The Nepal Electricity Authority has put forward a proposal to negotiate power purchase agreements (PPA) for solar power plants at a rate of up to 5.85 rupees per unit.

Among the eight companies that submitted proposals, Tarai Energy Pvt Ltd and Tarai Solar Pvt Ltd offered the lowest price at Rs 5.85 per unit. This proposed rate is even lower than the price the authority pays for hydropower projects during the winter season.

Currently, the authority purchases electricity at Rs 4.80 per unit during the rainy season and Rs 8.40 per unit during the winter. On average, the authority pays around 6.6 rupees per unit for hydropower projects in both seasons.

In response to the authority’s call for proposals for 90 megawatts of solar energy, various companies have submitted competitive offers. For example, Pashupati Renewable Energy proposed two rates of Rs 5.93 per unit in competitive bidding process, while Green Infrastructure Pvt Ltd offered two rates of Rs 5.87, Arghavavati Ventures at Rs 5.91, and Fortune Investments at Rs 5.86.

Previously, the price of solar energy was set at 7.30 rupees per unit through competition. However, under the direction of the then Energy Minister Pampha Bhusal, the Nepal Electricity Authority’s board meeting decided to conduct solar PPA through a competitive bidding process to make solar energy more accessible and competitive, following international trends.

To achieve this, the authority opened tenders for the first time, aiming to develop grid-connected alternative electric energy. As per the procedure approved by the Ministry of Energy, Water Resources, and Irrigation in 2017, the purchase rate of alternative solar and wind energy was fixed at 7 rupees 30 paise per unit. The rate would be maintained for projects completing the power purchase agreement within three years.

Due to technological advancements in the international market, the price of electricity produced by solar projects has been consistently decreasing.

The Nepal Electricity Authority had previously entered into PPAs for 110 MW with 21 solar projects, out of which 61.94 megawatts are from the private sector, and 25.1 megawatts are from the authority, all connected to the national transmission line for solar energy.