800 MW Solar Power Bids Propose Tariffs Between Rs 4.99 and Rs 6 Per Unit

Kathmandu: Companies participating in the bid called by the Nepal Electricity Authority (NEA) for the production of 800 MW of solar power have proposed competitive tariffs ranging from Rs 4.99 to Rs 6 per unit. This rate was revealed after the NEA opened the financial bid on Tuesday.

Rajan Dhakal, Director of Power Trade Department under NEA, informed that about 70 companies that submitted electronic bids for solar photovoltaic have proposed power purchase agreement (PPA) rates between Rs 4.99 and Rs 6 per unit. He added that the NEA is excited about this situation.

"Nearly 70 companies have proposed similar rates," Dhakal said. "A company from Ramechhap proposed the lowest rate  of Rs 4.99 per unit, while the highest bid is Rs 6 per unit. Based on this, the NEA will likely face an average tariff of no more than Rs 5.60 per unit."

After evaluating the financial proposals, the NEA plans to prioritize the lowest bidders and proceed with awarding contracts based on the capacity of the substations where the power will be connected. "We aim to complete the evaluation of the financial proposals within 8-10 days, before Dipawali (Tihar)," Dhakal added. "After that, the next steps will follow."

Dhakal emphasized that since competitive rates have been proposed, solar power production needs to be accelerated, and the solar power projects can be completed within a year and a half, the NEA will not delay in awarding the contracts.

The NEA initially announced a 45-day deadline for submitting bids on April 3, 2024, for solar power production with a total capacity of up to 800 MW. However, the deadline was extended three times due to low participation from developers, with the bids finally being opened at the end of Sawan (August 2024). The financial proposals were opened on Kartik 6 (October 22, 2024).

The NEA called for bids to connect the power generated to 61 grid substations and 97 distribution substations of 33/11 kV across the country. Developers were invited to submit proposals for producing up to 1 MW at distribution substations and up to 10 MW at grid substations (220/132/33 kV).

The NEA’s requirements stated that the connection points must be at 66 kV or higher for grid substations and 33 kV for distribution substations. Developers could apply to produce up to 150 MW of solar power across different substations, with a maximum per unit tariff Rs 5.94. Applicants were required to submit an application fee of Rs 15,000 and a security deposit of Rs 1 million per MW.

Selected companies that win contracts are expected to complete the construction of projects below 10 MW within 18 months of the PPA date, while projects larger than 10 MW must be completed within 24 months. The NEA will purchase electricity from the developers for a period of 25 years, with the PPA rate remaining constant over this duration. This fixed rate has also contributed to the NEA’s plan to produce of the solar power.