NEA offers power banking to IndiaThe Nepal Electricity Authority (NEA) submitted a concept note for power banking between Nepal and India to the Indian Embassy Wednesday. Power banking refers to exchange electricity for electricity instead of cash.
The Nepal Electricity Authority (NEA) submitted a concept note for power banking between Nepal and India to the Indian Embassy Wednesday. Power banking refers to exchange electricity for electricity instead of cash.
Under this mechanism, one country exports electricity to the other when it has a surplus, and imports back the same amount of energy when it has a deficit.
The state-owned power utility submitted the note to the embassy as per its request. “The embassy will forward the note to the Indian power ministry so that it can be discussed during the energy secretary-level joint steering committee (JSC) meeting between the two countries slated to be held next week in New Delhi,” said the highly placed NEA source.
According to the concept note, seasonal complementarities of demand and supply of electricity that exist in Nepal and India will make energy banking a highly suitable model for power transaction to benefit both countries.
Run-of-the-river hydropower projects in Nepal generate a large amount of electricity during the monsoon when domestic demand is low, coinciding with a sharp rise in demand in the Indian states of Uttar Pradesh, Haryana and Punjab due to increased use by the farm sector, the NEA said.
“In Nepal, electricity demand is very high during the dry season, but hydropower generation is reduced to almost one-third of the installed capacity due to low discharge in the snow-fed rivers,” the concept note said. “This makes power imports from India inevitable during such seasons. The same quantity of power can be exported to India during the wet season when generation is at its highest.”
If the southern neighbour agrees to the power swap arrangement, Nepal can export surplus electricity to India during the wet season and import back the same volume of power during the dry season when there is a shortage of energy.
Nepal is thinking of a barter arrangement as the price of electricity is lower in India, which is likely to make domestic power less competitive there. Against this scenario, power banking will be an ideal way to manage our surplus energy, according to the NEA.
The NEA is advocating for power banking between the two countries in order to secure a market for the surplus electricity that Nepal is likely to generate during the wet season after a year.
During the 11th power exchange committee meeting held last August, the NEA had proposed trading power between India and Nepal through the energy banking mechanism. At that time, the Indian side had urged NEA officials to take the proposal to the JSC meeting.