Five companies picked to set up solar plants

The Nepal Electricity Authority recently selected five private developers to construct solar power plants at five locations and supply the electricity generated to its nearest substations.

FDSN-LAMA, Sharma and Surya, Hansraj Hulaschand and Company, Mainachuli-Roshan and a joint venture of Himalayan Infrastructure Development Company and Ram Construction will build solar power plants with a combined installed capacity of 24 MW.

FDSN-LAMA will supply 8 MW of solar energy to Sivpur Chandrauta substation, Sharma and Surya and Hansraj Hulaschand will supply 4 MM and 2 MW of solar electricity to substations in Pokhara and Prasi respectively. Mainachuli-Roshan and the Himalayan Infrastructure Development Company-Raman Construction joint venture will supply 5 MW to Bulu Chowk and Gandak substations each.

The state-owned power utility is planning to sign power purchase agreements (PPA) with the firms within four months.

The developers are required to complete the construction and installation of their plants and start supplying electricity within a year after signing the PPAs. They have to supply electricity for a period of 25 years.

The developers will receive Rs16.60 per unit until June 30, 2022 and Rs6.60 per unit thereafter. The high tariff until June 2022 is due to the viability gap funding of Rs10 per unit being provided by the Nepal Electricity Authority, according to Manoj Silwal, chief of its Project Management Directorate.

The power utility has signed an agreement with Manila-based multilateral lender Asian Development Bank (ADB) to provide viability gap funding to the developers of the solar plants. The ADB is providing an $18.5 million grant to the Nepal Electricity Authority to provide viability gap funding under the South Asia Sub-Regional Economic Cooperation Power System Expansion Project. “As the ADB grant will cover the viability gap funding till June 2022, the developers will get more more only till that date,” said Silwal.

This is not the first time the Nepal Electricity Authority is including solar power in its energy mix. It has signed PPAs with 12 solar projects previously with a combined installed capacity of 53.14 MW in a bid to diversify its power sources by increasing the share of solar power in its energy mix.