For a long time in Nepal, the energy sector has been understood primarily as hydropower. Big rivers, large dams, and the dream of megawatts have shaped energy policies as well as investor priorities. However, in recent years, the scenario has begun to change. Even hydropower developers are now turning toward solar projects.

A striking example of this shift is Api Power and Asian Hydro Power. Api Power is emerging as one of Nepal’s leading companies in mixed energy generation. Along with hydropower, the company is also producing solar electricity. So far, the company has constructed and brought into operation three solar projects.

In addition, hydropower development company Asian Hydro Power has also moved forward with the construction process of a 40-megawatt solar project. The company has already completed a Power Purchase Agreement (PPA) with the Nepal Electricity Authority.

In Nepal’s electricity mix, hydropower has the dominant share. According to a study conducted by Dr. Hariman Shrestha in 1968, Nepal’s hydropower generation potential was estimated at 83,000 megawatts. In line with this estimate, electricity generation in Nepal has so far reached around 4,000 megawatts.

Despite Nepal’s vast hydropower potential, in recent times hydropower developers have gradually begun moving toward solar power generation as well. Since Nepal receives ample sunlight, there is significant potential for solar energy production. According to a study conducted with the support of the German International Development Agency (GIZ), Nepal is estimated to have the capacity to generate 432 gigawatts of solar power. This is one of the key reasons why power developers have started to be attracted to this sector.

First of all, due to the long construction period and high risks associated with hydropower projects, factors such as environmental approvals, land acquisition, local resistance, transmission lines, and natural risks all contribute to rising project costs. A project that is supposed to be completed within five years often sees its construction period extended to 10–12 years.

Meanwhile, solar energy has been becoming cheaper and faster to deploy. Due to declining technology costs, a modular design, and the ability to install projects within just a few months, solar projects have emerged as a new alternative for hydropower developers.

urjasanchar