Energy banking accord may be signed in OctThe Nepal Electricity Authority (NEA) is planning to sign an energy banking deal with India in October in a bid to lessen the effects of fluctuations in power generation during different seasons.
The Nepal Electricity Authority (NEA) is planning to sign an energy banking deal with India in October in a bid to lessen the effects of fluctuations in power generation during different seasons.
Energy banking involves exchanging 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.
Managing director of the state-owned power utility Kulman Ghising told the Post that India was positive about power banking, and that an agreement was expected to be reached between the two countries during the upcoming energy secretary-level joint steering committee (JSC) meeting scheduled to be held in October.
Currently, the NEA is in talks with India’s Central Electricity Authority (CEA) to establish a mechanism for energy banking, as directed by the last JSC meeting in April. The two organisations will finalise the modality and present it to the upcoming JSC meeting in October. The CEA will also send details of the different modalities used by Indian state governments for energy banking, Ghising said.
An energy banking mechanism is appropriate for a country like Nepal where power generation reaches full capacity during the monsoon and drops sharply during the dry season, officials said.
Run-of-the-river hydropower projects in Nepal churn out a large amount of electricity during the rainy season when the water level in the rivers rises. Electricity output plunges more than 50 percent during the dry season when the rivers shrink.
If India agrees to the power swap arrangement, Nepal can export surplus electricity during the wet season and import back the same volume of power during the dry season when there is a shortage of energy.
The pattern of electricity generation in Nepal complements the demand and supply of electricity in India. When there is surplus electricity in Nepal during the monsoon, demand soars in the Indian states of Uttar Pradesh, Haryana and Punjab due to increased use by the farm sector.
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 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 proposed trading power between India and Nepal through the energy banking mechanism. The Indian delegation had urged NEA officials to take the proposal to the JSC meeting.