Nepalnews.com Mercantile Connumications Pvt. Ltd.

Nepal is blessed with abundant hydropower resources. The identified hydropower projects range in size from the mammoth power stations with a capacity over 10 million KW to tiny micro hydropower plants with a capacity of just few kilowatts. Thus, our country could exploit our hydropower potential in a best possible way to provide electricity to the consumers at an exceptionally cheap rate. Unfortunately we have failed to do so. At present the consumers of the electricity have to bear the heavy burden of a very high electricity tariff. The Nepal Electricity Authority (NEA) is frequently raising the electricity tariff despite the fact that the price of electricity in Nepal is one of the highest in our region.

It is not difficult to trace why the electricity is so expensive in Nepal , and why the NEA is being dragged into the whirlpool of a financial crisis. The answer is quite clear to anyone who has carefully studied the recent annual reports of the NEA. At present about 43% of the total revenue of the NEA goes to the private hydropower developers to meet the payment for the purchase of electricity which is almost totally wasted. This is the main reason why the electricity tariff in Nepal is so high We shamelessly do not like to admit openly this bitter fact.

At present the electricity procured from the private developers are almost totally wasted because neither the NEA nor the Electricity Department are showing interest to analyze the hydropower engineering economics aspect of the deal with the private developers. Hardly any distinctions are made between the firm capacity and installed capacity or between the firm energy and seasonal energy.

It is relatively easy to determine the energy value for secondary energy. It is, however, quite a complex task to disaggregate the value of firm energy and firm capacity because the firm energy and the firm capacity are inextricably linked. Despite such difficulties the Karnali Multipurpose Project study provides a good analysis of such disaggregation. The result of disaggregation of benefits into capacity and energy values derived from the Karnali study report helps to understand how we were terribly wrong to purchase on a big scale at a high price electricity from the private developers that fetches insignificant value.

It should be explained that the Karnali Multipurpose Project would be having a power station with an installed capacity of 10.8 million KW. Firm capacity is expected to be 9 million KW. Average energy of the project would be 20842 GWh /year whereas the firm energy would be 15007 GWh/year. The values presented hereinafter have been discounted at 10% to the year 2001 though the whole analysis of the feasibility study has been discounted to the year 2003.

According to the Karnali Project feasibility study the firm power (capacity and energy) value of the Karnali Project is expected to be US$ 81.9/MWh. Only the energy value including both firm and secondary energy is expected to be about US $ 16.6/MWh. Thus the capacity value of the Karnali Project would be US$ 65.3/MWh. In other words, the firm capacity value of the Karnali Project is going to be about 4 times greater than the energy value.

Installed capacity of the Khimti Project is 60 MW whereas the firm capacity is only about 18 MW. It can readily be derived from the Karnali Project analysis that the actual power value of the Khimti Project would be less than half of the power value of any other similar type of run-of-the-river type project if such project is provided with a small daily storage pond that would allow to operate the hydropower station at full capacity even when the river discharge is sharply reduced ( like Marshyangdi, Kali-Gandaki, Trishuli, Sundarijal projects).

Government of Japan had provided financial assistance to conduct feasibility study of the Kulekhani-3 Hydropower. Study team had considered various alternative capacities ranging from 15MW to 75 MW. They had rightly proposed that the capacity of the Kulekhani-3 Project should be raised to about 75 MW to supply electricity to meet the demand for peaking energy. Topography and other related conditions allow to increase the capacity of this project without undue rise in the project cost. The proposed 75 MW Kulekhani Project is not a complicated project and, thus, it could be implemented within a short period. Nepal was experiencing at that time acute shortage of electricity to meet the peaking demand.

Kulekhani-3, indeed, was the most suited project to meet our energy demand. It was a great surprise that our experts in the NEA, Planning Commission and Electricity Department did not seem to have any understanding about the capacity value. They were all the time insisting upon only the direct energy value solely in terms of generation cost of per KWh electricity. In their opinion the 15 MW Kulekhani-3 Project was far better by comparison with the 75 MW Kulekhani-3. As a result, the 75 MW Kulekhani-3 Project was sidelined.

India too, like Nepal , is experiencing acute shortage of peaking energy for decades. In several states the load shedding has become a regular phenomenon. Now India is even planning to implement on a grand scale pumped storage plants to resolve the peaking power shortage problem.

At present India is experiencing an acute shortage of peaking energy. At the beginning of the Eight Plan, the total peaking shortage was 20% whereas the energy shortage was only 9% of the total power generation. The thermal and nuclear power stations are suitable to supply electricity to meet the base load demand of the system. It is not economic to use them to supply peaking energy. Gas turbines can be used to meet the peak load demand because of low specific investment costs and quick start up. However, the efficiency is limited due to the high exhaust gas temperature of the turbine.

Unlike Nepal , India is trying to resolve its power shortage problem based on sound engineering principles. It is making every effort to improve the hydrothermal mix for ensuring better system operating condition. However, the share of hydropower in the overall power generating capacity has steadily declined since the last few decades. The share of the hydropower in the overall power generating capacity was 50.6% in 1963. But few years before it has come down to only 25.66%.

Most of the good sites for the hydropower development have already been developed in the Northern India. There are even now several good sites for hydropower development in the North-Eastern India which have not as yet been used. However, such sites are at locations far away from the load centers. As a result, the Government of India in recent years had to embark on a plan to develop the pump storage schemes

Pumped storage schemes are provided for the generation of peaking power, even though there is a net energy loss in the system because more energy is consumed in pumping than can be produced by the turbines. The cycle efficiency of a pumped storage plant can usually be between 60 and 70 percent. It implies that such a plant consumes abut three units of electricity to produce only two units during the peak hours. The cost of the peaking energy produced by a pumped storage plant will have to take into account the investment to be made in the construction of the pumped storage plant. The per unit capacity investment cost of a pumped storage plant can be comparable to the cost of a similar hydropower located at a favorable site.

So far 56 major pumped storage schemes with a total installed capacity of 94,000 MW are reported to have been identified in India. Already few pumped storage schemes such as the Nagarjun Sagar (700 MW), Kadampani (400MW), Kadana (240MW), Panchit (40MW), Paithan, and Ujjani are either in operation or under various stages of construction. Bids were being evaluated some years ago by the West Bengal authorities for a civil work contract for the 900 MW pumped storage facilities at Purulia on the Ayodhya hills. Three other pumped storage facilities of similar capacity are being planned. The pumped storage at Sardar Sarovar (1200 MW) and Tehri (1000MW) are planned for construction in near future.

Decision makers in Nepal must be very careful and they should see to it that they would not be misled by inexperienced hydropower planners. Government should take decisions on hydropower projects based on sound engineering practices irrespective of the facts whether such power stations are going to be built by private developers or by government agencies. Or else the mistakes similar in nature to that of the Khimti, Bhote-Kosi or Indrawati projects would be repeatedly plaguing the financial conditions of the NEA.