Nepal Energy Development Roadmap

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1. Background Nepal's hydropower development began in 1968 B.S. with the 500 kW Pharping Hydropower Project. By the fiscal year 2080/81, the installed capacity of hydropower projects connected to the national grid reached 3,153 MW. This development has seen significant contributions from Nepal Electricity Authority (NEA) and its subsidiaries, independent power producers, and foreign investments. The national grid currently includes a mix of reservoir, semi-reservoir, and run-of-the-river hydropower projects, along with solar and bagasse-based (co-generation) projects. In recent years, with increasing electricity consumption and domestic production, Nepal has begun exporting electricity to neighboring India and Bangladesh, gradually reducing its trade deficit with India. During the monsoon season, domestic electricity production exceeds demand, necessitating policy and structural reforms to increase domestic consumption. Simultaneously, electricity trade has commenced with India and Bangladesh, where electricity demand is high. These developments in Nepal's energy sector have created a foundation for hydropower to become an exportable commodity, aligning with the objectives of the Hydropower Development Policy, 2058 B.S. To maximize the development of domestic energy sources, promote internal electricity consumption, realize potential benefits from cross-border electricity trade, and ensure planned and timely development of the energy sector, this energy development roadmap, covering 2024 to 2035, has been prepared with the following key areas: Capacity development, expansion, and modernization of the internal electricity transmission and distribution system. Current status and long-term needs of cross-border electricity transmission lines. Necessary financial resources for under-construction and generation-ready hydropower projects and electricity transmission line projects. Positive impact of electricity trade on the country's economic and social development. Administrative, policy, and legal reforms required for planned development of hydropower projects and electricity transmission line projects. Strategy to increase domestic electricity consumption. 2. Review of Past Efforts The Government of Nepal's periodic plans have consistently prioritized energy development. The Nepal Electricity Authority Act, 2041, was issued to make electricity generation, transmission, and distribution efficient, reliable, and accessible. Subsequently, the Electricity Act, 2049, and Electricity Regulations, 2050, were issued to ensure private sector participation in electricity development. Following this, the Hydropower Development Policy, 2058; Water Resources Strategy, 2058; and National Water Plan, 2062, were formulated. To regulate the electricity sector, the Electricity Regulatory Commission Act, 2074; Electricity Regulatory Commission Regulations, 2075; National Energy Efficiency Strategy, 2075, to support energy security; and National Water Resources Policy, 2077, for economic prosperity and social transformation through multi-purpose use of water resources, along with other policy and legal provisions, have been put in place. In addition, to provide electricity access and renewable energy technology services to geographically remote areas not covered by the national grid, the Government of Nepal implemented the Rural Energy Policy, 2063. Furthermore, the Renewable Energy Subsidy Policy, 2078, and Renewable Energy Subsidy Operational Procedure, 2079, have been implemented to support the promotion of renewable energy technologies. As a result, rural populations have gained easier access to renewable energy and improved their livelihoods. Efforts to address the energy crisis, which began in the 2060s B.S., were made periodically, but sufficient electricity generation was not achieved. The lack of high-capacity cross-border transmission infrastructure for importing electricity from India, policy ambiguities, and internal structural deficiencies meant that the balance between electricity demand and supply could not be maintained for a long time. To end Nepal's electricity crisis, the Government of Nepal, through a cabinet decision on 2072/11/06 B.S., approved the concept paper and action plan for the National Energy Crisis Resolution and Electricity Development Decade. Following the successful implementation of this concept paper and action plan, load shedding ended nationwide on 2075 Jestha 1 B.S. Additionally, the 400 kV Dhalkebar-Muzaffarpur cross-border transmission line for electricity import from India, along with the 132 kV Kataiya (India)-Kushaha (Nepal) and Raxaul (India)-Parwanipur (Nepal) transmission lines, have been completed and are operational. Furthermore, work is underway on the Nepal-India Integrated Transmission Master Plan, 2016, for cross-border electricity trade. During the visit of Nepal's Prime Minister to India from April 1-3, 2022, an agreement was reached to expand electricity exports, which began with 39 MW from Trishuli Hydropower Project and Devighat Hydropower Project, to 941 MW. On April 2, 2022, a Joint Vision Statement on Power Sector Cooperation was issued between Nepal and India for cooperation in the energy sector. This statement aims to expand bilateral cooperation in the electricity sector to the BBIN sub-region. This agreement has enabled access for Nepal's electricity to various Indian markets and made it possible to export electricity to Bangladesh. Following this agreement, a tripartite power purchase agreement was signed between Nepal Electricity Authority, Bangladesh Power Development Board, and NTPC Vidyut Vyapar Nigam of India on October 3, 2024, for 40 MW of electricity trade between Nepal and Bangladesh via the Indian transmission grid, which commenced on November 15, 2024. 3. Current Situation The current status regarding electricity project licenses, electricity generation, transmission system, distribution system, energy utilization, alternative energy, and power purchase agreements is as follows: 3.1 Energy Consumption According to the "Energy Sector Review Report, 2081" by the Water and Energy Commission, a study of Nepal's energy consumption from various sources in fiscal year 2079/80, such as biomass, petroleum products, coal, grid-connected electricity, and other renewable energy, shows that biomass accounts for 63.87% and petroleum products for 19.42%. The share of other renewable energy sources is the lowest at 3.09%. This indicates a need to transition from fossil-fuel-based and traditional energy sources to clean, green, and renewable energy consumption. Given that a significant portion of imported petroleum products is consumed in the transport sector, placing a substantial economic burden on the economy, it has become imperative to reduce petroleum consumption by maximizing the use of domestically produced electricity. Furthermore, to fulfill Nepal's commitment to achieving Net Zero Emissions by 2045, it is necessary to develop and promote clean and renewable energy sources, including hydropower. Increasing electricity consumption requires a clean energy transition in residential, agricultural, commercial, industrial, transport, construction, and mining sectors, shifting from traditional energy use to clean and renewable electricity. 3.2 Electricity Generation According to the projections in the Sixteenth Plan (2081/82-2085/86) issued by the National Planning Commission, the target is to generate a total of 11,739 MW of electricity by fiscal year 2085/86. As of Kartik (October/November) of the current fiscal year 2081/82, the total installed capacity of hydropower, solar, and bagasse-based co-generation projects has reached 3,243 MW. 3.3 Alternative Energy By fiscal year 2080/81, more than 90 MW of electricity has been generated from renewable energy sources (small and micro hydropower, solar, and wind energy), providing electricity access to approximately 1.4 million households. Around 2 million households have access to clean cooking energy technologies. More than 350 large-scale commercial biogas plants have been constructed. 3.4 Transmission System By fiscal year 2071/72, the total length of transmission lines was 2,624 circuit kilometers. By fiscal year 2080/81, an additional 3,883 circuit kilometers have been added, bringing the total length to 6,507 circuit kilometers. By the end of fiscal year 2080/81, the total installed capacity of grid substations reached 13,050 MVA. Details of transmission lines under construction and proposed, as well as those operational by fiscal year 2080/81, are presented in Annex-1. 3.5 Distribution System Electricity distribution is carried out from 129 distribution centers across the country. Out of 753 local levels, 732 have access to the national grid. Other local levels are electrified through off-grid systems promoted by the Alternative Energy Promotion Centre. Additionally, about 50,000 customers in Syangja, Palpa, Arghakhanchi, and Pyuthan districts receive electricity services from Butwal Power Company. Details of substations operational, under construction, and proposed distribution lines/substations by fiscal year 2080/81 are provided in Annex-2. 3.6 Electricity Project Licenses By fiscal year 2080/81, survey licenses for 84 hydropower projects with a total installed capacity of 9,019 MW and generation licenses for 249 hydropower projects with a total installed capacity of 9,833 MW are in effect. Additionally, applications for generation licenses for 91 projects with a capacity of 10,600 MW are under process at the Department of Electricity Development. (Source: Ministry of Energy, Water Resources and Irrigation; Department of Electricity Development) 3.7 Power Purchase Agreement By fiscal year 2080/81, Nepal Electricity Authority has signed power purchase agreements for electricity projects with a total installed capacity of 10,301 MW. Of these, projects with a capacity of 2,496 MW are commercially operational, projects with a capacity of 3,906 MW are under construction after financial closure, and projects with a capacity of 3,899 MW are awaiting financial closure after signing PPAs. This includes solar and co-generation projects with capacities of 107 MW and 6 MW respectively. 4. Analysis of Electricity Demand and Supply The "Nepal's Sustainable Development Goals and Roadmap (2016-2030)" report targets achieving 15,000 MW of total installed capacity and 1,500 units of per capita electricity consumption by 2030. However, by 2024, the peak demand in the national grid is estimated to be only about 2,000 MW. During the dry season, in addition to domestic production, demand is managed through electricity imports, while during the monsoon season, electricity is exported to neighboring India after meeting domestic demand. 4.1 Electricity Demand Analysis The Water and Energy Commission has projected electricity demand for 2015 to 2040, considering GDP growth rates of 4.5%, 7.2%, and 9.2%, across sectors such as Agriculture, Construction, Mining, Manufacturing, Service, Energy, Transport, and Domestic. The demand projections for various fiscal years based on GDP growth rates are presented below. (Source: Water and Energy Commission's Electricity Demand Forecast Report (2015-2040)). The forecast uses the following modified parameters for capacity factor, transmission and distribution loss, outage, and additional power requirement to support peak demand: Basis for Projection by Water and Energy Commission (2017) Basis Adopted in this Report Capacity Factor 50% 50% Transmission and Distribution Loss 25% 15% Outage 20% 5% Reserve Margin 30% 20% By keeping the total energy projected by the Water and Energy Commission constant and modifying only the above parameters, the internal electricity demand is projected as follows: Year (AD) Energy Demand (GWh) Peak Electricity Demand (MW) 4.5% 7.2% 9.2% 4.5% 7.2% 9.2% 2025 12,998 14,864 16,546 4,300 4,917 5,474 2026 14,413 16,882 19,209 4,768 5,585 6,355 2027 15,828 18,901 21,873 5,236 6,253 7,236 2028 17,244 20,920 24,537 5,705 6,921 8,117 2029 18,659 22,938 27,200 6,173 7,588 8,999 2030 20,074 24,957 29,864 6,641 8,256 9,880 2031 22,008 28,107 34,488 7,281 9,299 11,409 2032 23,942 31,258 39,112 7,921 10,341 12,939 2033 25,877 34,409 43,736 8,561 11,383 14,469 2034 27,811 37,559 48,359 9,200 12,425 15,998 2035* 29,745 40,710 52,983 9,840 13,468 17,528 * Actual quantity may exceed the projected quantity. Electricity Demand and Supply Electricity Demand and Supply Year 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Output / Demand (MW) 0 5000 10000 15000 20000 25000 Reserve (MW) Export (MW) Domestic Demand (MW) Total Production (MW) 4.2 Electricity Generation Projections Based on the capacity of operational and proposed electricity projects by fiscal year 2080/81 (2023/24), electricity generation is projected until 2092 B.S. (2035 AD). From fiscal year 2080/81 to 2089/90, projects with power purchase agreements are projected to generate 5,873 MW, projects in the PPA process 3,205 MW, projects with connection agreements 3,108 MW, projects in the connection agreement process 5,648 MW, and large-scale projects studied by Nepal Government and government-owned companies (not yet in the PPA process) 4,431 MW, and projects promoted by Indian companies 3,679 MW, totaling 25,944 MW. With these, by fiscal year 2091/92, Nepal's total electricity generation, including currently operational projects, is expected to reach 28,713 MW. 4.3 Electricity Demand and Supply Balance The total demand until 2035 includes domestic electricity demand and exports to neighboring countries. Considering the export of approximately 700 MW of electricity to India in fiscal year 2080/81 and the ongoing process of exporting more electricity to the Indian market, it is projected that 1,000 MW will be exported by fiscal year 2081/82, 4,000 MW by 2085/86, and 15,000 MW by 2091/92 to neighboring countries. Accordingly, by fiscal year 2091/92 (2035 AD), the total electricity demand, including demand from India, Bangladesh, and China, is projected to reach 28,468 MW. To meet this electricity demand, 5,900 MW will be generated from reservoir hydropower projects, 10,500 MW from semi-reservoir projects, and the remaining energy from run-of-the-river projects. In addition, 5-10% of the total installed capacity will be generated from alternative sources such as solar energy and green hydrogen. Therefore, by fiscal year 2091/92 (2035 AD), considering domestic demand and exports to neighboring countries, the electricity demand is projected to be 28,468 MW. Year Domestic Demand (MW) Export (MW) Total Demand (including export) (MW) Total Production (MW) 2025 4,917 600* 5,517 5,561 2026 5,585 800* 6,385 6,468 2027 6,253 1,000 7,253 7,417 2028 6,921 2,000 8,921 9,083 2029 7,588 4,000 11,588 11,797 2030 8,256 5,500 13,756 14,031 2031 9,299 7,000 16,299 16,787 2032 10,341 8,500 18,841 20,540 2033 11,383 11,000 22,383 24,148 2034 12,425 12,000 24,425 26,233 2035* 13,468 15,000 28,468 28,713 * Projected quantity, actual may be higher. 5. Promotion of Domestic Electricity Demand and Cross-Border Electricity Trade 5.1 Promotion of Domestic Electricity Demand The Sixteenth Plan of the National Planning Commission aims to achieve 700 units of per capita electricity consumption by fiscal year 2085/86. Currently, Nepal's per capita electricity consumption is about 400 units. To achieve this target, it is necessary to provide accessible, reliable, and quality electricity supply in the coming years and maximize electricity consumption. According to the Nepal Energy Sector Synopsis Report-2024 prepared by the Water and Energy Commission, the sectoral breakdown of total domestic energy consumption, including electricity, is presented as follows: Sectoral Energy Consumption, 2021 Total Energy Consumption: 626 Million Gigajoules Industrial, 18.3% Commercial, 7.0% Transport, 9.0% Agriculture, 1.6% Residential, 63.2% Construction & Mining, 0.8% Sectoral Energy Consumption, 2009 Total Energy Consumption: 401 Million Gigajoules Industrial, 3.3% Commercial, 1.3% Transport, 5.2% Agriculture, 0.9% Residential, 89.1% Construction & Mining, 0.2% Despite economic growth, technological advancements, improvements in energy efficiency, and easy access to electricity leading to increasing energy demand, the share of residential energy consumption has decreased compared to 2009. Conversely, energy consumption in industrial, transport, commercial, agricultural, construction, and mining sectors has significantly increased. While energy demand is rising, there is significant potential to increase electricity usage in these sectors. Therefore, there is ample basis and opportunity to significantly increase domestic electricity consumption by promoting the use of electricity in residential, industrial, transport, commercial, agricultural, construction, and mining sectors. This will lead to the replacement of mineral-based and other energy sources with electricity, contributing positively to the country's economic growth. 5.2 Cross-Border Electricity Trade To facilitate cross-border electricity trade between Nepal and India, construct cross-border electricity transmission lines, synchronize the grids of the two countries, and promote hydropower projects, an agreement on Electric Power Trade, Cross-Border Transmission Interconnection and Grid Connectivity was signed on October 21, 2014. Based on the electricity trade agreement between Nepal and India, Nepal began importing electricity from India's Day-Ahead market on the Indian Energy Exchange from May 1, 2021, during dry season months. Conversely, Nepal started selling surplus electricity from November 3, 2021, during monsoon months in the same market. Subsequently, a significant achievement in cross-border electricity trade was the signing of a long-term power trade agreement between Nepal and India on January 4, 2024. According to this agreement, efforts will be made to increase Nepal's electricity exports to the Indian market to 10,000 MW within the next 10 years. Successful implementation of this will create a positive environment for investment in Nepal's electricity sector and ensure an international market for generated electricity. By fiscal year 2080/81, Nepal is exporting approximately 800 MW of electricity during monsoon months from various hydropower projects with a total capacity of 941 MW, which have received approval from the Government of India for sale in the Day-Ahead/Real-Time (DAM/RTM) market of the Indian Energy Exchange. Additionally, a medium-term agreement for exporting 400 MW of electricity to NTPC Vidyut Vyapar Nigam, the nodal agency of the Government of India for power trade, has been signed, and approval has been received from the Government of India for projects with a capacity of 235.5 MW. Similarly, a medium-term power trade agreement for exporting 200 MW of electricity via Nepal-Bihar 132 kV transmission lines to PTC India Ltd., another Indian power trading company, has been signed, and approval has been received from the Government of India for projects with a capacity of 125 MW. Furthermore, to promote electricity trade between Nepal and Bangladesh, a Memorandum of Understanding (MoU) on Cooperation in the Field of Power Sector Development was signed on August 10, 2018. The provisions of this MoU have facilitated energy cooperation through regular meetings of committees, identifying areas for advancement. The electricity trade between Nepal and Bangladesh has been materialized through tripartite agreements and separate meetings between Nepal and India, further contributing to cooperation. As a result, a tripartite agreement was signed on October 3, 2024, between Nepal Electricity Authority, Bangladesh Power Development Board, and NTPC Vidyut Vyapar Nigam of India for the export of 40 MW of electricity from Nepal to Bangladesh via the Indian grid. This agreement has opened the door for electricity trade between Nepal and Bangladesh and is a step towards tripartite cooperation between Nepal, Bangladesh, and India. Additionally, this agreement has created a situation to expand Nepal-Bangladesh electricity trade significantly by fostering tripartite understanding in the construction of cross-border transmission infrastructure and gradually through the BBIN sub-regional market for Nepal's electricity export. 6. Problems and Challenges 6.1. Policy, Legal and Institutional Arrangements Problems: Existing public procurement laws do not have specific provisions (Exclusive provision) conducive to hydropower project development. Policies and laws required for project development are not formulated and revised timely. Challenges: Harmonizing existing acts and laws. Clarifying the role of provincial and local levels in electricity project development. 6.2. Investment Management Problems: Inability to identify and operationalize mechanisms to mitigate financial risks. Inability to manage and mobilize sufficient domestic capital for the development of energy infrastructures. Challenges: Attracting sufficient foreign investment, including from multilateral agencies, for energy infrastructures. Utilizing climate financing for energy infrastructure development. 6.3. Energy Demand Management Problems: Insufficient legal and policy provisions for electricity demand management. Inability to expand the market for electricity in industrial, residential, and commercial sectors and ensure a reliable and quality electricity supply. Lack of timely and appropriate tariff arrangements. Challenges: Preparing necessary infrastructure for electricity supply and consumption in line with increasing domestic electricity demand. Making customer services timely, technology-friendly, and effective. 6.4. Energy Production Problems: Environmental studies, forest land use, and land acquisition processes for project construction are not simple and easy, leading to increased time and cost for project development. Lack of inter-agency coordination and ownership in project development. Lack of easy availability and effective deployment of necessary technical capacity for project study, development, and construction. Inability to timely confirm the prioritization of large projects and the implementation and funding modalities for priority projects. Challenges: Optimizing the design of hydropower projects according to cross-border electricity demand. Achieving an energy mix with RoR, PROR, and Storage hydropower projects, as well as alternative energy projects, to ensure national electricity security with self-reliance. Addressing climate change risks in hydropower project design and construction appropriately. 6.5. Electricity Transmission and Distribution System Problems: Lack of inter-agency coordination in the development of transmission and distribution systems. Procedural delays in land acquisition, compensation, and RoW clearance for transmission lines and substations. Lack of easy availability and proper deployment of technical and financial resources, as well as skilled construction professionals, for transmission and distribution system construction. Environmental studies, forest land use, and land acquisition processes are not simple and easy. Challenges: Completing project construction, strengthening, and capacity enhancement within the stipulated time. Ensuring coordination in the construction of electricity generation projects and the necessary transmission lines and substations. 6.6. Electricity Trade Problems: Lack of clear policy and legal frameworks for electricity trade. Lack of necessary infrastructure for cross-border electricity trade. Challenges: Expanding the market at regional/sub-regional levels, including BBIN (Bangladesh, Bhutan, India, and Nepal), BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation), SASEC (South Asia Subregional Economic Cooperation), and SAARC (South Asian Association for Regional Cooperation). 7. Future Roadmap The report "Nepal's Sustainable Development Goals and Roadmap (2016-2030)" states a target of 1,500 units of per capita electricity consumption by 2030, while by 2024, Nepal's per capita electricity consumption is only 400 units. Based on the Water and Energy Commission's Electricity Demand Forecast Report, 2015-2040, projecting an annual GDP growth rate of 7.2%, and an internal electricity demand of 40,710 GWh by 2035 (fiscal year 2091/92), this roadmap has been prepared with the objective of achieving 1,500 units of per capita electricity consumption by 2035. The overall objectives of this roadmap are as follows: Achieving self-reliance in electricity for the long term and ensuring energy security for the nation. Ensuring reliability and quality of electricity supply by maintaining harmony between generation, transmission, distribution, and trade. Exporting surplus electricity to regional and sub-regional markets after meeting domestic demand, thereby expanding cross-border electricity trade. Promoting clean energy transition by implementing programs to maximize the use of clean and renewable energy to achieve the Net Zero Emission target by 2045. Formulating necessary policy and legal frameworks for the overall development of the electricity sector. Strengthening institutional capacity to identify, prioritize, implement, monitor, and evaluate electricity-related plans and programs. Promoting electricity export trade to strengthen the country's balance of payment position and contribute to foreign exchange reserves. To supply 40,710 GWh of total internal electricity demand by 2035, an installed capacity of 13,468 MW is required. Additionally, with a target of exporting approximately 15,000 MW to neighboring countries in the coming decade, Nepal's total installed capacity is expected to reach 28,500 MW by 2035. It is possible to meet the projected internal electricity demand and exports by 2035 through operational electricity projects, projects with signed power purchase agreements (PPAs), projects in the PPA process with connection agreements, projects in the connection agreement phase, and projects promoted by Nepal Government and government-owned institutions and other companies. Considering the electricity demand-supply and export potential, the following actions will be taken: 7.1 Legal, Policy, Institutional, and Procedural Reforms Timely formulation and revision of necessary policies and laws for project development. Initiating efforts to incorporate specific provisions (Exclusive Provision) conducive to hydropower project development in existing public procurement acts/regulations. Reviewing existing institutional arrangements and restructuring and enhancing capacity as needed. 7.2 Energy Production Total installed electricity capacity to reach 28,500 MW by 2035. Developing technical capacity and ensuring financial resource availability for project study, development, and construction. Ensuring inter-agency coordination for simplifying land acquisition, environmental studies, forest land use, and other tasks for project construction. 7.3 Human Resources and Financial Resources Management Creating a conducive environment for attracting foreign investment while effectively mobilizing domestic capital for the construction of energy infrastructures. Identifying mechanisms to mitigate financial risks and operationalizing them. Initiating efforts to attract climate finance for climate change-induced losses and carbon emission reduction. Implementing programs to enhance capacity, including human resource development, promotion, and training. 7.4 Energy Demand and Supply Management Achieving 1,500 units of per capita electricity consumption by 2035. Replacing traditional energy consumption in residential, industrial, commercial, agricultural, and transport sectors with electricity. Encouraging maximum electricity consumption by consumers through reliable electricity supply and timely tariff arrangements. 7.5 Transmission-Distribution System and Physical Infrastructure Development By 2035, constructing 6,431 circuit kilometers of 132 kV, 4,061 circuit kilometers of 220 kV, and 6,440 circuit kilometers of 400 kV transmission lines, and increasing substation capacity to 40,000 MVA. Proceeding with the construction of necessary transmission and distribution infrastructures to manage demand and supply in Kathmandu Valley and 7 major clustered areas. Ensuring availability of technical capacity and financial resources for the construction of transmission and distribution projects. 7.6 Electricity Trade By 2035, exporting 10,000 MW of electricity to neighboring India and 5,000 MW to Bangladesh/China, totaling 15,000 MW. Formulating necessary policy and legal frameworks, including Market Design, for domestic and cross-border electricity trade. Constructing necessary cross-border electricity trade infrastructures within a time-bound manner. Introducing additional policy and legal provisions to involve the private sector in electricity trade. Energy Development Roadmap Energy Development Roadmap State in 2024 Total Installed Capacity: 3,243 MW Annual Per Capita Electricity Consumption: 400 Units Electricity Export: 700 MW Transmission System: 6,507 Circuit KM Substation: 13,050 MVA Electricity Access: 98% Annual Domestic Electricity Demand: Approx. 12,700 GWh Target for 2035 Total Installed Capacity: 28,500 MW Annual Per Capita Electricity Consumption: 1,500 Units Electricity Export: 15,000 MW Transmission System: 17,446 Circuit KM Substation: 40,000 MVA Electricity Access: 100% Annual Domestic Electricity Demand: 40,710 GWh Legal, Policy, Institutional and Procedural Reforms Energy Production Related Programs Human Resources & Financial Resources Management Energy Demand & Supply Management Programs Transmission-Distribution System & Physical Infra Dev. Electricity Trade Related Programs 8. Projects for Immediate Implementation Due to the predominance of run-of-the-river (RoR) projects in Nepal's electricity system, while these projects generate electricity at installed capacity during the monsoon season, production decreases during the dry season due to reduced water flow. During the monsoon, there is a surplus of electricity beyond domestic demand, which needs to be exported to India. In the dry season, however, there is a deficit, requiring imports. Currently, some projects are unable to connect to the transmission system, and even when connected, they cannot transmit electricity at full capacity. Therefore, it is necessary to identify and implement immediate construction, expansion, and upgrade works for the electricity transmission and distribution system with priority. 9. Financial Resource Management To achieve the targets for electricity generation, transmission, and distribution projects by 2035, the estimated cost, annual expenditure, and availability of financial resources for proposed projects are analyzed as follows: 9.1. Cost Estimation of Projects To estimate the cost of electricity generation projects with a total installed capacity of 28,500 MW by 2035 and the necessary transmission and distribution systems, the following assumptions were made: For run-of-the-river (RoR) hydropower projects, the average cost will be $1.6 million per MW. For semi-reservoir (PROR) hydropower projects, the average cost will be $1.8 million per MW. For reservoir/pumped storage hydropower projects, the average cost will be $2.7 million per MW. The average construction period for run-of-the-river hydropower projects will be 4 years, for semi-reservoir hydropower projects 6 years, and for reservoir hydropower projects 7 years. The average annual cash disbursement during the construction period for RoR, PROR, and Storage/Pumped Storage projects will be as follows: Format Construction Period (Years) 0 1 2 3 4 5 6 RoR 5% 20% 25% 35% 15% PROR 3% 10% 16% 21% 33% 17% Storage/ 2% 9% 14% 18% 28% 18% 14% For 400 kV, 220 kV, and 132 kV double-circuit transmission lines, the average cost per circuit kilometer will be $350,000, $200,000, and $125,000 respectively. The cost for multi-circuit projects will be double the above. Approximately 30% of the average cost of transmission infrastructure construction will be for land acquisition. The average annual cash disbursement for transmission infrastructure construction will be as follows: Transmission Infrastructure Construction Period (Years) Construction Year 1 2 3 4 5 1 100% 2 50% 50% 3 30% 30% 40% 4 10% 30% 30% 30% 5 5% 15% 20% 30% 30% For substation construction, the average cost per MVA will be $80,000. For 33 kV, 11 kV, and 0.4/0.23 kV distribution lines, the average cost per circuit kilometer will be $13,000, $11,000, and $9,500 respectively. The average cost per transformer under the distribution system will be $4,000. The average cost per 33/11 kV substation will be $925,000. The estimated cost for electricity generation, transmission, and distribution infrastructure as per the energy development roadmap is as follows: Cost for Electricity Generation Projects Description Estimated Cost (USD) Cost of additional 26,000 MW generation excluding currently operational 2,500 MW projects Approx. 50 billion Cost of 3,700 MW projects to be built with Indian investment Approx. 7.7 billion Cost of 22,300 MW projects to be built with investment from private sector, Nepal Government, Nepal Electricity Authority, and other agencies Approx. 42.3 billion Investment managed for 22,300 MW projects Approx. 2.6 billion Remaining investment to be raised for 22,300 MW projects Approx. 39.7 billion Cost for Transmission Line and Substation Construction Description Cost (USD) Estimated total cost for construction of 11,700 circuit km transmission lines and 33,000 MVA substation capacity Approx. 7.4 billion Investment managed for this Approx. 1.8 billion Remaining investment to be raised Approx. 5.6 billion Cost for Distribution System Construction Description Estimated Cost (USD) Total amount required for 100 units of 33/11 kV substations, 2000 km of 33 kV lines, 25,000 km of 11 kV lines, 100,000 km of 0.4/0.23 kV lines and 47,000 transformers (excluding cost of substations and distribution lines constructed by industrial customers for their own use) Approx. 1.5 billion Investment managed Approx. 300 million Remaining investment to be raised Approx. 1.2 billion Based on the above tables, a total investment of $46.5 billion is required for generation, transmission, and distribution infrastructures. 9.2 Investment Management Based on the above cost estimates, approximately $46.5 billion needs to be raised over the next 12 years until 2035. To manage this investment, it is necessary to mobilize capital from the government, private sector, general public, foreign investment, and non-resident Nepalis, as well as Nepalis working abroad, into the energy sector. 9.2.1 Mobilization of Domestic Capital Assuming that the energy sector receives high priority in proportion to the growing economy, and estimating that 15% of total debt investment will be in the energy sector, approximately $18 billion can be managed from domestic sources by 2035. The revenue collected from consumers for electricity supply, revenue received from electricity generation projects, and amounts received by producers for electricity sales are calculated based on the following assumptions: As per the royalty payment provisions of the Electricity Act, 2049, for 15 years from the start of commercial production, a royalty of NPR 100 per kW of installed capacity annually and 2% of the average selling price per unit (kWh). After 15 years, NPR 1,000 per kW of installed capacity annually and 10% of the average selling price per unit (kWh). Run-of-the-river (RoR) hydropower projects will generate an average of 6 GWh per MW annually. Semi-reservoir (PROR) hydropower projects will generate an average of 5.5 GWh per MW annually. Reservoir hydropower projects will generate an average of 4 GWh per MW annually. Run-of-the-river (RoR) and semi-reservoir (PROR) hydropower projects will generate 30% of their annual production during the dry season. Reservoir hydropower projects will generate 35% of their annual production during the dry season. For estimation purposes, producers will be paid an average of NPR 8.4 per kWh for electricity generated during the dry season and NPR 4.8 per kWh for electricity generated during the monsoon season. For estimation purposes, the average electricity tariff per kWh will be NPR 10. Based on these assumptions, the revenue from electricity generation projects, collected revenue, and amounts received by producers from electricity sales by 2035 are as follows: Description Estimated Amount (NPR) Revenue collected from electricity generation projects (received by Nepal Government) Approx. 88 billion Revenue from electricity supply Approx. 65 trillion Amount received by producers from electricity sales Approx. 39 trillion Amount received by Nepal Electricity Authority from power purchase and sale Approx. 26 trillion For estimation purposes, Nepal Electricity Authority's Profit Margin 40% Accumulated amount with Nepal Electricity Authority for Reinvestment/Refinancing by 2035 Approx. 10 trillion (Approx. 8 billion USD) Economic Benefits of Energy Generation Projects 0 200.00 400.00 600.00 Amount (NPR in billions) Year Revenue Income Payment 9.2.2 Mobilization of Capital from Climate Financing It is estimated that approximately $2 billion can be managed through climate financing for green energy production, and considering the government's high priority for the energy sector with an annual budget allocation of $500 million, a total of $6 billion can be managed by 2035. 9.2.3 Mobilization of Capital from Foreign Investment and Non-Resident Nepalis Approximately $12 billion can be mobilized from non-resident Nepalis and Nepalis working abroad to invest in the energy sector through financial instruments like Power Bonds and Debentures issued by Hydroelectricity Investment and Development Company (HIDCL), Nepal Infrastructure Bank (NIFRA), and other institutions. Additionally, approximately $8.5 billion can be managed through foreign investment, grants, and loans. In summary, the availability of financial resources required for the development and construction of generation, transmission, and distribution infrastructures is presented in the following table: Financial Source Estimated Amount (USD) Remarks Nepal Government Investment 6 billion Needs to be raised Domestic Sources (Private Sector, Banks and Financial Institutions) 10 billion Needs to be raised Refinancing/Reinvestment from Nepal Electricity Authority 8 billion Ensured source Climate financing 2 billion Needs to be raised Investment from Non-Resident Nepalis and Nepalis working abroad (Remit) 12 billion Needs to be raised Foreign Investment, Grants and Loans 8.5 billion Needs to be raised Total Investment Management 46.5 billion Thus, based on the above table, out of $46.5 billion, approximately $8 billion in financial resources is ensured through Refinancing/Reinvestment from Nepal Electricity Authority. Approximately $4 billion for projects like Upper Arun, Dudhkoshi, etc., which are in the pipeline, is being financially secured. The remaining $34.5 billion needs to be raised through further efforts to mobilize investment. 10. Economic and Social Benefit Analysis The development and effective implementation of the energy generation projects listed in this action plan are expected to yield the following benefits: Maximum utilization of water resources will lead to quality and reliable electricity self-sufficiency. The country will not need to import electricity for domestic demand, and surplus electricity can be exported, improving the country's trade balance. The implementation of energy development projects will increase employment opportunities, contributing positively to the economy. Analysis of electricity generation projects indicates that approximately 1,000 MW of hydropower generation annually will create the following employment opportunities: Human Resources Description Estimated Number (per year) Managers 50-60 Engineers 500-600 Supervisors and Foremen (site leadership) 1,500-2,000 Skilled workers with various skills and expertise 5,000-6,000 General workers 20,000-25,000 Furthermore, electricity generation is expected to make a significant contribution to the national economy. As discussed above, the electricity generation projects by 2035 will generate the following revenue from electricity supply, collected revenue, and amounts received by producers from electricity sales: Description Estimated Amount (NPR) Revenue collected from electricity generation projects (received by Nepal Government) Approx. 88 billion Amount received by producers from electricity sales Approx. 39 trillion Amount received by Nepal Electricity Authority from power purchase and sale Approx. 26 trillion 11. Analysis and Management of Potential Risks 11.1. Potential Risks The risks associated with the implementation of this action plan are as follows: Climate Change: Due to climate change, there is a possibility of annual energy production falling below expectations. Natural Disasters: Natural disasters can damage physical infrastructure of projects under construction and in operation, potentially leading to delays and reduced electricity supply. Supply Chain Disruption: Disruption in the import/supply of construction materials like explosives and iron can affect construction work, leading to delays and increased costs. Policy Instability in Cross-Border Electricity Trade: Policy instability can delay the implementation of long-term electricity trade agreements, adversely affecting electricity trade. Economic Recession: An economic recession can hinder financial resource mobilization for energy generation projects from the private sector and financial institutions. Financial Condition of Nepal Electricity Authority (NEA): If NEA's commercial operations do not generate expected profits, it may face challenges in mobilizing investment for electricity supply infrastructure. Obstacles in Reservoir Project Development: Environmental impacts and displacement of settlements in reservoir areas can hinder the development of reservoir projects as expected. Investment Environment: If a favorable investment environment is not established in the country, and in case of an economic recession, foreign investors and non-resident Nepalis may not invest as expected. 11.2. Risk Management To effectively manage the risks associated with the implementation of this action plan, the following risk management measures are deemed appropriate: Climate Change: Adopting national/international guidelines and good practices that incorporate climate change dimensions for the study, construction, and operation of hydropower projects. Natural Disasters: Implementing disaster prevention measures, recovery plans, and awareness systems, including disaster management/mitigation measures, during project study, construction, and operation phases. Supply Chain Disruption: Expanding alternative sources for construction material supply/import and developing/promoing domestic sources. Policy Instability in Cross-Border Electricity Trade: Ensuring long-term electricity trade agreements that are recognized by international law and expanding/promoting domestic electricity consumption. Economic Recession: Maintaining frugality in administrative expenses. Financial Condition of Nepal Electricity Authority: Reducing expenses and reviewing/revising electricity tariffs. Obstacles in Reservoir Project Development: Identifying ground realities during the environmental impact assessment phase of projects and preparing appropriate plans for impact mitigation and resettlement. Investment Environment: Continuously creating a favorable investment environment. 12. Energy Development Action Plan The following action plan has been prepared for the implementation of this roadmap: S.N. Activity Timeframe Lead Agency Support Agencies Estimated Cost to Government (NPR)*** Remarks 1. Draft and implement new Electricity Act. 6 months Ministry of Energy, Water Resources and Irrigation Ministry of Law, Justice and Parliamentary Affairs Electricity bill submitted to Federal Parliament 2. Draft "National Energy Security Policy". 1 year Ministry of Energy, Water Resources and Irrigation National Planning Commission, Water and Energy Commission, Nepal Electricity Authority, Alternative Energy Promotion Centre 3. Conduct studies and provide policy recommendations for energy demand promotion and management. Continuous Water and Energy Commission Ministry of Energy, Water Resources and Irrigation 4. Formulate and implement guidelines for land acquisition for hydropower projects, ensuring no land ceiling limits and simplifying land acquisition and compensation processes. 1 year Ministry of Energy, Water Resources and Irrigation Ministry of Law, Justice and Parliamentary Affairs, Ministry of Land Management, Cooperatives and Poverty Alleviation 5. Prepare necessary basis and standards for determining electricity purchase rates for reservoir projects and implement appropriate modalities such as Vertical Separation PPP Modality (VSPPPM) for reservoir project development. 6 months Electricity Regulatory Commission Ministry of Energy, Water Resources and Irrigation; Nepal Electricity Authority 6. To ensure investment certainty in hydropower projects, remove restrictions on the Return on Equity (ROE) for RoR and PROR projects with domestic investment that have signed PPAs for projects over 100 MW and are awaiting financial closure, and for future projects. Immediate Electricity Regulatory Commission, Nepal Electricity Authority Ministry of Energy, Water Resources and Irrigation 7. Formulate and implement Dam Safety Guidelines for dams built in hydropower projects and downstream areas. 6 months Ministry of Energy, Water Resources and Irrigation Water and Energy Commission, Department of Electricity Development, Nepal Electricity Authority 8. Draft and implement procedures for open access in electricity transmission and distribution infrastructure. 6 months Ministry of Energy, Water Resources and Irrigation; Electricity Regulatory Commission Nepal Electricity Authority 9. Formulate legal provisions to ensure private sector participation in electricity trade. 1 year Ministry of Energy, Water Resources and Irrigation Department of Electricity Development 10. Draft and implement Tariff Based Competitive Bidding (TBCB) guidelines to attract private sector investment in transmission infrastructure. 6 months Ministry of Energy, Water Resources and Irrigation Nepal Electricity Authority, National Transmission Grid Company Limited 11. Make land use arrangements for forest areas timely to promote hydropower project development and construction. 6 months Ministry of Forest and Environment Ministry of Energy, Water Resources and Irrigation 12. Ensure inter-agency coordination for environmental studies of hydropower projects. Continuous Ministry of Energy, Water Resources and Irrigation Ministry of Forest and Environment 13. Make compensation for land affected by Right of Way for electricity transmission lines practical and scientific. 6 months Ministry of Energy, Water Resources and Irrigation Nepal Electricity Authority, National Transmission Grid Company 14. Formulate legal provisions for renewable energy and energy efficiency. 1 year Ministry of Energy, Water Resources and Irrigation Ministry of Law, Justice and Parliamentary Affairs 15. Draft and implement electricity trade guidelines for domestic and cross-border electricity trade. 1 year Ministry of Energy, Water Resources and Irrigation Ministry of Law, Justice and Parliamentary Affairs; Nepal Electricity Authority 16. Formulate and implement standards (Standardization & Labelling) for electrical appliances to enhance energy efficiency. 1 year Ministry of Energy, Water Resources and Irrigation Nepal Bureau of Standards and Metrology, Alternative Energy Promotion Centre 17. Discourage the import and sale of electrical appliances that do not meet minimum standards for Standardization & Labelling. Continuous Ministry of Industry, Commerce and Supplies Ministry of Energy, Water Resources and Irrigation; Alternative Energy Promotion Centre Start work within 3 months 18. Formulate and implement guidelines for the establishment and operation of charging stations and electrification for electric vehicles. 1 year Nepal Electricity Authority Ministry of Energy, Water Resources and Irrigation; Ministry of Physical Planning and Transport 19. Promote the use of electric appliances. Continuous Ministry of Finance Ministry of Energy, Water Resources and Irrigation; Nepal Electricity Authority; Alternative Energy Promotion Centre Start work within 3 months 20. Formulate policy provisions for compensation if electricity distributors cut power without prior notice, except in extraordinary circumstances, or if consumers suffer losses due to voltage fluctuations or other reasons. Continuous Ministry of Energy, Water Resources and Irrigation; Electricity Regulatory Commission Nepal Electricity Authority, Butwal Power Company Start work within 3 months 21. Arrange for private land affected by the Right-of-Way of existing electricity transmission lines to be used as collateral for bank loans. Continuous Nepal Rastra Bank Ministry of Finance; Ministry of Energy, Water Resources and Irrigation; Nepal Electricity Authority Start work within 3 months 22. Draft and issue guidelines for determining Transmission Service Charges for using electricity transmission lines. 1 year Ministry of Energy, Water Resources and Irrigation; Electricity Regulatory Commission Nepal Electricity Authority, National Transmission Grid Company Ltd. 23. Formulate policy provisions to make land use and tree felling processes for hydropower projects faster and easier, ensuring quick approval for tree felling as per environmental study reports. Continuous Ministry of Forest and Environment Ministry of Energy, Water Resources and Irrigation 24. Formulate policy provisions for utilizing innovative financial instruments such as Quasi Equity, Mezzanine Financing, etc., to attract investment in hydropower projects. 1 year Ministry of Finance, Nepal Rastra Bank Ministry of Energy, Water Resources and Irrigation; Ministry of Industry, Commerce and Supplies; Hydropower Investment and Development Company 25. Clarify the scope of work for energy development-related agencies. 1 year Ministry of Energy, Water Resources and Irrigation Relevant Ministries 26. Formulate legal provisions to replace fossil fuel-powered vehicles with electric vehicles. 1 year Ministry of Physical Planning and Transport Ministry of Finance; Ministry of Energy, Water Resources and Irrigation; Ministry of Law, Justice and Parliamentary Affairs 27. Promote chemical fertilizer plants using green hydrogen. Continuous Ministry of Energy, Water Resources and Irrigation Ministry of Finance 28. Operate, expand, and manage the national transmission grid in accordance with the Nepal Electricity Grid Code. Immediate Nepal Electricity Authority, National Transmission Grid Company Ltd. Ministry of Energy, Water Resources and Irrigation 29. Develop structural arrangements for the implementation of Green Hydrogen Policy to utilize the abundant potential of green hydrogen production for clean energy transition. 6 months Ministry of Energy, Water Resources and Irrigation Alternative Energy Promotion Centre, Nepal Electricity Authority 30. Develop Nepal Power Trading Company (a government-owned company licensed for electricity trading) as Nepal's Nodal Agency for electricity trade. 6 months Ministry of Energy, Water Resources and Irrigation Nepal Electricity Authority 31. Develop and implement an integrated plan for the coordinated development of hydropower projects. Continuous Ministry of Energy, Water Resources and Irrigation; Ministry of Physical Infrastructure and Transport Department of Electricity Development, Nepal Electricity Authority 32. Arrange for the Department of Electricity Development to conduct studies, research, data collection, archiving, and evaluation related to climate risk in energy infrastructure development and to obtain climate financing. Continuous Ministry of Energy, Water Resources and Irrigation Water and Energy Commission, Department of Hydrology and Meteorology Start work within 3 months 33. Conduct studies and research and ensure coordination between relevant agencies for reducing risks of natural disasters like floods, landslides, and forest fires in energy infrastructures. Immediate Department of Electricity Development, Department of Hydrology and Meteorology National Disaster Risk Reduction and Management Authority 34. Conduct studies and research on Technological Risks like Cyber Security Risk in energy systems and mitigate risks. Continuous Nepal Electricity Authority Ministry of Energy, Water Resources and Irrigation 35. Prepare procedures for transferring hydropower projects to the Nepal Government in operational condition after their license period, and regularly monitor project construction, maintenance, and operation plans. Continuous Department of Electricity Development Ministry of Energy, Water Resources and Irrigation; Ministry of Forest and Environment 36. Further simplify the process for issuing working visas and labor permits to foreign professionals involved in the engineering and construction of hydropower projects. 3 months Ministry of Home Affairs, Ministry of Labor, Employment and Social Security Ministry of Energy, Water Resources and Irrigation 37. Further simplify the supply arrangements for explosives required for hydropower project construction. Continuous Ministry of Defense, Ministry of Home Affairs Ministry of Energy, Water Resources and Irrigation; Ministry of Foreign Affairs 38. Facilitate the commercial operation of Nepal Electricity Authority. Continuous Ministry of Energy, Water Resources and Irrigation Ministry of Finance 39. Update electricity demand projection, energy consumption evaluation, and generation, transmission, and distribution master plans. Continuous Water and Energy Commission Ministry of Energy, Water Resources and Irrigation 40. Encourage domestic and international investors, non-resident Nepalis, and Nepalis working abroad to invest in the energy sector by issuing investment instruments such as Sovereign Green Energy Bonds, Climate Finance, Power Bonds, and Debentures. 2 years Ministry of Finance; Ministry of Energy, Water Resources and Irrigation; Ministry of Forest and Environment; Nepal Rastra Bank Hydroelectricity Investment and Development Company, Securities Board, Banks and Financial Institutions, Insurance Companies, Investment Company 41. Restructure Nepal Electricity Authority to make electricity generation, transmission, and distribution more effective. 2 years Ministry of Energy, Water Resources and Irrigation Ministry of Finance, Nepal Electricity Authority 42. Enhance the institutional capacity of Hydroelectricity Investment and Development Company Limited (a company owned by the Nepal Government). 1 year Ministry of Energy, Water Resources and Irrigation Ministry of Finance 43. Formulate legal frameworks, establish steering committees, and analyze demand and supply of green energy in national and international markets through various modern financial instruments to promote and develop green energy and carbon trading in Nepal. 2 years Ministry of Finance; Ministry of Energy, Water Resources and Irrigation; Ministry of Forest and Environment; Nepal Rastra Bank Hydroelectricity Investment and Development Company, Securities Board, Banks and Financial Institutions, Insurance Companies, Investment Company 44. Develop and implement an integrated Hazard and Safety Information System to mitigate and manage disasters that may occur in hydropower projects. Continuous Department of Electricity Development Department of Hydrology and Meteorology, National Disaster Risk Reduction and Management Authority 45. Implement programs to control losses in the electricity supply system. Continuous Nepal Electricity Authority Ministry of Home Affairs 46. Conduct timely studies, research, and training programs to enhance the capacity of relevant employees. Continuous Ministry of Energy, Water Resources and Irrigation Relevant Agencies 47. Continue Energy Audit activities for large electricity consumers for effective electricity management and energy efficiency. Continuous Nepal Electricity Authority, Department of Industry, Alternative Energy Promotion Centre Ministry of Energy, Water Resources and Irrigation; Water and Energy Commission Programs to be continued even after 2035. 48. Identify and effectively implement projects to manage electricity demand and supply during dry and monsoon seasons. Immediate Nepal Electricity Authority Ministry of Energy, Water Resources and Irrigation 49. Ensure that reservoir areas of hydropower projects, for which construction is confirmed and identified in river basin master plans, are not affected, and implement infrastructure and other development programs. Continuous Infrastructure Development Related Agencies Ministry of Energy, Water Resources and Irrigation 50. Advance Dudhkoshi Reservoir Hydropower Project, Budhigandaki Reservoir Hydropower Project, Nalgad Reservoir Hydropower Project, Naumure Multi-purpose Project, Jagdulla Semi-reservoir Hydropower Project, Upper Arun Semi-reservoir Hydropower Project as transformative projects. Continuous Project Development Related Agencies Ministry of Finance; Ministry of Energy, Water Resources and Irrigation 51. Advance the development of Sunkoshi-3 Reservoir Hydropower Project through joint efforts of the Nepal and Bangladesh governments. 6 months Nepal Electricity Authority Ministry of Energy, Water Resources and Irrigation 52. Coordinate with relevant provincial and local levels for route alignment during the construction of hydropower projects and transmission lines. Immediate Ministry of Energy, Water Resources and Irrigation; Nepal Electricity Authority; National Transmission Grid Company Federal, Provincial and Local Levels 53. Arrange for quick acquisition of public land required for the construction and expansion of substations and distribution lines related to the distribution system. Immediate Ministry of Home Affairs, Relevant Local Levels Ministry of Energy, Water Resources and Irrigation; Nepal Electricity Authority 54. Strengthen the necessary transmission and distribution infrastructures to manage electricity demand in Kathmandu Valley and 7 major areas listed in Annex-3. Immediate Nepal Electricity Authority Ministry of Energy, Water Resources and Irrigation 55. Implement and finalize investment modalities for cross-border transmission lines as per Nepal-India Transmission Master Plan. 1 year Nepal Electricity Authority Ministry of Energy, Water Resources and Irrigation 56. Expedite the construction of the New Butwal-Gorakhpur 400 kV cross-border transmission line and complete it within the stipulated time. 1 year Nepal Electricity Authority Ministry of Energy, Water Resources and Irrigation 57. Advance construction and expansion work for transmission substations with high priority, with a time-bound program to reach a capacity of at least 40,000 MVA by 2035. Continuous Nepal Electricity Authority, National Transmission Grid Company Ministry of Finance; Ministry of Energy, Water Resources and Irrigation 58. Conduct feasibility studies for connecting wind energy to the grid. Continuous Alternative Energy Promotion Centre, Private Sector Ministry of Energy, Water Resources and Irrigation; Nepal Electricity Authority 59. Make necessary arrangements for solar electricity purchase and sale. 6 months Nepal Electricity Authority Ministry of Energy, Water Resources and Irrigation; Electricity Regulatory Commission 60. Determine electricity purchase rates for grid-connected Storage Solar PV Systems promoted by the private sector. 6 months Electricity Regulatory Commission Ministry of Energy, Water Resources and Irrigation; Nepal Electricity Authority 61. Study projects related to the production of Green Hydrogen and its derivatives like Ammonia/Fertilizer. 2 years Nepal Electricity Authority, Investment Board Nepal, Electricity Generation Company Ltd. and Private Sector Ministry of Energy, Water Resources and Irrigation 62. Construct sufficient transmission infrastructure to evacuate electricity from hydropower projects and promote cross-border electricity trade. Continuous Nepal Electricity Authority, National Transmission Grid Company Limited, Private Sector Ministry of Energy, Water Resources and Irrigation 63. Advance the construction and expansion of high-voltage transmission lines and substations as per the master plan with a time-bound program and high priority. Continuous Nepal Electricity Authority, National Transmission Grid Company Ministry of Energy, Water Resources and Irrigation 64. Arrange for fair distribution of benefits from transmission projects to landowners and local communities directly affected by the Right-of-Way of transmission lines. 6 months Ministry of Energy, Water Resources and Irrigation Nepal Electricity Authority 65. Construct and expand underground distribution systems and Indoor/GIS Substations in major cities of the country by adopting modern technology. Continuous Nepal Electricity Authority Ministry of Energy, Water Resources and Irrigation 66. Connect electrical infrastructures not connected to the national grid. Continuous Alternative Energy Promotion Centre Nepal Electricity Authority 67. Generate energy from waste through local level and private sector collaboration. Continuous Nepal Electricity Authority/Alternative Energy Promotion Centre Ministry of Energy, Water Resources and Irrigation; Local Levels 68. Conduct detailed studies of multi-purpose hydropower projects of national priority and initiate development work with the participation of neighboring countries. Continuous Ministry of Energy, Water Resources and Irrigation Department of Electricity Development/Pancheshwar Development Authority Programs to be continued even after 2035. 69. Arrange for high-voltage consumers to directly purchase electricity from producers or licensed trading companies after paying the prescribed transmission fee. 1 year Electricity Regulatory Commission, Nepal Electricity Authority Ministry of Energy, Water Resources and Irrigation 70. Remove Probability of Exceedance (PoE) Q40 and implement Optimum PoE for maximizing hydropower project capacity development, and arrange for Take or Pay principle-based power purchase agreements. 1 month Nepal Electricity Authority Ministry of Energy, Water Resources and Irrigation; Electricity Regulatory Commission 71. Considering the potential risks of climate change, remove time limits for modifying the contract energy of hydropower projects and eliminate Hydrological Penalty in power purchase agreements after 5 years of project operation. 3 months Nepal Electricity Authority Ministry of Energy, Water Resources and Irrigation 72. Arrange for trading Renewable Energy Certificates (REC) of hydropower projects through appropriate international bodies. 1 year Nepal Electricity Authority Ministry of Energy, Water Resources and Irrigation; Electricity Regulatory Commission 73. Expand electricity transmission infrastructure to suitable locations for chemical fertilizer plants, special economic zones, and industrial areas. Continuous Nepal Electricity Authority Ministry of Finance; Ministry of Industry, Commerce and Supplies; Investment Board Nepal 74. Promote new technologies and platforms such as green hydrogen and carbon trading. Continuous Ministry of Energy, Water Resources and Irrigation Ministry of Finance; Ministry of Industry, Commerce and Supplies; Nepal Rastra Bank; Nepal Electricity Authority; Private Sector 75. Gradually implement Seasonal Time-of-the-Day (TOD) tariff system for residential customers to increase electricity consumption. Continuous Electricity Regulatory Commission Nepal Electricity Authority 76. Implement Smart Grid concept nationwide to modernize transmission and distribution systems and make them consumer-friendly. Continuous Nepal Electricity Authority, National Transmission Grid Company Ministry of Energy, Water Resources and Irrigation 77. Construct necessary transmission infrastructures to export 10,000 MW of electricity within ten years as per the long-term power trade agreement with India. By 2030 Nepal Electricity Authority Ministry of Energy, Water Resources and Irrigation, Ministry of Foreign Affairs 78. Gradually construct necessary transmission infrastructures to export 5,000 MW of electricity to neighboring Bangladesh and China. By 2035 Nepal Electricity Authority Ministry of Energy, Water Resources and Irrigation; Ministry of Foreign Affairs 79. Sign power purchase agreements for hydropower projects up to 10 MW based on Take or Pay provisions (without exceeding the generation mix limit) with priority. Continuous Nepal Electricity Authority Ministry of Energy, Water Resources and Irrigation 80. Sign power purchase agreements for various hydropower projects based on Take or Pay principle, considering electricity transmission and market risks. Continuous Nepal Electricity Authority Ministry of Energy, Water Resources and Irrigation 81. Provide electricity to 100% of households in areas not connected to the national grid through off-grid solar, wind, and micro-hydropower technologies. 2 years Alternative Energy Promotion Centre Ministry of Energy, Water Resources and Irrigation *** Financial resources required for the implementation of these programs are mentioned in Section 9. Annexes Annex-1 (Related to Section 3.4) Details of operational transmission lines by fiscal year 2080/81 Fiscal Year Circuit KM Total Circuit KM 66 kV 132 kV 220 kV 400 kV 071/72 494 2130 2624 072/73 494 2417 2911 073/74 494 2596 75 78 3243 074/75 514 2717 75 78 3384 075/76 514 3143 255 78 3990 076/77 514 3240 437 78 4269 077/78 514 3541 741 78 4874 078/79 514 3817 897 102 5329 079/80 514 3979 1101 148 5742 080/81 514 4136 1213 644 6508 Source: Nepal Electricity Authority Details of transmission lines under construction and proposed S.N. Description Voltage NEA National Transmission Grid Company Ltd. Other Total 1 Transmission lines under construction (Circuit KM) 132 kV 1111 200 1311 220 kV 988 988 400 kV 754 380 630 1764 Total Circuit KM 2852 580 630 4062 2 Proposed transmission lines (Circuit KM) 132 kV 1141 1141 220 kV 1752 220 1972 400 kV 3858 670 4528 Total Circuit KM 6751 890 7641 Source: Nepal Electricity Authority Details of 400 kV capacity transmission lines S.N. Transmission Line Length (Circuit KM) Relevant Agency Operational Transmission Lines 1 Dhalkebar-Muzaffarpur Cross-Border Transmission Line (Double Circuit) 156 NEA Transmission Lines Under Construction 1 Hetauda-Dhalkebar-Inaruwa Transmission Line (Double Circuit) 576 NEA 2 Ratmata-Lapsifedi-New Damouli-New Butwal Transmission Line (Double Circuit) 630 MCA Nepal 3 Projects proposed by National Transmission Grid Company 380 NTGC Ltd. Proposed Transmission Lines 1 Kerung-Chilime Hub (220 kV) 140 2 Bheri Corridor 50 3 Arun-Inaruwa-Anaramani 460 4 Arun-Dudhkoshi Tingla 230 5 Dudhkoshi-Dhalkebar 170 6 New Butwal-Gorakhpur 40 7 Nijgadh-Harniya 140 8 Harniya-Bodebarsain 708 9 Nijgadh-Hetaunda 150 NEA 10 New Butwal-Lamahi 300 11 Lamahi-New Kohalpur 180 12 New Kohalpur-Dododhara 190 13 Dododhara(New Lamki)-New Attariya (Daiji) 180 14 Tingla Hub-Likhu Hub-New Khimti 110 15 New Khimti-Tamakoshi 3-Sunkoshi Hub-Dhalkebar 220 16 Budhigandaki Corridor (Philim-Gumda-Ratamate) 190 17 Damauli-Kusma-Burtibang-Bafikot 400 18 RPGCL Proposed Lines 670 NTGC Ltd. Source: Nepal Electricity Authority Annex-2 (Related to Section 3.5) Total capacity of operational substations by fiscal year 2079/80 Fiscal Year Total Capacity (MVA) 071/72 2132 072/73 2223 073/74 2618 074/75 3198 075/76 3935 076/77 4300 077/78 6434 078/79 7149 079/80 8867 080/81 13,050 Source: Nepal Electricity Authority Total capacity of substations under construction and proposed S.N. Description NEA National Transmission Grid Company Ltd. Total 1 Substation capacity under construction (MVA) 10470 2500 12970 2 Proposed substation capacity (MVA) 15565 4500 20065 Source: Nepal Electricity Authority Proposed distribution lines and substations S.N. Description 2079/80 2080/81 2081/82 2082/83 2083/84 2084/85 2085/86 2086/87 2087/88 2088/89 2089/90 2090/91 2091/92 1 33/11 kV Substation, Nos 187 196 204 212 220 228 236 244 252 260 268 276 284 2 33/11 kV Substation, Capacity, MVA 2,203.90 2,311.90 2,407.90 2,503.90 2,599.90 2,695.90 2,791.90 2,887.90 2,983.90 3,079.90 3,175.90 3,271.90 3,367.90 Line Length, Km 3 33 kV line length 7,236.72 7,400.00 7,550.00 7,650.00 7,750.00 76,800.0 7,750.00 7,900.00 8,050.00 8,200.00 8,350.00 8500 8650 4 11 kV line length 47,732 52,000 55,000 56,980 58,960 60,940 61,920 62,900 63,880 64,860 65,840 66,820 67,800 5 0.4/0.23 kV line length 145,270 150,000 155,000 157,110 159,220 161,330 163,440 165,550 167,660 169,770 171,880 173,990 176,100 6 Distribution Transformer, Nos 42,185 45,185 49,185 53,185 57,185 61,185 65,185 69,185 73,185 77,185 81,185 85,185 89,185 7 Distribution Transformer, Capacity, MVA 4,036.50 4,744.43 5,410.35 5,850.35 6,290.35 6,730.35 7,170.35 7,610.35 8,050.35 8,490.35 8,930.35 9,370.35 9,810.35 Source: Nepal Electricity Authority Annex-3 (Related to S.N. 54 of Section 12) List of Kathmandu Valley and 7 Major Areas Kathmandu Valley (Kathmandu, Lalitpur and Bhaktapur districts) and Banepa town in Kavrepalanchok district. Pokhara Valley (Kaski district) Biratnagar, Itahari, Dharan, Biratchok and nearby towns in Morang, Sunsari and Jhapa districts. Janakpur and Bardibas (Dhanusha and Mahottari districts) Hetauda, Simara, Parwanipur and Birgunj (Makwanpur, Bara and Parsa districts) Butwal, Bhairahawa and Sunwal (Rupandehi and Nawalparasi districts) Nepalgunj and Kohalpur (Banke district)