Hitendra Dev Shakya

System Planning Department

Nepal Electricity Authority

GRID SOLUTIONS for

ENERGY ACCESS FOR ALL

Sustainable Energy for All

S D G 7 -

Affordable and Clean Energy - Ensure access to affordable, reliable, sustainable and modern energy for all.

Energy <- - Grid Electricity

• What SDG 7 means to an Electric Utility - Energy is presumed as Electricity Electricity is presumed as Grid Electricity And in Nepal, Grid Electricity is presumed as Hydro-

electricity

Half the assumption is corrected as Electricity is Off-grid in Remote areas On-grid Electricity follows far behind But it is still about Electricity only. Hydro-electricity

AND electricity as a source of energy is increasing with

technology and time – (18% world average/ 2% Nepal)

Renewable, other

1% Petroleum

9% Electricity

2%

Coal 3%

Biomass 87%

Grid Map of Nepal Areas covered by Grid Electricity

Off-Grid Nepal Map of areas covered by AEPC

How Long to wait for Reliable Electricity?

Connecting the two –’Haves’ and ‘Have Nots’

Nepal facts – 1. Mountainous country - Road access is limited

2. Grid Electricity – 60% of the population, Geographical coverage – Central hills, southern plains and eastern border region and western border region – < 40% of populated areas

3. Off-Grid – claims of 15% access, but not functioning, many fall to disrepair within few years of operation

4. Subsidy to Off-Grid Micro-hydro power or solar grid – conditional on distance from Grid > 5 years (No Economics)

Where there is a will, there is a way..

A Snapshot – hard work for

Energy in Remote Areas

1. Grid expansion is targeted towards large loads and generators

2. Market-based Transmission Development – Only suitable for Large Generators and Consumers

3. Grid Expansion is Capital intensive and low returns

4. Grid expansion is afflicted by ROW issues and large affected areas – Forces transmission lines to Government domain in order not to increase cost of energy up-front

5. Transmission Network is centrally planned (Top-down approach) and the expansion is slow

How Long to wait for Reliable Electricity?- >> From Grid Expansion Direction >> Grid expansion is targeted

towards large loads and generators

Market-based Transmission Development – Only suitable for Large Generators and Consumers

Grid Expansion is Capital intensive and low returns

Grid expansion is afflicted by ROW issues and large affected areas - Forces transmission lines to Government domain

Transmission Network is centrally planned (Top-down approach) and the expansion is slow

>>Looking from the Rural Off-Grid>> A look at the Off-Grid MHP model

• The distribution network – Poor, not safe for grid connection.

• Low Income ( low plant factor/ low productive uses) forces low quality of Operation.

• Distance from Road-head increases O&M time and cost • MHP - Design at river discharge of high exceedence (Q90);

yet Plant factor is 20-30% only. • The Electronic Load Controller (ELC) is used. Controls

frequency by dummy load - Useful where raw material is free – Water/wind/solar etc.

• The switchgear - Not ready for grid-interconnection.

BUT most villages would find a viable river source for MHP ( pico, micro or mini) if a workable business model and funding available

MHP - Design at river discharge of high exceedence (Q90); yet Plant factor is 20-30% only.

One MHP aspect - The Electronic Load Controller (ELC) is used. Controls frequency by dummy load - Useful where raw material is free – Water/wind/solar etc.

The switchgear - Not ready for grid-interconnection The distribution network – Poor, not

safe for grid connection.

Problem of MHPs - Low Income ( low plant factor/ low productive uses) forces low quality of Operation.

Distance from Road-head increases O&M time and cost

BUT most villages would find a viable river source for MHP ( pico, micro or mini) if a workable business model and funding available

Low skill/ knowhow, low p.f. and low revenue, accessibility, less room for industrial use >> tendency to fail

Success factors

Creativity and adaptation

Grid Solutions to Off-Grid distribution 1. Inter-connection of Clusters of small power plants in a mini-grid

ready for Connectivity with Grid

2. Help / subsidy >> Grid-readiness for remote/ offgrid generators/ users >> synchronizing switchgear and relaying

Grid Energy is mostly cheaper and reliable than Isolated systems. 1. Distributed Generation has Multiple Impacts on Local economy that

offsets the Initial high costs of electricity

2. Spin-off for Grid - Reduces demand on Reinforcement of grid & Reactive power management by doing Distributed generation

Most rural areas in Nepal have Some sources to produce Electricity

1. Mountain areas – Hydro and Solar; Remote areas in Terai – Solar and Biopower, some areas – wind etc.

2. Government support for Grid Connectivity – Sustainability of the DG and also enable expansion of grid. ‘Biggest Bang for a Buck’

>> EARLY ACCESS TO CLEAN ELECTRICITY BY ALL >>

Electronic Load Controller - as governor of MHP

Role of Switched ELC in Grid-operated MHP – 1. Protective device against Over-speed during Grid-disconnect 2. Allows Operator mobility and free to work within village

Typical costs of Interconnection of a <100 kW MHP

VCB - 6 lakh, ..\..\temp\VisitSriLanka\Option I_Mini Grid Drawing_VCB on both Feeder.pdf

Transformer - 4 lakh,

CT,PT - 0.5C + meter - 2 lakhs,

synchronizing eqpt, ELC+ AVR modification - 4 lakh

Switchyard, LA and Isolator, Earthing - 3 lakh

Commissioning - 2 lakh

VAT + contingency - - 3 lakh

Total -24 lakh ~ 24,000 $

Providing for O&M costs and interest of loan,

the Payback period is 7/8 years for 20kW, and 4/5 years for 30 kW,

excluding Plant costs and interests if any.

Hence, Interconnection requirement at 11kV with VCB and metering

is Not Viable for very small MHP

Example –

20kW Syaure MHP –

Grid-connection costs- 2.4 mill

Subsidy

- Cash 0.5 million

-Credit 0.5 million – soft loan

at 5% interest

-Yet, the Revenue– 1,035,000.

-O&M + int costs - 750,000.

Profit – 285,000.

= 7 yrs Payback

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SUBSIDY or VGF is required to make MHPs Inter-connected / Grid Ready

15

BangDovan Mini-grid- Baglung District >> Along Mid-hill highway; Grid is within 50 km reach >> Population and electricity demand is increasing – it is Off-Grid >> Planning for a sub-transmission and mini-grid subsidy will deliver Grid supply quickly

Usually, Isolated MHPs fall into disrepair (the community is not

well-synthesized, and tariff does not support major repair, nor quality operation)

MHPs when connected to grid - provides incentive to operate due to Profit from Energy supplied to Grid. Becomes Sustainable

◦ Sustainability of MHP is a net gain for community and the government.

◦ No sunk costs, Local economic activity boosted, jobs, technical base

◦ Technical - Voltage boost, losses reduction, less capacity investment, dry season energy

Challenges - Feed In tariff- comparably Low [NRs 4.8 (8mth)/8.4

(4mth)]

Financing for Interconnection equipment – High costs

Once grid-connected, capacity can be upgraded (from Q90 to Q40)

Plant Factor may increase from 30% to 90%.

Private equity injection to MHP/ Isolated mini-grid and private management models are being explored to make them sustainable. 16

What works for MHP … will also help Access for Rural areas, So…

Source – World Bank report on Nepal:Scaling up Access through mini-grid

Get Bigger for survival !

Get Inter-connected and Grid Ready

Connecting Off-Grid to Grid-> Best of Both Worlds

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• Off-Grid MHP - Subsidy for Grid-Connectivity

• Required -> Sub-transmission networks – radial 132kV line, 132/33/11

kV substations and 33/11 kV lines to villages/ MHP

• Investment in Sub-transmission lines by Govt. - as Integrated subsidy

plan to clusters of MHPs , padded with soft Loans - in Build – Own –

Transfer BOT model -

• After Subsidy, remaining Amortized costs to be recovered as Local

Transm. Charges from present and future Users of the Line

Optimized Network planning – from sub-transmission line requirements

from villages – “Bottom Up but Coordinated” approach

Subsidy to Off-Grid electrification with “Biggest Bang for the Buck “ -

Distributed Generation bringing multiple local benefits + system benefits

What Next? CEUG .

Financial Initiative that worked – Grid Connected – Community Electricity Users Group CEUG

Subsidized distribution of electricity at NRs 3.60 / kwh to Community Electricity User Groups (CBOM)

Community Electrification – 90% subsidy by Government – 10% community - enabled expansion of rural networks at 400V / 11 kV and 33 kV

It has worked – No of CEUG increasing and its consumer members The technical (distribution- 6-8%) and non-technical loss (> 8-10%) that

otherwise occur justify the reduction in tariff below cost of generation, Generation and transmission cost = 27382 M NRS, Total energy = 4794

(6% system loss) M units, = 5.70 / unit Cost of Energy for NEA at 11kV delivery - w/o operating costs /depreciation / overhead)

Tariff needs revisit due to increased purchase price. Administrative cost of NEA ( Losses ) to administer the Rural Distribution

is saved. For Embedded Generators within CEUG, Purchase tariff is Bounded. For Larger MHPs, near such CEUG, it should be connected to Grid directly

before the CEUG point – to enable it to get the Regular PPA Tariff.

Options for Grid Solutions

1. Optimized network planning and Extensive Public Investment

2. Private Investment for the Funding Gap - > Market -based Transmission Development – Only suitable for Large Generators and Consumers

NEPAL High Voltage Transmission Lines &

Substations

21

Transmission Lines Existing

(Circuit km)

Under

Construction

(Circuit km)

Planned

(Circuit km)

66kV Voltage Level 511.16 -

132kV Voltage Level 2337.7 1010.0 1320.0

220kV Voltage Level - 659.0 949.8

400kV Voltage Level - 648.0 6495.6

Total 2848.86 2317.0 8765.4

Substations Existing

(Numbers/Capacity)

Under

Construction (Numbers/Capacity

)

Planned (Numbers/Capacity)

66kV Voltage Level 13/509.15MVA -

132/66kV Voltage Level 28/1622.4MVA 10/506.5MVA 21/917MVA

220kV Voltage Level - -(*) 18/3876MVA

400kV Voltage Level - - 5/2025MVA

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Investment on Transmission

Label 2015 2020 2025 2030 2035

All Zones Commissioning from 2015 2020 2025 2030 2035 Total

to year 2019 2024 2029 2034

MUSD MUSD MUSD MUSD MUSD MUSD

Lines Comm. 412.8 621.1 214.2 0.0 0.0 1248.1

Lines Planned 138.1 332.6 181.7 0.0 0.0 652.3

Lines All 550.9 953.7 395.9 0.0 0.0 1900.5

S/S Existing 123.0 60.2 13.2 34.5 26.1 257.1

S/S Comm. 410.0 231.3 82.7 81.5 0.0 805.4

S/S Planned 47.4 358.0 215.2 67.1 5.3 693.1

S/S All 580.5 649.5 311.1 183.0 31.4 1755.6

Total Existing 123.0 60.2 13.2 34.5 26.1 257.1

Total Comm. 822.8 852.4 296.9 81.5 0.0 2053.6

Total Planned 185.5 690.6 396.9 67.1 5.3 1345.4

Total All 1131.4 1603.2 707.0 183.0 31.4 3656.0

Connection Lines 142.6 584.2 420.4 76.8 4.1 1228.1

Connection Bays 38.5 83.6 118.4 25.4 6.5 272.4

Grand Total 1312.5 2270.9 1245.9 285.2 42.0 5156.5

The core of the transmission network is to be commissioned during the next 10 years. The total investment cost planned for the whole 2015-2035 period amounts to 5.15 billion USD and is mainly concentrated in first ten years, i.e. between 2015 and 2025:

Grid Expansion Issues ... 1. Optimized network planning and Extensive Public

Investment 2. Private Investment for the Funding Gap - > Market -based

Transmission Development – Only suitable for Large Generators and Consumers

3. For challenge faced from PAF by ROW and Towers – 1. Considering options of Long-Term Lease in lieu of Purchase/

one-time compensation – Yet to be proven. 2. Pro-rata allocation of Project developer equity from the lot

given to affected people – Long-term benefit sharing by the people – Yet to be proven

4. Build, Own and Transfer (BOT) model for transmission / distribution lines by communities and Build Transfer model for isolated generators – Policy in process

5. Policy of declaration of shallow Grid – Not done yet

Grid Solutions

Integrated Planning for

Sub-transmission

network

Community Electricity

Users Groups CEUG– Hand-

over

Build and Transfer BT Policy for

Private Generators

Change Approach –

Grid Planning for DG and

Rural Access

Policy for Transmission charges and Private Trans

owner / operator

MHP subsidy

Extend TO Grid

Synchro equipment

Subsidy / Soft Loan for 33 and 11 kV sub-trans /distrib links to

Grid Energy to All by

National Grid

Access

Focus- DG and Village

Load potential

Funding Deficit-> Private Capital

Use Hydro-developers’ strength for Construction

& ROW

Efficient Admin of

Rural Consumers

Sustainable / Profitable

MHP – “Most Bang

for Buck”

Earlier Access ->

Amortized costs

Off-Grid

Grid Side

What has worked? MHP and distribution network with larger consumer base and

anchor loads– Case - Khumbu Bijuli (900kW), Salleri Chyalsa (400kW) ) Having Periodic oversight and Support

Subsidized tariff to CEUG ( having small consumers & capped to 5 A users) – Successful CEUGs adapting the lessons learnt.

What needs reform? Stand-alone MHPs with weak consumer base – Scale –up ! Top-down Rural Electrification without Regional Optimized

planning –> Reverse direction ! Subsidy for MHP / Rural electrification – Include Grid

Connectivity with Partial Payback (90/10 model ) in the Integrated Subsidy model !

What can be learnt? for Rapid Grid Expansion Involve community – allow BOT for sub-transmission networks

and Use subsidy/ VGF model Involve Private / Developers – and / or allow BT model for

rapid expansion of Main Grid

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Creativity and adaptation

Top-down approach of grid-planning coordinated with Bottom-Up approach to Identify/Prioritize and

Investment Rethink - Need to support/ subsidize community-driven / owned grid-connection and expansion coupled with local DG economics.

Thank you ! Namaste !

Q&A and discussion