As per the government’s plan, it will purchase solar power from the private sector by signing power purchase agreements (PPA) with them. “There have been talks about making a policy statement through the budget on purchasing solar power from the private sector,” said Natinal Planning Commission (NPC) Vice-chairman Govinda Raj Pokharel.

With many foreign companies proposing to invest in Nepal, the government has planned to adopt a policy under which it should not the bear the risk.

As per the planned policy, the government will call a tender and “the PPA will be signed with the company that offers the lowest rate”, said Pokharel. He said there are many companies that have proposed supplying solar power at less than Rs 10 per unit. Currently, the Nepal Electricity Authority (NEA) purchases power at Rs 8.40 per unit from private sector hydropower developers in the winter and Rs 4.80 per unit in the rainy season.

However, the PPA rate for solar power might be a little higher than what the NEA pays to private sector hydropower developer. “But some donors have expressed interest in bearing the additional costs the NEA faces,” said Pokharel.

“Although solar power is not an alternative to hydropower projects, the energy from hydropower projects can be saved for night and evening times by supplying solar power during the day time,” he said.

According to Pokharel, they are yet to estimate the amount of solar energy to be supplied. “We also have to calculate how much cost the country has to bear for not having energy, and for getting energy from solar plants at a relatively higher price,” he said.

Companies that have expressed interest in investing in solar plants have sought some incentives from the government. Pokharel said they have demanded the construction of transmission lines from the plant to evacuate the generated power to the national energy grid, value added tax and customs duty waiver on equipment they import for the plant, and exemption of environment tax as solar plants do not affect the environment.

“It is in fact attractive offer from the solar companies as the government should not provide cash incentives to them like it is offering to the hydropower developers,” he said.

Energy Minister Radha Gyawali has also recently announced establishing six big solar plants across the country with an aim of generating 325MW energy in the next three years.

As per the plan, the private sector will be asked to install six plants having capacity of at least 25MW each, while the government will install two plants having capacity of 50MW each. The World Bank has also pledged to build a separate solar plant having capacity of 25MW, according to the Energy Ministry.