NEA aims to increase electricity production from solar power plants to address energy scarcity in winter

Energy entrepreneurs are found increasingly interested in investing in electricity generation from solar energy.

Recently, the Nepal Electricity Authority (NEA) had issued a call for power purchase agreements (PPAs) for 800 MW of solar power. The state-owned power utility received applications for 3,600 MW, more than four times the amount it initially quoted in this segment. According to officials of the Power Trade Department (PTD) of the NEA, a total of 134 companies have applied for production of the aforementioned amounts of solar energy.

Targeting to purchase 800 MW of electricity generated by solar power plants in the next two years, the NEA had issued tender bids in April 2024. In response, a total of 134 companies proposed to produce 3,600 MW through 300 projects.

Out of around 3,200 MW of installed capacity of electricity in Nepal, 95 percent is generated from hydropower. Currently, the government has been prioritizing energy mix to ensure sustainable energy supply in the country.

According to a report unveiled by the Investment Board Nepal in April 2024, the average sunshine period in the country stands at 300 days a year. Based on this fact, the solar radiation received by the country can produce between 3.6 units and 6.2 units of electricity per square meter.

Rajan Dhakal, director of the PTD, said the NEA has stepped up efforts to produce more solar power-based electricity to meet the increasing demand of the load center in the Terai region. According to him, the NEA has capped a solar project to sign the PPA only for up to 150 MW, while the agreement will be signed for the next 25 years.

At present, the power utility has targeted to sign PPA for solar projects that are to be built near the NEA owned substations with capacities of 200 kV, 132 kV and 33 kV. NEA Managing Director Kulman Ghising said they have targeted to connect the solar generated electricity in the main grid to ensure adequate electricity supply mainly in winter time when the demand for energy surges while the production of hydropower projects falls.

The NEA has fixed the base rate of PPA for electricity generated by solar projects at Rs 5.94 per unit. It aims to sign agreements to purchase solar electricity up to 10 percent of the national grid's capacity.

Currently, the NEA has signed PPAs for 175 MW of solar-generated electricity. Out of this, 107 MW of projects are already operational, including a 25 MW project at the Devighat Hydropower Plant, which was invested in by the NEA. Additionally, PPAs for another 30 MW of solar power projects are in the process of being finalized with the NEA.