India meets 36 percent of its total coal demand through imports. Imported coal will continue to dominate the Indian power market with 15 MW of coal capacity being added annually between 2022 and 2031, according to the report.
The market analysis conducted ICF International has also projected that Nepal can tap northern power market of India like Uttar Pradesh and Bihar which are far from coal-fired plants established along the coastal areas. Power generated by these plants will be expensive for northern states like Uttar Pradesh and Bihar. Also it is unfeasible given the weaker inter-state connectivity, Bishal Thapa, an advisor to IBN on power market, said.
It is also said that India has a national low carbon growth strategy to cut coal plants as imported energy from Nepal can add share of renewable energy in energy mix. Currently, renewable energy comprises only 10 percent of total energy mix and the share of renewable will increase to 30 percent by 2030, according to the report.
The analysis report states that Nepal can sell energy at the rate of NRs 5.15 (IRs 3.32) per unit after 2022 as northern region will have the highest annual all-hour firm power prices.
Three mega hydropower projects with installed capacity of 2400 MW are being developed in Nepal by Indian investors, targeting the Indian market.
ICF also has assumptions that price of imported coal India will climb to around US$ 65 per ton and this implies wholesale power price at about NRs 9.9 per unit of the energy between 2022 and 2031.
Thapa stressed for interconnectivity between Nepal and India for starting power trading.
Experts say Nepal can sell surplus energy of the wet season to India and import energy for dry months from the southern neighbor.