A World Bank (WB) study has revealed that Nepal will require 10,000 megawatts of electricity by 2040.
The three-year study titled ‘The Benefits of Expanding Cross-Border Electricity Cooperation and Trade in South Asia’ has revealed that the electricity demand for domestic consumption in Nepal after 25 years will touch 10,000 MW.
World Bank researchers Michael Toman and Govinda Timilsina carried out the study weighing countries’ capacity for generating electricity, inter-nation trade and production demand to meet the goal among the South Asian countries excluding the Maldives. In the report, the researchers have stated that Nepal can generate 52,000 MW of electricity.
The study states that the South Asian region is comprised of nations with rapidly growing energy demand, significant seasonal complementarities in their energy demands, and large but unevenly distributed primary energy electricity generation potential across countries and seasons. It points the fact that the region’s national electricity systems face several challenges and electricity supplies have not kept pace with demand and are frequently interrupted.
In this scenario, Nepal will have to spend Rs 800 billion to meet the domestic demand for electricity of 10,000 MW after 25 years, the research showed.
The World Bank has invested a total of around Rs 35 billion in Nepal on various energy projects and in hydropower. It has proposed an ambitious plan to spend Rs 100 billion in addition for electricity generation, development and reformation programmes.
The researcher duo have also shared that the study had indicated that regional trade of electricity did not grow as anticipated due to slow pace of regional cooperation, policy level and technical improvement, and lack of institutional systems.
The study also mentions that increased regional electricity integration and trade could generate, on average, cost savings to the order of about $9 billion per year relative to the status quo, which has very limited cross-border trade and even less investment coordination. The present value of the net cost savings from expanded electricity cooperation and trade over 25 years (2015-2040) is almost $100 billion, using a social discount rate of five per cent.
Furthermore, the study has underlined the need for Nepal to make institutional reforms at Nepal Electricity Authority. It also stresses on the need to form a separate body for transmission and electricity generation, and to adopt multi-buyer model from single buyer model and build trade linkages with Bangladesh among other countries.
The World Bank study also talks of the need to expand market-based power trade linkages with neighbouring India to further help develop the hydropower sector.