Nepal's Power Export Ambitions Stalled by PPA Backlog

Nepal's energy sector is grappling with a significant bottleneck, as private power producers are caught in a regulatory maze and a massive gridlock. The Nepal Electricity Authority (NEA) is facing a backlog of unsigned Power Purchase Agreements (PPAs) totaling nearly 16,000 megawatts, leaving project developers in a state of uncertainty.

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The Nepal Electricity Authority (NEA) currently faces a backlog of unsigned Power Purchase Agreements (PPAs) totalling nearly 16,000 megawatts, leaving project developers in uncertainty.

The government's ambitious target to generate 15,000 MW has been significantly impacted by the rapid exhaustion of quotas for Run-of-River projects. Since 2018/19, standard PPAs for these projects have been suspended, creating a prolonged period of inaction. While some adjustments were made by transferring unused reservoir quota to RoR projects, the core issue of stalled agreements persists.

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While the government previously introduced a policy framework to generate 15,000 MW, rapid exhaustion of designated quotas led to a prolonged suspension of standard PPAs since 2018/19.

Developers are now calling for greater policy consistency and open market access to facilitate private sector power trading. They argue that addressing these systemic bottlenecks is crucial for transforming Nepal's energy sector from one constrained by quotas to a fully realized necessity. The urgency to resolve these issues is paramount for the nation's energy self-reliance and development goals.

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As developers call for policy consistency and open market access to allow private sector power trading, the urgency to address these systemic bottlenecks has never been higher.