Nepal Electricity Authority (NEA) has decided to open power purchase agreements (PPA) with small hydropower companies tasked with producing up to 10 megawatt of electricity.
According to the NEA, a board meeting of the authority held last week made the decision to facilitate domestic investors who have been looking to inject capital in small hydropower projects. With the decision, the NEA has welcomed all the small hydropower to be built under the modalities of run-of-the-river (RoR) and semi storage types’ projects.
The NEA Managing Director Kulman Ghising said the state-owned power utility will purchase electricity produced by the small hydroelectricity projects under the take-or-pay scheme. Under this clause, the NEA will take responsibility to evacuate electricity generated by the projects or it will be liable to pay a certain amount in penalty for failing to purchase the produce.
The NEA is supposed to purchase the electricity at the rate of Rs 8.40 per unit during the off-season that exists between November end and May end. For the peak season in the remaining six months, the NEA will buy the electricity of small hydropower projects for Rs 4.80 per unit.
Ghising said the PPA with small hydropower projects could not be done due to the provision of quota imposed in the segment. According to him, the quota provision has now been scrapped and the NEA will sign PPA with the projects in the production range at any moment.
At present, 89 projects with production capacity of up to 10 MW have been waiting for the NEA’s nod to sign the PPA. These projects have earmarked to produce a total of 351 MW of electricity. Out of these, 44 projects of 195 MW have already signed an agreement with the NEA for grid connectivity.
So far, the NEA has signed agreements with hydropower projects with a capacity of 9,200 MW. Of the proposed small hydropower projects, most are of RoR type.
Meanwhile, the NEA has increased the threshold of PPA in solar electricity projects. In the revised provision, the NEA will be signing the PPA with such projects that produce within the limit of up to 10 percent of the total capacity of the national grid.
Ghising said the NEA has fixed the PPA ceiling at Rs 5.94 per unit for the solar-based power projects. Regarding these projects, the authority will purchase electricity from the producers with the lowest bidding rate. “The new provision is expected to allow PPA of 800 MW of solar electricity projects,” he added.
As of now, the NEA has signed PPA with 175 MW of solar projects through competition. Out of these, 106 MW projects have already started production. An additional 30 MW of solar projects are in the pipeline to sign the PPA with the authority.
