The Nepal Electricity Authority (NEA) has resumed signing Power Purchase Agreements (PPA), which had been stalled for months.

The authority has started PPAs specifically for solar projects that had been put on hold without any clear reason for months. As soon as Managing Director Manoj Silwal assumed office, he began making swift decisions on the pending works. He has already signed PPAs for 24 solar projects with a total capacity of 355 megawatts.

The process of sending the agreements to the Electricity Regulatory Commission for final approval has also been completed.

The Authority had already issued letters of intent for 960 megawatts last Kartik (around October/November). However, companies had been rushing for PPAs. Except for a few large ones that pleased the then government leadership, most were unable to secure PPAs. After becoming the Managing Director, Silwal approved the PPAs without any vested interest, strictly following due process and procedures.

The private sector had been complaining about the lack of PPAs.

According to the Authority, projects with a capacity of less than 10 megawatts must begin generation within 18 months of signing the Power Purchase Agreement (PPA). For projects with a capacity of more than 10 megawatts, the provision requires them to start generation within 24 months of the PPA, as stipulated in the contract.

The Authority is set to purchase electricity from solar projects located around the 220 kV, 132 kV, and 33 kV transmission lines. The 963rd meeting, chaired by then Energy Minister and Chairperson of the NEA Board of Directors, Shakti Bahadur Basnet, had decided to proceed with PPAs for the solar projects. The Authority has signed the PPAs for a period of 25 years.

For these projects, the companies will purchase land. According to a study conducted by the Ministry of Energy, the average cost of solar power was 800 million rupees per megawatt. However, with technology becoming cheaper in recent times, the average cost has dropped to around 500 million rupees per megawatt. Due to continuous technological advancements, the cost of solar power is steadily declining. A few years ago, the cost of solar in Nepal was as high as 2 billion rupees per megawatt. This figure excludes the cost of land.

For energy security, the Authority has also focused on solar power, which will help make electricity management somewhat easier for the Authority.

Source: Online Khabar