In a significant development for Nepal’s energy sector, the Nepal Electricity Authority (NEA) has received applications to produce 3,600 MW of solar power, far exceeding its initial target of 800 MW. This unexpected surge in interest highlights the growing momentum behind renewable energy in the country.

How Did This Happen?

The NEA’s call for power purchase agreements (PPAs) for solar power was met with overwhelming enthusiasm from energy entrepreneurs. Initially, the NEA aimed to secure 800 MW of solar power to diversify the country’s energy mix, which is heavily reliant on hydropower. However, the authority received proposals from 134 companies aiming to produce a total of 3,600 MW of solar energy through 300 projects.

This remarkable response is attributed to several factors:

1. Favorable Solar Conditions: Nepal enjoys around 300 days of sunshine per year, with solar radiation levels that can generate between 3.6 and 6.2 units of electricity per square meter. These ideal conditions make solar power a lucrative investment opportunity for entrepreneurs.
2. Government Initiatives: The NEA's efforts to promote solar power as part of a broader strategy to ensure a sustainable energy supply have attracted significant interest. By capping solar projects to sign PPAs only for up to 150 MW, the NEA has created a competitive and attractive market for solar investments.
3. Growing Demand for Energy: The increasing demand for electricity, particularly during the winter months when hydropower production declines, has driven interest in alternative energy sources like solar power. The NEA’s proactive approach to addressing this demand has further encouraged investment in solar projects.

Why Is This Important?

This development is a major milestone for Nepal’s energy sector, as it marks a shift towards a more diversified and sustainable energy mix. Currently, 95 percent of Nepal’s installed electricity capacity comes from hydropower. While hydropower has been a reliable source of energy for the country, it is highly dependent on seasonal water availability, which can be unpredictable.

By increasing solar power production, Nepal can reduce its reliance on hydropower and ensure a more stable energy supply, particularly during the dry season. The NEA’s initiative to integrate solar-generated electricity into the national grid is crucial in achieving this goal. Additionally, the move towards solar energy aligns with global trends in renewable energy, positioning Nepal as a forward-thinking nation in the fight against climate change.

The financial aspect is also significant. The NEA has set the base rate of PPAs for solar projects at Rs 5.94 per unit, making solar power a competitive option within the national grid. This competitive pricing, coupled with the growing demand for clean energy, is expected to attract even more investment in the future.

When Will the Impact Be Felt?

The impact of this surge in solar power applications will be felt over the next few years as these projects move from the proposal stage to implementation. The NEA plans to sign PPAs for solar projects to be developed near its substations with capacities of 200 kV, 132 kV, and 33 kV. The projects that receive approval are expected to come online within the next two years, significantly boosting the country’s solar power capacity.

Currently, the NEA has already signed PPAs for 175 MW of solar-generated electricity, with 107 MW of these projects operational. Notable among these is the 25 MW project at the Devighat Hydropower Plant, which is fully invested in by the NEA. Additionally, PPAs for another 30 MW of solar power projects are in the final stages of approval.

As these projects begin to generate electricity, Nepal will experience a more balanced energy mix, reducing the seasonal fluctuations in energy supply and ensuring more reliable access to electricity, especially during the winter months.

Conclusion

The NEA’s receipt of applications for 3,600 MW of solar power is a clear indication of the growing interest in renewable energy in Nepal. This surge in interest, which far surpasses the initial target, is a testament to the country’s favorable solar conditions, proactive government initiatives, and the increasing demand for reliable energy sources.

As these solar projects come online over the next few years, Nepal will benefit from a more diversified and stable energy supply, reducing its reliance on hydropower and positioning itself as a leader in renewable energy in the region. The NEA’s strategic approach and the overwhelming response from energy entrepreneurs signal a bright future for solar power in Nepal, paving the way for a more sustainable and energy-secure nation.