The Energy Roadmap

Endowed with enormous water resources, Nepal is making every effort to generate sufficient electricity to achieve the goal of development and prosperity. Electricity is the primary component of industrialisation, modernisation of agriculture and technological innovation in addition to easing the daily life of the people. One of the reasons behind the underdevelopment of Nepal is its inability to produce electricity in the desired quantity. Nepal’s manufacturing and agriculture sectors are in dire need of investment. Uninterrupted power supply is the key to their development. The importance of electricity has further increased in the wake of the global shift to green energy, which is essential to mitigate the impacts of climate change. This is a reason why Nepal has placed top priority on the generation of a larger quantity of power to tackle the development challenges of the new century.

Against this backdrop, the government has recently introduced the 'Energy Development Roadmap and Action Plan-2081' to produce 28,500 MW of electricity by 2035. The government also aims to export 15,000 MW and consume 13,500 MW domestically. This is, no doubt, an ambitious goal but not unfeasible. Currently, Nepal’s installed capacity of electricity stands at 3,400 MW. The country needs to reform the existing policy, simplify the bureaucratic procedures and pump at least USD 46.5 billion (approximately Rs. 6,400 billion) for generating, transmitting and distributing 28,500 MW of power. An environment conducive to investment is vital to attract domestic and foreign investors, given the slow growth of the global economy.  This is also necessary as money is not coming to develop new hydro projects.

 The new action plan also seeks to increase per capita electricity consumption to 1,500 units in a decade. It is based on the under-construction projects, licenses issued for the new hydropower projects, completion of financial closure and the projects advanced by the government with priority, according to a news report of this daily. The government has issued survey permits to 84 hydropower projects with a total capacity of 9,019 MW, while 249 hydropower projects with a 9,833 MW capacity have received generation permits. Similarly, the Department of Electricity Development has initiated a process to grant generation permits to 91 projects with a total installed capacity of 10,600 MW. The Nepal Electricity Authority (NEA) has entered into power purchase agreements for power projects with a total installed capacity of 10,301 MW. Of them, the projects have already started generating 2,496 MW commercially, while projects with a 3,906 MW capacity are under construction after completing financial management. 

The production and distribution of power will be more reliable by 2035, for about 5,900 MW of electricity will be generated from reservoir-based projects, 10,500 MW from semi-reservoir projects, and the rest from run-of-river projects. To make the power sector more sustainable, around 5-10 per cent of energy will be produced from alternative sources, such as solar, wind and green hydrogen. Financing is another crucial aspect to realise the power roadmap. The government is set to collect $18 billion from internal sources and $2 billion through climate financing. The Ministry of Finance is advised to introduce new financial tools, such as green bonds, to attract investments into the hydropower sector. The public-private partnership model is another mechanism to create additional funds. Political consensus and commitment, and support from the private sector and general people are equally important to implement the electricity action plan.