Potential For Hydropower Exports Underscores Nepal-India Transmission Line

BMI View : We believe that India is in the midst of developing a high voltage direct current transmission line to Nepal as it intends to import electricity from Nepal over the long-term. Nepal is currently developing its hydropower potential, and is poised to have an electricity surplus over the medium- to long-term. We also note that Bhutan is likely to retain its role as a major exporter of power to India, but highlight that India's increasing reliance on electricity imports from Nepal and Bhutan will exacerbate the vulnerability of the country's electricity supply to weather patterns.

On December 5, India's External Affairs Minister Salman Khurshid announced that the country was working on plans to develop a high voltage direct current (HVDC) transmission line to Nepal. The line is intended to facilitate electricity imports from Nepal over the long-term, and there are also plans to develop lines to import electricity from Bhutan in order to improve energy security in India. These regional connections are part of India's plan to establish a multilateral South Asian Association for Regional Cooperation (SAARC) market for electricity, and a larger SAARC transmission grid.

We believe that India intends to import electricity from Nepal over the long-term as the country is poised to have an electricity surplus over the medium- to long-term. At present, Nepal faces serious energy shortages (leading to occasional load shedding) and imports about 150MW of electricity from India via a 40MW transmission line completed in 2012. However, this situation is set to change as Nepal develops its hydropower potential estimated at over 40,000MW (according to Hydroelectricity Investment and Development). Less than 1GW of this hydropower potential has been developed at present, but positive regulatory developments have greatly improved the outlook for the sector ( see 'New Project Template To Unlock Hydropower', June 22 2012). There are currently 1.7GW of hydropower projects in various stages of development and the completion of these projects, such as the 456MW Upper Tamakoshi hydropower project, could help to change this shortage into a surplus over the next decade.

Nepal: Currently An Importer
Nepal - Electricity Generation And Sales, TWh

BMI View : We believe that India is in the midst of developing a high voltage direct current transmission line to Nepal as it intends to import electricity from Nepal over the long-term. Nepal is currently developing its hydropower potential, and is poised to have an electricity surplus over the medium- to long-term. We also note that Bhutan is likely to retain its role as a major exporter of power to India, but highlight that India's increasing reliance on electricity imports from Nepal and Bhutan will exacerbate the vulnerability of the country's electricity supply to weather patterns.

On December 5, India's External Affairs Minister Salman Khurshid announced that the country was working on plans to develop a high voltage direct current (HVDC) transmission line to Nepal. The line is intended to facilitate electricity imports from Nepal over the long-term, and there are also plans to develop lines to import electricity from Bhutan in order to improve energy security in India. These regional connections are part of India's plan to establish a multilateral South Asian Association for Regional Cooperation (SAARC) market for electricity, and a larger SAARC transmission grid.

We believe that India intends to import electricity from Nepal over the long-term as the country is poised to have an electricity surplus over the medium- to long-term. At present, Nepal faces serious energy shortages (leading to occasional load shedding) and imports about 150MW of electricity from India via a 40MW transmission line completed in 2012. However, this situation is set to change as Nepal develops its hydropower potential estimated at over 40,000MW (according to Hydroelectricity Investment and Development). Less than 1GW of this hydropower potential has been developed at present, but positive regulatory developments have greatly improved the outlook for the sector ( see 'New Project Template To Unlock Hydropower', June 22 2012). There are currently 1.7GW of hydropower projects in various stages of development and the completion of these projects, such as the 456MW Upper Tamakoshi hydropower project, could help to change this shortage into a surplus over the next decade.

Nepal: Currently An Importer
Nepal - Electricity Generation And Sales, TWh

We also note that Bhutan is likely to retain its role as a major exporter of electricity to power-hungry India. Exports of hydropower to India are already a major source of revenue for Bhutan, and the country is looking to further commercialise its hydropower resources. Both domestic and Indian companies in Bhutan are investing in hydropower projects across the country as electricity demand grows rapidly, driven by local and Indian consumers. There are already a number of 440kV lines between Bhutan and India, and the Indian government has plans to increase transmission capacity to 5,000MW by 2020 through HVDC transmission lines.

That said, we believe that India's increasing reliance on electricity imports from Nepal and Bhutan will also exacerbate the vulnerability of Indian electricity supply to weather patterns. This is because hydropower generation is highly dependent on rainfall. For instance, the effective generation capacity in Bhutan drops from 1,488MW to 284MW during the drier winter months, exposing the country to electricity shortages. This means that during the drier months, Nepal and Bhutan would seek to import instead of export electricity, affecting the stability and security of India's electricity supply.

In our opinion, we are likely to see more countries in Asia seek grid integration across the region in efforts to improve energy security. The Malaysian and Indonesian governments have collaborated on a number of grid integration projects, such as the integration of the Sarawak and West Kalimantan grids ( see 'Sarawak-West Kalimantan Line Heralds Greater Regional Interconnection', August 30) and a new transmission line connecting Sumatra to Peninsular Malaysia ( see 'Malacca-Riau Cable MoU Increases Competitiveness', June 25 2012). India is currently developing a line to Bangladesh, and is likely to seek further grid integration with other Asian countries such as Pakistan and Myanmar over the long-term.

Read the full article

This article is tagged to:
Sector: Power
Geography: India, Nepal
×

Enter your details to read the full article

By submitting this form you are acknowledging that you have read and understood our Privacy Policy.