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NEPAL & BHUTAN MARKETS

NEPAL ENERGY MARKET

Nepal has a huge hydropower potential. Current estimates are that Nepal has approximately 40,000 MW of economically feasible hydropower potential. However, the present situation is that Nepal has developed only approximately 600 MW of hydropower. Therefore, bulk of the economically feasible generation has not been realized yet. Besides, the multipurpose, secondary and tertiary benefits have not been realized from the development of its rivers.Although bestowed with tremendous hydropower resources, only about 40% of Nepal's population has access to electricity. Most of the power plants in Nepal are run-of-river type with energy available in excess of the in-country demand during the monsoon season and deficit during the dry season. Nepal's electricity generation is dominated by hydropower, though in the entire scenario of energy use of the country, the electricity is a tiny fraction, only 1% energy need is fulfilled by electricity. The bulk of the energy need is dominated by fuel wood (68%), agricultural waste (15%), animal dung (8%) and imported fossil fuel (8%).The other fact is that only about 40% of Nepal's population has access to electricity.

BHUTAN ENERGY MARKETS

In 2002, Bhutan's energy sector went through a major restructuring to separate commercial management and ownership from the government. Since these reforms, the policy-making body on energy has been the Ministry of Economic Affairs, which includes three departments relevant to the sector: (i) the Department of Hydropower and Power Systems (DHPS), (ii) the Department of Renewable Energy, and (iii) the Department of Hydromet Services (established 1 December 2011). The state-owned Bhutan Power Corporation (BPC) has had the main responsibility for transmitting and distributing of electricity, while the Druk Green Power Corporation (DGPC), also state-owned, looks after power generation.

Power generation in Bhutan relies almost exclusively on hydropower. The total installed capacity of existing hydropower plants is 1,488 megawatts (MW). Since all of the existing plants are run-of-the-river types, the total generation drastically drops to about 300 MW during the winter dry season (December - March) due to low water levels. This falls short of meeting peak system demand during winter dry seasons.To deal with the seasonal power shortage, Bhutan has curtailed industrial loads during the winter months. Power has been imported from India, especially in the winter, but this will become increasingly difficult to arrange because India has its own power shortage during these months. Bhutan's winter power shortages will therefore worsen until 2016, when the 1,200 MW Punatsangchhu - I hydropower plant is expected to come on line. During the wet season, existing hydropower plants can generate enough electricity to meet the domestic and industry demands and also export power. The BPC's annual electricity sales (in gigawatt - hours) are expected to continue growing at more than 10% per year for the next several years, despite the winter power shortages.

After meeting its domestic consumption needs, Bhutan exports around 70% of the total power it generates each year to India. The power sector is the largest source of the government revenue and the premier contributor to the country's gross domestic product. Extensive investments will be needed in high-voltage power transmission to evacuate power from new power plants to India and to connect them to BPC's domestic transmission network. While development of these transmission lines will need to be coordinated with the development of individual plants, a holistic approach to the network's expansion will be crucial so that the investment benefits are maximized and any adverse safeguard impacts in the transmission corridors are minimized. As the number of hydropower plants increases, BPC will also need to improve its operational control to ensure system reliability.

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