HYDROPOWER DEVELOPMENT IN NEPAL

HYDROPOWER DEVELOPMENT IN NEPAL : MAJOR ISSUES, ENVIRONMENT CONSIDERATION

AND WAYS FORWARD

DR. MURALI GOPAL RANJITKAR (DIRECTOR, MTEEC)

MR. SAROJ UPADHYAY (ENV. PROGRAM MANAGER, MTEEC)

OUTLINE OF THE PRESENTATION

1. History and current status of hydropower development inNepal

2. Consequences of failure to develop hydropower

3. Issues in hydropower development in Nepal

4. Environmental consideration in hydropower projects

5. Ways forward for hydropower development

WATER RESOURCES IN NEPAL

Claims of Nepal as "second richest country" in the world after Brazil in hydropower potential has never been validated

Students and general public have been inundated with the 83,000 MW potential rhetoric- based on a 1966 PhD of Dr. Hari Man Shrestha

However, another more scientific study lead by Prof. Narendra Man Shakya has shown that Nepal has a total potential to generate 53,000 megawatts of hydropower

Another study revels 43,000 MW of economically and technically feasible hydroelectricity (NPC, 1985)

Despite these discrepancies, the general consensus is that hydropower has the potential for uplifting the lives of the Nepalese people

HISTORY OF HYDROPOWER DEVELOPMENT IN NEPAL

Pharping Hydropower Plant is one of the oldest hydropower plants of Asia and the first hydropower plant of Nepal.

Established in the year 1911 while the first hydropower plant in China was established in 1912.

Ironically, we have lagged behind in hydropower generation ever since and have faced seemingly perpetual load shedding hours in the recent years

This is despite the fact that Nepal is among the richest country in the world in terms of water resources.

STATUS OF HYDROPOWER DEVELOPMENT IN NEPAL (1)

Presently, the total installed capacity of Nepal’s power plants is roughly 787 MW including thermal and solar plants (NEA, 2015).

Source Capacity (KW)

Total Small Hydro (NEA)-Isolated 4,536

Total Hydro (NEA) 477,930

Total Hydro (IPP) 255,647

Total Hydro (Nepal) 733,577

Total Thermal (NEA) 53,410

Total Thermal (NEA) 100

Total Installed Capacity (NEA and IPP) 787,087


Except 92 MW Kulekhani reservoir project, all of the hydropowerprojects in Nepal are of run-of-river (ROR) type

Huge power generation difference between rainy and dry season

Peak demand for 2015 was estimated as 1291.80 MW

Shortage of production during the dry season results in 14 hours’ ofload-shedding everyday in Kathmandu and other major cities inNepal


• Nepal lag well behind other South Asian compatriots.

Presenter

Presentation Notes

***Bergner, M. (2013). Developing Nepal’s hydroelectric resources: Policy alternatives. University of Virginia


3 distinct stages of Hydropower development in Nepal

Donor assisted till 1995

Independent Power Producers (IPPs) oriented till 1995-2001

Open and Liberal policy since than


First Five-Year Plan (1956-1961)Electricity development highly prioritized

Main objective was to generate 20 MW of electricity

In 1962, Nepal Electricity Corporation (NEC) was established and in1985 it was restructured to Nepal Electricity Authority (NEA)


Nepal embarked on a market led liberalized economy after the restoration ofdemocracy in 1990.

Since then a number of hydropower development policies have been formulated.

Eighth Five Year Plan (1992- 1997)

First plan by the democratic government formed after JanaAndolan of 1990.

Hydropower Development Policy 1992, Water Resources Act 1992, Electricity Act1992 and Foreign Investment and One Window Policy 1992 were formulated toattract foreign as well as domestic investment from private sectors


Tenth Five Year Plan Period (2002-2007)

Laid emphasis on construction of small, medium, large and reservoir type hydropower projects

To promote integrated development of water resources involving private and public sector with emphasis on rural electrification and control of unauthorized leakage of electricity


TenYears Hydro Development Plans

10,000 MW in 10 Years

Reserving small hydropower projects up to 50 MW for domestic investors

Building cost effective projects under Public-Private Partnership (PPP)

TwentyYears Hydro Development Plans

25,000 MW in 25 Years and projects divided into 5, 10, 15 and 20 years time frames

Domestic consumption and export oriented

Also emphasized Public-Private Partnership (PPP)

COSTS AND CONCERNS ARISING FROM INSUFFICIENT ELECTRICITY SUPPLY

Environment and Health Impacts Deforestation and indoor air pollution

Economic Impacts Cost of importing petroleum products

Implications for development Missing out on revenue generation

Equity Access to electricity, national grid among rural population

ISSUES IN HYDROPOWER DEVELOPMENT IN NEPAL

1. Political constraints including the state reconstruction

2. Technical constraints

3. Financial constraints

4. Policy constraints

5. Climate change


1. Political constraints Lack of Political Will

Persistent political instability

Aspiration of local people

State Reconstruction

Case study from Cauvery River dispute in India


Cauvery River dispute in India The Cauvery originates in Karnataka and flows through Tamil Nadu before joining the

Bay of Bengal.

Both parties argued that they need the water for millions of farmers in the region.

Conflict has persisted for decades now often marred by violent protests.

Natural Resources and Revenue Sharing in the New Federal System of Nepal must be thoroughly studied to avoid these kinds of situations


2. Technical Constraints Technical constrains for the development of hydropower related to geological,

hydrological and topographical settings of the country.

Also, lack of manpower specialized in hydropower development and lack of long termhydrological and sediment logical data are other technical constraints

Lack of adequate transmission lines and insufficient capacity of existing and plannedcross-border transmission lines

Absence of Storage-type Projects


3. Financial Constraints Hydropower projects are more capital intensive

Nepal doesn’t have the necessary financial resources to develop the hydropower in its own and haveto be reliant upon investment form international financial institution and donor agencies

Pricing Issue of electricity

4. Policy Constraints

Issue of License and institutional constraints

Monopoly of NEA over transmission and distribution of power

Overlapping responsibilities among governmental ministries and departments

Inconsistency among various hydropower policies


Agrawala, et. al., 2003

5. Climate Change • Water resources and hydropower ranks among the most vulnerable resources


5. Climate Change (Cont……) With only 1-2% of its potential currently developed, it will be quite some time before the

opportunities to expand hydropower energy are constrained by climate change in Nepal.

This does not mean that the existing facilities might not be seriously affected by Climate change. Theways in which climate change can affect hydropower resources include:

Run off variability

Glacial retreat

Glacial Lake Outburst Flood (GLOF)

Sediment load and Evaporation losses

Financial constraints and disincentives

FUTURE FOR HYDROPOWER DEVELOPMENT IN NEPAL

1. Alternatives

2. Transmission lines

3. Storage Type Projects

4. Policy

5. Environmental Considerations

1. ALTERNATIVES FOR INCREASING HYDROELECTRIC CAPACITY

1. Letting present trends continue

2. Developing micro-hydropower projects (100 MW)

3. Expand capacity using mid-range dams (1-100 MW)

4. Pursuing large-scale hydroelectric projects (>100 MW)

Pursue micro-hydropower projects as the current political and regulatoryenvironment in Nepal is not conducive to medium and large-scale projectdevelopment***.

The economic, social and environmental benefits of pursuing micro-hydropower isimmense but ultimately large projects especially storage type projects should bepursued to fully capture Nepal’s vast hydroelectric potential.

Presenter

Presentation Notes

***Bergner, M. (2013). Developing Nepal’s hydroelectric resources: Policy alternatives. University of Virginia

2. STORAGE TYPE PROJECTS

Except 92 MW Kulekhani reservoir project, all of the hydropower projects in Nepal are of run-of-river (ROR) type

Total electricity generation during dry season drops drastically resulting in nearly 14 hours of load-shedding everyday

Storage type hydroelectric projects are must for Nepal

Increases the reliability of the electricity supply as ROR (Run-off-river) projects are subjected to variability in river flows

Multipurpose: irrigation, water supply

Water available for generations even during times of drought

Though need more investment and have socio-economic impacts

3. TRANSMISSION LINES

Inadequate transmission lines and its insufficient capacity

Short term: Important to curb the current load shedding rate by importing electricity from India during dry season

Long term: New cross-border transmission lines for commercial viability of mega projects and power sale to India

Many projects in limbo due to lack of transmission lines

Impractical environmental and forest guidelines also hindering construction of transmission lines

4. POLICY

Public Private Partnership best suited for Nepal

Lack of business environment for FDI (Foreign Direct Investment)

Government and private sector alone cannot undertake huge projects

Case Study: Chilime Hydropower Project

Model project of Public-Private Partnership in hydropower development in Nepal

4. POLICY (CONT..)

Chilime Hydropower Company Limited (CHPCL), a subsidiary company of NEA.

The majority of shares, i.e. 51% belong to the NEA, 14% has been distributed to the general public, 10% to the locals of the project region and the remaining 25% is owned by the staffs of the company

Located in Rasuwa district with installed capacity of 22.1 MW.

First project to mobilize local capital, local skill and local labor for electricity generation

Best suited for the country as it shares risks as well as profit between private and public sector

General and local people can also become partners

5. ENVIRONMENT CONSIDERATIONS

Legal Requirement and environmental screening Areas requiring Environment Impact Assessment(EIA) Environment Impact assessment study Screening Environmental scoping Preparation of terms of reference Environmental monitoring Environmental auditing Preparation of EIA report

CONCLUSION AND RECOMMENDATION

In depth study becomes very essential to identify the real potential ofhydro power projects in Nepal

Need to develop hydro power projects according to plan program

Nepal’s internal financial resources need to be attract in Hydro powersector

Major issues need to be address in time

CONCLUSION AND RECOMMENDATION

Environment consideration need to be strongly applied in allaspects

Effective management team need to be develop for hydro powerdevelopment projects.

Public private Partnership modules need to be strongly applied inmedium scale hydro power projects

THANK YOU