Present Electricity Demand and Supply in Nepal

At present, the Integrated Nepal Power System (INPS) has a total installed capacity of some 706 MW of which 652 MW (92%) is generated from hydro resources[1]. The annual electricity generation on the grid system in 2009-2010 was about 3,690 GWh, of which about 57% was generated by power plants owned by the Nepal Electricity Authority (NEA), 26% by IPPs, and the remaining 17% was imported from the Indian grid.  The power system has about 1,854,275 customers, which is an increase of 10.6% from the previous year.

The peak load in Nepal occurs during the winter when the run-of-river power plants generate at a lower capacity (compared to the installed capacity) due to low river flows. According to the NEA, the peak demand in 2010 was 885 MW, which was an increase of 9% over the previous year. The annual energy demand was 4,367 GWh resulting in a shortfall of some 676 GWh, resulting in load shedding of 12-14 hours per day.

The peak demand met by NEA rose steadily from 603 MW in 2006 to 946 MW in 2011 (with the excess over installed capacity supplemented by purchases from India), indicating a compound annual growth rate (CAGR) of 9.4%.  Likewise, the total available energy increased from 2,781 GWh to 3,858 GWh at a CAGR of 6.8% during the same period. The total number of consumers increased at a CAGR of 10.0% from 1.28 million in 2006 to 2.05 million in 2011, of which 95% comprise domestic connections.

Electricity sales by NEA increased from 2,033 GWh in 2006 to 2,735 GWh in 2011at a CAGR of 6.1%.  In terms of composition, the domestic sector accounted for 43% of the total consumption in 2011, followed by the industrial sector at 38%.  Consumption by other sectors is very much smaller, and comprised commercial (7.5%), non-commercial (4.0%), street lighting (2.4%), water supply & irrigation (2.0%), community sales (1.7%), and bulk supply to India (1.1%), with negligible amounts consumed by transport and temples.

The energy and demand forecast for the financial years 2010-11 to 2027-28 is provided in the Table 1 below.  The electricity demand is forecast to reach about 3,679 MW in the financial year 2027-28, (medium growth scenario) which is an increase of some 2,800 MW from the present peak demand. The energy forecast indicates an energy output of 17,404 GWh by fiscal year (FY) 2027-28.

Table 1: Nepal Power System Load Forecast

Achieving the above targets present several challenges.  The unreliable and inadequate power supply continues to be a severe constraint on infrastructure development and economic growth. There has been insufficient investment in generation, transmission and distribution, and private investors and development partners have been reluctant to invest in the power sector because of several factors.  These include:

§  Weak governance and institutional structure;

§  Lack of institutional arrangements to mobilise the private sector;

§  Limited availability of domestic funds;

§  Low consumer tariffs (not revised since 2001) that do not reflect present costs[2];

§  High technical and commercial losses, coupled with inadequate attention to operation and maintenance (O&M);

§  A financially stressed public sector utility; and

§  Inadequate human resource capacity.

Notwithstanding the above, some progress is being made in addressing the power deficit. The recently approved World Bank-assisted cross border transmission project with India will help in reducing load shedding. The ETFC is also being reconstituted to review cost and retail tariff under the current ADB-supported intervention. Likewise, some transmission improvement projects are being undertaken with World Bank and ADB assistance. However, despite the efforts of GoN, the issue of grid-connected access in new areas will remain a challenge in the long-term, and will be one of the areas addressed by SREP.

Sources:

AEPC Annual Progress Report, FY 2009-10

Nepal is divided into five development regions, namely, Eastern Development Region, Central Development Region, Western Development Region, Mid-Western Development Region, and Far Western Development Region

Nepal Labour Force Survey 2008, Central Bureau of Statistics

National Energy Strategy Nepal 2010, WECS

NEA Annual Report 2011

---