NEA directs hydropower projects to cut output amid monsoon surplus and transmission constraints

Nepal's hydropower sector is facing a seasonal surplus, prompting the Nepal Electricity Authority (NEA) to direct hydropower projects to cut their output. With the onset of the monsoon, increased water levels have boosted generation to levels exceeding domestic demand and current transmission capacities.

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Projects in contingency are always the first to be restricted.

The Load Dispatch Centre under the NEA has been issuing regular curtailment orders, particularly to projects classified as 'contingency.' These projects, while technically capable of generating power, cannot be fully integrated into the grid due to limitations in transmission infrastructure, substations, or line capacity. Hydropower developers report receiving varied instructions, sometimes operating for only a few hours a day.

This recurring scenario underscores a persistent structural challenge in Nepal's power system: the rapid expansion of generation capacity has outpaced the development of transmission infrastructure and the growth of domestic electricity consumption. During the monsoon, hydropower plants operate at peak capacity, creating an imbalance that the grid operator must manage alongside limited export capabilities.

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Nepal’s peak demand is around 2,200 MW. Even after exporting roughly 1,200 MW to India and Bangladesh, total demand reaches about 3,400 MW. But installed capacity has already reached around 4,300 MW.

Officials acknowledge the surplus but frame it as a manageable situation through load balancing and export scheduling, rather than outright wastage. Independent Power Producers' Association, Nepal (IPPAN) president Mohan Dangi noted that installed capacity has reached around 4,300 MW, while peak demand is about 2,200 MW, even with exports of roughly 1,200 MW. This leaves a potential surplus of nearly 900 MW during high-flow periods, primarily affecting contingency projects first.

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As soon as generation exceeds consumption, contingency projects are the first to have their output cut.