Nepal Energy Authority Gets Nod to Sell Electricity in India’s Energy Exchange Market

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India, for the first time, has opened the door for Nepal to sell its electricity in India’s energy exchange market after persistent lobbying from Kathmandu, as Nepal Electricity Authority (NEA) is now in a position to sell its surplus energy.

Nepal has already received approval from India to purchase electricity from IEX. In April, India opened its power exchange market to Nepal only for selling electricity to Nepal.

“Following the Indian approval for Nepal to export its electricity, power trade between the two countries has entered a new phase,” the ministry of Energy, Water Resources and Irrigation said.

“The NEA will now participate in the auction at IEX from 10-12 am every day in order to sell electricity,” the ministry said. As per the bilateral agreement, Nepal has appointed India’s NTPC Vidyut Vyapar Nigam Limited as its representative to participate in the bid.

In the first phase, 39 MW power, including 24 MW produced by NEA-owned Trishuli hydropower and 15 MW Devighat power house, has been permitted for trading in Indian Energy Exchange. Both projects were developed with India’s assistance.

According to Madhu Bhetuwal, spokesperson for the Energy Ministry, the Indian authority has also been studying Nepal’s proposal to sell the electricity generated by two other power projects, including the 456 MW Upper Tamakoshi Hydropower Project.

Kulman Ghising, managing director of the authority, told the Post early last month that only 900 MW-1100 MW was consumed during the night at low demand hours. In the daytime, 1200 MW to 1300 MW was consumed when the demand was the least.

Bhetuwal said Nepal was also exploring the options of selling electricity to India under a long-term power purchase agreement in the rainy season besides the current option of selling in India’s power exchange market.

“Energy banking mechanisms can be an answer to address the issue of long-term power trading,” he said. In December 2018, two countries had agreed to set up an energy banking system that will prevent the spilling of electricity generated in the country when production surpasses demand.

Even though India has now opened the door for Nepal to trade its electricity in India’s exchange market, there are currently two separate electricity trading arrangements with India at small scales.

One is the power exchange mechanism with Bihar and Uttar Pradesh states of India. Under this mechanism, the two countries can buy power from each other as and when needed. The price has been fixed at INR 6.18 per unit for trading (buying or selling) power through the 132kV transmission line and INR 6.65 for trading through the 33 kV transmission line, The Kathmandu Post reported.

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