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Nepal is currently experiencing an energy crisis of unprecedented severity. There is the deficiency in capacity as well as in energy supply compared to their respective demands. Government declared National Electricity Crisis in 2008 and announced 38 point measures to address the problems. Furthermore, government formed two High Level Taskforces consecutively to chart out plans for generating 10,000 MW hydropower in 10 years; and 25,000 MW hydropower in 20 years. However, the pace towards developing hydropower has not yet accelerated. As a result of this, people of Nepal are facing acute load shedding problem and this is ever increasing. The demand for grid electricity is currently around 1200 MW but the production in the rainy season is 750 MW only. In addition, the gap between supply and demand of grid electricity is increasing every year, as the demand is growing with more than 7% annually while hardly any new power plants are being commissioned (70 to 80 MW of additional installed capacity should be realized every year to meet the growing demand).
The Nepal Electricity Authority (NEA) is facing several challenges in expanding, maintaining and running its operation. The current governance system of NEA is neither able to run its business in commercial line nor is getting adequate financial support from the government to expand its services. High electricity leakages (more than 25 percent), long load shedding, corruption allegations, and revenue deficits and deteriorating image are some of the major challenges the NEA is facing currently. Until and unless NEA is able to overcome these challenges, it will not be able to play a lead role in electricity development. The private sector of Nepal is just able to take up small projects due to the problem of managing equity capital for investment. In addition, the limited road connectivity and the transmission line bottleneck have become serious barriers to the development of hydropower for private sector. Based on the current scenario, the growth of hydropower will remain slow in the coming 4-5 years to come if it goes on in the same manner. And, therefore the renewable energy sector has an important role to play in rural electrification and possibly towards mitigating the negative impact of load shedding in urban areas.
The Nepal Electricity Authority (NEA) is facing several challenges in expanding, maintaining and running its operation. The current governance system of NEA is neither able to run its business in commercial line nor is getting adequate financial support from the government to expand its services. High electricity leakages (more than 25 percent), long load shedding, corruption allegations, and revenue deficits and deteriorating image are some of the major challenges the NEA is facing currently. Until and unless NEA is able to overcome these challenges, it will not be able to play a lead role in electricity development. The private sector of Nepal is just able to take up small projects due to the problem of managing equity capital for investment. In addition, the limited road connectivity and the transmission line bottleneck have become serious barriers to the development of hydropower for private sector. Based on the current scenario, the growth of hydropower will remain slow in the coming 4-5 years to come if it goes on in the same manner. And, therefore the renewable energy sector has an important role to play in rural electrification and possibly towards mitigating the negative impact of load shedding in urban areas.
