The Nepal Electricity Authority (NEA) has decided to commence Power Purchase Agreements (PPA) with hydropower projects of up to 10 megawatts, aiming to encourage domestic investors to invest in small-scale hydropower ventures.

The NEA's 963rd board meeting decided to enter into PPA with run-of-river (RoR) and semi-reservoir (PROR) hydropower projects of up to 10 megawatts, without any specific limitations on timing or quantity.

Under this scheme, NEA will procure electricity from these hydropower projects on a 'take or pay' basis. The purchasing rates are set at Rs 8.40 and Rs 4.80 per unit for the dry season (December to May) and the rainy season (June to November) respectively.

Kulman Ghising, Managing Director of the NEA, said that the PPA limit, previously determined based on production mix, does not apply to projects up to 10 megawatts. This change aims to stimulate maximum utilization of local natural resources and foster investment from domestic stakeholders in small hydropower projects.

"Previously, the signing of PPA for hydropower projects up to 10 MW was hindered due to quota restrictions. However, with the removal of these quotas, PPA can now be executed at any time. This move is designed to incentivize small-scale domestic investors," said Ghising.

To date, a total of 89 projects up to 10 megawatts have submitted applications to the NEA for PPA, with a combined capacity of 351 MW. Among them, 44 projects totaling 195 megawatts have already finalized grid-related agreements.

NEA has set an ambitious target of achieving self-sufficiency in electricity production through internal means, aiming for a total capacity of 15,000 megawatts over the next decade. This vision aligns with the concept of energy mix, with reservoir-based projects contributing 25 percent, peaking run-of-river projects 30 percent, and run-of-river projects constituting 45 percent of the total capacity.