The recent natural disaster in the Bhote Koshi region resulted in a significant 431 MW reduction in national power output, which is now creating unexpected operational benefits for other functional hydropower projects.
The Impact of the Bhote Koshi Disaster
On Bhadau 10, a major flood disaster hit the border area between China and Nepal, causing serious damage to the Bhote Koshi region. This event was not just a typical flood, but a major catastrophe that led to heavy loss of life and property. The hydropower sector was directly affected as 431 MW of electricity was removed from the national grid due to floods in Rasuwa. This amount equals about 10 percent of the total installed capacity of the country. While some projects suffered direct physical damage, others were cut off from the national grid because of broken transmission infrastructure.
Changing Opportunities for Hydropower Projects
In the past, hydropower projects often struggled to sell their full electricity capacity to the Nepal Electricity Authority. Even though Nepal has been increasing its power production, the domestic consumption and export capacity could not always keep up. During the monsoon season, production capacity would reach about 4100 MW, but with domestic demand near 2400 MW and exports around 1300 MW, there was a surplus of 300 to 400 MW. This made the Authority limit production for many projects, especially those under take and pay agreements, because it was hard to manage such a supply gap. This really hurt Run-of-River projects that depend on river water flow during the monsoon.
Current Advantages for Producers
The situation changed after the floods removed 431 MW from the system, making it easier for the Authority to manage the remaining supply. Most projects are now running at their full capacity. This gives a big advantage to Run-of-River projects because they can finally sell all the electricity they produce when the water flow is good. By running at full capacity, these projects are seeing better production, sales, and eventually higher profits. This is a big change from the past when they had to cut back production even when water was plenty.
The Role of Low Interest Rates
Interest rates are another big deal for hydropower. Most projects are built with 70 percent debt and 30 percent equity, so bank interest rates have huge effect on their costs and income. Right now, interest rates in the banking system are much lower than before. This lowers the financial costs for projects that still have to pay off large loans. With lower interest expenses, the operating profit of these projects go up, which makes it easier to pay back loans and improves the overall profit of the company.
Water Availability
According to Mohan Kumar Dangi, who is the chairman of the Independent Power Producers Association of Nepal, there was heavy rain in Asoj this year. The significant rainfall in the middle of Asoj increased the water levels in the rivers, and the ongoing rain is helping to keep those levels high for longer. Combining lower interest rates, the 431 MW capacity gap in the grid, and good water levels, it is clear that many hydropower companies are in a position to see better income this season.
AI Disclaimer: This article was originally published on https://bajarkochirfar.com. It has been translated with the help of AI. For the best understanding and accurate facts, we recommend reading the original Nepali version.
