begin commercial operation, schedule for delivery of electricity, penalties for under delivery, payment terms, and termination Why PAs? Depending on regulation and the market environment, diferent Situations can arise in which PPAs are an advantageous form of financing o a stabilizing factor in long-term power delivery. Key Features of PPA (World Bank) + Where a government agency enters into an arrangement for @ private power company to establish a powerplant an sell on the power to the government agency, the public agency typically feners into a PPA. + The PPA usually takes the place of a BOT or concession agreement: in addition to obligations reating to the sale and purchase of the power generated, the PPA also sets out the required design and ouiputs and operation and maintenance specifications for the power pln. ‘+ Sale of eapacity and energy - the power producer agrees o make available to the Purchaser the contracted capacity of energy and

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