Nepal Electricity Authority (NEA) has already signed Power Purchase Agreement (PPA) with RoR projects having combined capacity of 2,600 MW. This means there is space for projects with combined capacity of 400 MW. But projects with combined capacity of more than 1,000 MW are waiting to sign PPA with NEA. Similarly, projects with capacity of more than 10,000 MW are under different phases of study.
RoR projects are designed on the basis of the flow of river. These projects generates only around one-third of the installed capacity during dry season when demand hits peak.
The energy mix outlined in the master plan, which was unveiled last week, gives 20 to 30 percent of the pie to RoR, 40 to 50 percent to reservoir projects, 15 to 20 percent to peaking RoR projects and 10 to 15 percent to renewable energy sources like of wind and solar for balanced energy development.
But this has become another constraint for hydropower projects in pipeline as most of them are RoR projects, said Khadga Bahadur Bisht, president of Independent Power Producers' Association. Bisht said that they will soon raise the issue before officials of the Ministry of Energy.
This will give a valid ground for NEA not to sign Power Purchase Agreements (PPA) with RoR projects. NEA, which is the lone single energy buyer in the country, has inserted 'conditional purchase' clause in PPA of 24 projects with combined capacity of about 300 MW since September 2013, making them impossible to achieve financial closure.
Prior to that, there used to be a 'take or pay' clause in PPA that made projects bankable.
Good thing, according to power developers, is that the master plan promises to lift all those conditional PPAs. Sanjay Sharma, spokesperson of Energy Ministry, said that it won't be practical not to buy energy from projects which are under study.
Nepali independent developers have, so far, focused on RoR projects only as they are cheaper. They don't have any immediate plan to build peaking RoR projects which can generate electricity in peak hour by storing water during off-peak hours. Also the government doesn't offer separate rate for such projects
However, the master plan states that separate seasonal PPAs for peaking and reservoir projects will be introduced within three months.
PPA SIGNED WITH LOWER MODI-2
NEA has signed PPA with United Modi Hydropower to purchase power generated by Lower Modi-2 (10.5 MW) hydropower project. The project will be developed as a cascade project of Lower Modi -1.
Sudhi Prasad Timalsina, managing director of United Modi Hydropower and Acting Deputy Managing Director of NEA Rajiv Sharma signed the agreement.
The PPA rate has been set at Rs 8.40 per unit for dry month and Rs 4.80 during wet months.
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