NEA invites bids to supply solar power

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    May 3, 2018-The Nepal Electricity Authority (NEA) has stepped up efforts to diversify its power sources by increasing the share of solar power in its energy mix. The state-owned power utility recently called global tenders to select independent developers to supply solar power to up to 25 substations at various locations in the country.

    As per the tender notice, hopeful solar power developers have to install solar plants with an installed capacity of 1 to 5 MW at 25 different locations in the country and supply electricity to the NEA for a period of 25 years. They are required to complete the construction and installation of their plants and start supplying electricity within one year after signing a power purchase agreement (PPA) with the NEA.

    The NEA will even provide viability gap funding (VGF) to the selected developers as an incentive. The power utility has signed an agreement with Manila-based multilateral lender Asian Development Bank (ADB) to provide the money. The ADB will provide the VGF under the South Asia Sub-Regional Economic Cooperation Power System Expansion Project.

    “The ADB will support us with an $18.5 million grant to provide VGF to the developers,” said Manoj Silwal, chief of the Project Management Directorate at the NEA. “We will pay the developer Rs6.60 per unit of electricity while the rest of the cost will be covered by the ADB’s fund.”

    For example, if the NEA signs a PPA with a developer agreeing to buy electricity at Rs7 per unit, it will pay only Rs6.60. The remaining Rs0.40 will be paid from the VGF. “Since we have a limited fund of $18.5 million, the total installed capacity of the solar plants will be determined by the price at which the PPA deal is signed,” said Silwal.

    The NEA has instructed bidders to submit their proposals in two envelopes, technical and financial, by June 21, 2018.

    The financial proposals of only technically responsive and qualified bidders will be opened after their technical proposals have been evaluated, according to the NEA.

    This is not the first time that the NEA announced plans to purchase electricity generated from solar plants to diversify its energy portfolio. In June 2016, the power utility published a request for proposals from interested parties to install solar plants and supply electricity at a base price of Rs9.61 per unit.

    However, the procurement process had to be abandoned after the Energy Ministry issued a guideline on grid-connected solar energy development which stated that the power purchase rate for solar electricity should not exceed Rs7 per unit.

    Source: The Kathmandu Post