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NEA agrees to buy power generated by 2 MHPs

Nepal Electricity Authority (NEA) and two micro hydropower plants had entered Power Purchase Agreement (PPA) in late March 2016. Following the PPA two plants will synchronise electricity generated by MHPs to the national grid. Alternative Energy Promotion Centre (AEPC), the government institution responsible for alternative energy promotion has been coordinating the PPA to take place. This is initiating of PPA with MHPs official status.

The two MHPs who agreed PPA are Syaurebhumi Micro Hydropower Project (23 kW), Sikre VDC, Nuwakot and Leguwakhola Micro Hydropower Project (40 kW), Marek Katahare VDC, Dhankuta. Both the MHPs were installed with subsidy of Government of Nepal through AEPC. These both were completed three years back in BS 2070. A total of 660 households have been provided electricity access by the said MHPs currently. Connection to the national grid has been brought into effect after the national grid extension stretched to the locations.

After connecting to the national grid the MHPs will be able to make money as they are 24 hours generating electricity and NEA will pay against receiving electricity through the national grid. Thus, the MHPs will be self sustaining and better operationalised.

According to the PPA NEA will pay Rs 4.80 per unit (watt hour) in wet season and Rs 8.60 in dry season. The rate will be revised with 3% per year for five years.

Rana Bahadur Thapa, manager of Community Electrification Sub-Component at AEPC elaborated study on viability of PPA with NEA and Micro Hydropower Projects had been in process since 2006. Formulation of better modality and finding suitable MHPs were taken into consideration in the first phase, according to Thapa. This process had encouraged the communities and as will help sustainability of MHPs currently in operation and those installed in future. Thus, AEPC is putting efforts on connecting MHPs to national grid as well.

Executive Director at AEPC Ram Prasad Dhital, in this context, said that private sector investors now can join in MHPs as entrepreneurs. The first PPA made confidence on MHPs so as had been able to woo the investors and stakeholders. The PPA with MHPs also create environment of upgrading the materials and equipments used in MHPs, process of construction and installation so as to suite NEA standard. As such, micro hydro entrepreneurs will have opportunities in upgrading their capacities. Likewise, government sector will put efforts in coordinating resources for MHPs to connect to the national grid.

NEA and AEPC had principally agreed earlier in July 2015 to this effect. The PPA coming into effect is as a matter of fact opening a wayout for around 1500 MHPs installed in the country to be connected to the national grid. (April 1, 2016)

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