Nepal Electricity Authority will soon choose a solar manufacturing company to supply solar power in its grid as it is opening the financial bid of the six companies which passed technical qualification criteria.

Financial proposals of the Pashupati Renewables, Green Infrastructure Pvt. Ltd, Arga Bhagabati Ventures Pvt Ltd, Tarai Solar Pvt Ltd, Tarai Energy Pvt. Ltd and Fortune Investment Pvt Ltd will now be opened on June 30, the NEA said in a notice posted on its website.

A total of 10 companies had submitted technical and financial proposals to participate in the bid.

“The company quoting the lowest prices will be chosen among them after the financial proposal is opened,” said Suresh Bhattarai, spokesperson for the NEA. “Then a letter of intent will be issued within a week after the bidder is selected.”

It is the first time that the state-owned power utility is selecting the solar company through competitive bidding. It is also the first time that prices of energy will be determined based on competition among the companies.

Earlier, NEA decided to buy the solar by capping maximum price at Rs5.94 per unit, making it clear that the solar companies participating in the bid could compete in prices at less than the capped price.

In March 2022, the power utility body had decided to cap the maximum rate to be offered to the solar power generators at Rs5.94 per unit. Earlier, it had been signing power purchase agreements with solar power developers at a fixed rate of Rs7.30 per unit.

After the Patan High Court last month vacated its earlier interim order issued on March 5, halting the procurement process, the NEA moved ahead to open the technical and financial bids.

In a notice issued on November 28 last year, the power utility had invited bids from solar manufacturers for setting up solar farms in 16 proposed locations across the country. NEA had estimated that up to 230MW solar power could be generated in those locations.

The initial deadline of February 26 for submitting bids had been extended till March 13. But the high court issued an interim order on March 5, barring the NEA from opening the bid documents submitted by various firms.

In response to a writ petition filed by the Solar Electric Manufacturers Association Nepal, the high court issued such order by taking into account the claims made by the association that maximum price of Rs5.94 per unit offered by the NEA would not be profitable for investors who had already made huge investments in the expectation of getting Rs7.30 per unit, the rate fixed by the government earlier.

With the court vacating its own interim order, the door opened for NEA to move ahead with the procurement process. The NEA said that the move to take solar power was aimed at increasing the share of solar power in the energy mix, which is currently insignificant.

Nepal has a long way to go to realise its potential in solar energy with the country so far producing just 44.52MW from solar power, according to the Ministry of Energy, Water Resources and Irrigation.

The country has the potential to generate around 2,100MW of solar electricity, according to the Nepal Energy Sector Synopsis Report-2022. Nepal plans to have a certain portion of energy to be generated from solar power.

The country also aims to generate a total of 15,000MW electricity by 2030. Of the total energy generation in the country, the government wants the contribution of mini and micro-hydropower, solar, wind, and bio-energy projects at 5-10 percent as an energy mix strategy.