Energy Banking: Nepal and India

Energy Banking: Nepal and India

August 20, 2019


Nepal and India have agreed on 25 January 2019 on energy banking concept which seems to be the extension of the Power Trade Agreement that Nepal and India signed in 2014. It has paved path for selling surplus electricity and purchasing the same volume of energy when necessary. 

Secretary of MoE, Nepal, Dinesh Kumar Ghimire (Left) and Secretray of MoE, India, A K Valla(2019, 25th January)

The new mode of electricity exchange is beneficial for Nepal as it enables the country to bank energy by providing to India during wet season when there is surplus energy. Later the same amount of energy can be received when necessary. 

Government secretary-level joint steering committee (JSC) Meeting, Pokhara 2019,25th January

Nepal, which faced acute energy crisis till 2018, is set to have surplus energy during wet months after the 456 MW Upper Tamakoshi Hydropower comes into operation. But the deficit in dry months continues even after the completion of this Project.

Existing Issues:

The energy banking allows Nepal to participate in India’s power exchange market, which is a forward looking move in bilateral energy exchange. 
However, Nepal need to work on:

  • exchange modality,
  • secured synchronizations of grid connectivity,
  • agreements on commercial terms  

The most powerful grid interconnection system is Synchronous Grid of Continental Europe (ENTSO-E) with 667 (GW) of generation. In the ENTSO-E in 2018, over 2900 terawatt hours energy were sold on the European Energy Exchange. The widest region served from the same grid is that of the former Soviet Union. Synchronous grids with ample capacity facilitate electricity market trading across wide areas. 

Currently the import from India is done without synchronization. Nepal needed a loop with India in grid connection to protect possible supply failure or blackout, and have stable energy supply if one of the connectivity lines failed to work. 

Nepal’s electricity supply system is small compared to India’s 357.875 GW massive supply system. Much preparation is needed on synchronization before the concept of energy banking could be materialized. 

Nepal Electricity Authority and India’s Central Electricity Authority have to work out modality of investment and implementation of transmission line construction soon with possible alternatives.

A power system interconnection is a kind of marriage, because two systems become one when they operate in synchronism. To do this requires a high degree of technical compatibility and operational coordination. It grows the cost of the system as well complexity of the system also increases.

For example, when systems are interconnected, the fault current (current during short circuit) increases, which requires the installation of high capacity circuit breakers to maintain safety and reliability as well capacity of insulator and overall TL may need to increase for withstanding high fault level.

To properly specify these and many other technical changes required by interconnection requires extensive planning studies, computer modeling, and exchange of data between the interconnected systems.

Present Development:

Mujaffarpur-Dhalkebar Transmission Line is being upgraded to 400 kV from 220 kV. This upgrading work allows both import and export of up to 600 MW from the current capacity of 290 MW. 

The Government of Nepal is building a mega cross-border transmission line connecting Butwal with Gorakhpur under grant assistance from the US Government. Nepal and India agreed on upgrading of 132 KVA transmission lines (Raxaul-Parwanipur and Kataiya-Kushaha) to double circuit and study of a new cross-border transmission line on the route of Bareli-New Duhabi–New Purnia is also going on.