Where does solar-energy production stand-in “god’s gift” for Hydroelectricity?

Where does solar-energy production stand-in “god’s gift” for Hydroelectricity?

Nepal is considered to be resource heaven for hydropower generation. Private investments introduced in 1996, opened the doors for hydropower developers to take on projects, attract and capitalize on the private sector investments for hydropower generation. One such development company is Ridi Hydropower, a well-known entity in the hydropower sector. The company was established in 2013 after an acquisition of the original Rairang Hydropower company which had been in operation from 2005. For this edition, we have interviewed Mr. Kuber Mani, the managing director of the Ridi Hydropower Development Company Limited. A seasoned veteran in the hydropower sector, Kuber has 20 plus years of combined experience in renewables including hydro, solar, and biomass. This article takes a look into Kuber’s thoughts about the past, present, and future of the renewable energy sector and how it has shaped and developed in the last 20 years in Nepal.

Hailing from the Eastern part of Nepal in the Himalayan mountains, Kuber had a formal educational background in Botany and had been working as a researcher in a joint program under the Tribhuvan University in Nepal before joining the hydropower sector back in 2001. In the last 20 years, Kuber has been involved in several energy production projects and in his own words, summarizes the journey. “I have worked in the three areas, solar, hydropower and biomass respectively. During my involvement, I have always tried to give the message to the communities that these 3 areas of renewables have a high potential for us. We have the natural resources, raw materials, and a strong domestic market in Nepal for the development of these three-renewable energy production systems.”

Hydro-electricity generation in Nepal

Starting his career in the hydropower sector, the 20+ years journey has made Kuber a witness of all the developments that have happened over the years.  As Kuber explains why Nepal is a God’s gift for producing hydropower, he describes the geography of the country. With the hilly mountain ranges full of snow and the low-belt plains in the south, a beautiful natural gradient is created for water flow with the lowest part being about 60m below the mean sea level. “Hydropower generation projects are expensive to construct and thus require huge investments to begin with. But with 6000 rivers flowing across the country, we have the natural resources and the raw materials to make it happen. The cost and infrastructural challenges exist but it is you who has to go out there, take the challenge and make it happen.”  To know a bit more about the critical factors, we wanted to dive deeper into Kuber’s experiences. “Under the RHDL company, I have completed 3 hydropower projects which produce a combined of more than 60MW and from my experience, I have identified three key areas of focus being financial, social and technological factors. The technology has come a long way and social benefits have been proven in this period but with financial constraints, unstable government, erratic policies and insurgency problems in the past, Nepal is still 10-15 years behind of what it should be. But now things are much better and things are looking positive. Additionally, a bunch of projects has improved human capital in Nepal and local expertise and knowledge are capable to construct projects up to 100MW. Another benefit for us is the close proximity to India as the largest companies in the sector have bases set up there which helped us reduce costs by 30% to 40%.” Comparing the drastic difference in the financing, Kuber remembers the initial days in the early 2000s where a 3MW of hydropower generation project took 82 shareholders and 7 financial institutions. Now a single financial institution can easily finance up to 20MW.

Experience with Solar Energy

The socio-economic and business case for hydropower generation in Nepal has grown strongly with notable traction from banks and investors but how is it really being evaluated by the renewable energy developers. Under Kuber’s supervision, Nepal has gotten its first grid-connected solar plant, an 8.5 MW project at Butwal. The Butwal project took only 6 months to complete and collaborating with an experienced EPC contractor from India, the project is already selling electricity under the Power Purchase Agreement (PPA). Reflecting on his experiences, Kuber explains the fundamental differences of completing these two types of projects. “Solar projects have much lower infrastructural costs and setting it up with completing all the groundwork is much easier than a hydropower plant. A hydropower plant of similar magnitude as Butwal solar plant would have taken 4 times more for completion.” Kuber tells us that electricity generated by both hydro and solar power are sold at the same price but the differentiator between the two business cases comes down to the plant load factor. The plant load factor is the ratio between the actual energy generated by the plant to the maximum possible energy that can be generated with the plant working at its rated power and for a duration of an entire year. “Here in Nepal, hydropower generation plants have around 65% plant load factor whereas it is only 15%-18% for solar. Also with Solar energy, power generation is limited to daylight whereas hydro is generally not.” As Kuber explains, there are benefits, limitations and drawbacks for both models but he is hopeful and optimistic about solar energy becoming equally popular with the banks and financiers. “With revenue-generating and interests being paid, banks are now increasingly interested to take on solar projects under their portfolio.” The development of Renewables in the energy production sector of Nepal has seen the market dynamics shifting and I wanted to know if this meant that RHP were now keener to chase solar projects? Kuber explained that the situation has not changed in terms of chasing more solar-energy-oriented projects. “We are open and eager to complete projects as they come to us. We have a good rapport with the bank and usually have no problem in securing credit.”

                  Butwal Solar Power Plant

The future scopes and potential for the Renewable sector

The questions now focused more on the future of renewables and what were the scopes. Kuber sees high potential for Nepal in solar irrigation. Additionally, Kuber mentions another use of solar energy to be combined with hydropower. “Nepal has pumped storage projects to store water through pumps for hydropower plants. Here solar energy can be used as a source for clean energy to substitute for fossil fuel. This will allow hydropower to be utilized through the stored water to supply electricity during peak times. We already have 3 seasonal storage projects where the stored water serves as good as diesel. So, the solar power can be used when electricity demand is there and in the other times it can be used to run the pump and store water.” Kuber sees a mixed source of energy in the grid where 10%-15% comes from solar and thus believes that a 40% installed capacity would be required. “Currently, the hydropower generated electricity has a surplus but it might not be so in the future. Presently the challenge is to sell electricity. There are already several projects in the pipeline and a few are under construction (18GW in pipeline and 7GW under construction) so the projects are coming up rapidly. What we need to focus on is the dated infrastructure. The transmission lines and the substations need to be improved with rapid transmission lines required for the anticipated high volume of energy export potential.”

As we neared the end of the interview, Kuber emphasized the gains for the industry in the last two decades. “We have come far and there are more opportunities for growth in the market.” Hydro is a natural gift to Nepal and solar has strong potential with solar irrigation creating major impact. Also, the future for energy production using biomass looks strong.” A firm believer in renewables, Kuber sees an exciting and positive outlook for the future of renewables in Nepal and hopes that the day is not far when fossil fuels will be completely substituted to have a greener climate in the future.