Nepal turns on the electric switch

Nepal has had an impressive growth in hydropower development over the past decade from 734MW in 2014 to a combined capacity of 2,625MW from solar and hydropower stations, with 95% of households connected to the grid.

Investment to the tune of $5 billion, predominantly in domestic NPR, is estimated to have gone into new generation projects in this time to complete construction and invest in some 8,000MW of new power plants that are at various stages of design and construction.

It is certainly reassuring to a population still suffering PTSD from years of brutal load-shedding to realise that Nepal is headed for long term power surplus, with prospects in 2024 for the first time to export more power than import from India, if the monsoon cooperates.

One important question in a lot of people’s minds, however, is how Nepal’s generation of clean energy compares with the fossil fuel Nepal continues to import at an annual cost of almost $3 billion, and growing.

Are we anywhere close to generating the hydropower and solar energy needed to replace the petroleum fuel that Nepal imports?

At first glance it looks like the gap is discouragingly large. NEA sold just over 10 billion kWh or 10 TWh of electricity in 2023. In the same year, all the petroleum-based fuels the Nepal Oil Corporation (NOC) imported had a total energy content of 40TWh.

It would seem that NEA and Independent Power Producers (IPPs) would need to complete construction of the full pipeline of 8,000MW on top of what they are already generating to match even the petroleum fuel we use today.

Fortunately, electricity can be used more efficiently than fossil fuels. An LPG stove has a thermal efficiency of around 50%, reflecting the percentage of heat from burning the mix of propane and butane that is transferred to the pot. The rest goes into heating the burner, the counter-top, and the rest of the kitchen.

An induction cooker on the other hand is able to transfer around 90% of the energy directly to the pot since the cooking surface does not even get hot itself. So, cooking with electricity can be accomplished with 45% less energy compared to LPG with the use of an efficient appliance.

The end-use efficiency advantage is even more impressive when it comes to transportation. A petrol burning internal combustion engine converts only 20% of the energy the fuel produces into motion. The remaining 80% of the energy content of the petrol is lost as heat in the engine, requiring a radiator to keep the engine from overheating.

An electric vehicle on the other hand uses high efficiency motors that have conversion efficiencies in the range of 80-85%. Even with the 20% ‘round trip’ losses in charging and discharging the battery, an EV uses less than a third of the energy to drive a kilometre than an equivalent petroleum fuel vehicle does.

Since close to 95% of the petroleum fuel imported into Nepal is used to meet either road transportation or cooking needs, it is very encouraging that appliances already exist in the market for Nepal to transition away from petroleum fuel.

Similar efficiencies exist for switching away from diesel irrigation to electric pumps and for a range of industrial processes to switch from using different fossil fuels to electricity.

For the consumer to switch over to electric cooking and electricity-fueled transportation, the relative prices of each energy type are important, along with the improved efficiency.

Here too the news is promising: NEA’s applicable domestic electricity tariff for users wanting to cook with electricity for cooking or charging EVs at home is a maximum of Rs11 per kWh. This compares with Rs18.5 per kWh of petrol and Rs9.83 per kWh of LPG.

Once the thermal efficiency is taken into account, however, the effective price of petrol and LPG go up to Rs55.50 and Rs17.87 respectively for driving the same distance or cooking the same volume of food as one kWh of electricity.

Two final barriers must be removed before consumers will be able to make the switch to efficient electric vehicles and cooking appliances. First: NEA must invest in strengthening transmission and distribution networks. It is not enough for there to be sufficient hydropower and solar energy generated if the power lines and transformers are not sufficiently sized to distribute the additional electricity needed for switching to electricity.

Second: end-users must be able to afford EVs and cooking appliances. The government and banks have an important role to play in making this transition happen. The government needs to appreciate the tradeoff: provide tax incentives for people to purchase EVs and high efficiency electric appliances that can replace petroleum. Banks need to provide financing for users to be able to purchase EVs and appliances and pay for them from the savings in fuel.

The good news is Nepal is very close to generating enough electricity to replace petroleum imports. Making up for 40TWh of petroleum fuel will likely require less than 20TWh of electricity. Extrapolating from the rate of growth of hydropower and solar generation over the past decade, Nepal could have sufficient clean energy projects online to be generating 30TWh as early as 2028.  

Bikash Pandey is Director of Clean Energy and Circular Economy at Winrock International. People Power is his new regular column in Nepali Times on global energy issues relevant to Nepal.