A sizable number of households in urban centers -- including Kathmandu -- have turned to electricity for cooking food after the short-supply of LPG started due to the Indian blockade. Use of induction stoves and rice cookers has increased the demand for electricity during cooking-hours has soared, Bhuwan Kumar Chhetri, chief of Load Dispatch Center at Nepal Electricity Authority (NEA), said. Chhetri projects daily energy demand to spike above at least 20 million units from the current 1.92 million units.
NEA should now revise its energy demand forecasts in line with the increased demand due to the use of induction stoves and other electrical cooking equipment. Those who have invested in the appliances are likely to keep using them in the longer term, energy expert Amrit Man Nakarmi says. "It is a good sign in the energy consumption scenario as people have voluntarily shifted to safer, efficient and cost-effective cooking and NEA has now focused on energy generation."
Use for cooking accounts for very little in NEA's energy demand forecasts and its low demand forecast is said to be a conservative and a rather suppressed one.
Shift in consumer behavior from LPG to electricity means something more for hydropower plant developers, several of their proposals have been turned down by NEA saying the future market demand has already been exhausted.
According to NEA's demand forecast, peak load demand of electricity will be only 2,000 MW by 2019/20 and NEA says it has already signed power purchase agreements (PPAs) with a combined installed-capacity of 2,000 MW that will come into generation by 2016/17.
In the last two years, NEA has agreed to purchase electricity from 28 hydropower plants with a combined capacity of 510 MW but on the condition their electricity will be consumed in the market only if there will be demand. The state-run power utility is the sole buyer of electricity from power plant developers in the country.
Shailendra Guragain, vice-president of Independent Power Producers' Association Nepal (IPPAN), expects NEA to revise its policy for purchasing electricity with the new rise in demand.
"Massive use of induction stoves alone have created demand of an additional 600 MW during peak hours. Electric cars and other electrical appliances will demand more electricity than the current suppressed demand in rolling blackouts," adds Guragain, who has been waiting for a take-and-pay Power Purchase Agreement for Super Nyadi project of 40 MW instead of a conditional PPA.
A thousand households using 1,000-watt cooking appliances for an hour increases demand for electricity by 1 MW. Guragain rejects NEA's proposal of signing conditional PPAs and is waiting for NEA to change its policy. Project developers with a combined installed capacity of about 1,000 MW are also waiting for PPAs.
The country's electricity utility has its own argument, and fears that electricity from plants designed to maximum utilization of flood-water from June to October will go to waste after 2016/17.
However, a yawning gap in energy supply and demand will still prevail during wet months as rivers produce up to less than half of installed capacity.
"It is a compulsion for NEA to offer only conditional PPAs as its capacity to buy has already been exhausted," Anil Rajbhandari, chief of Power Trade Department at NEA, says. "Expectations are to sell wet season surplus energy to India but it's uncertain until we have entered into a commercial agreement," added Rajbhandari, who however is not sure the current rise in demand from cooking will remain long term.
"Bank and financial institutions have turned down proposals for 'project finance' for projects having conditional PPAs," Guragain says. However, developers have no option but to enter into such agreements as their project licenses will expire.
Hydropower projects demand huge investment and 'project finance' covers a minimum 70 percent of the project cost.
Two weeks ago, Prime Minister K P Sharma Oli announced he would take steps to expedite signing of power purchase agreements with hydropower developers, but his statement has not come into implementation yet.
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