With the adoption of the Open Access Directive 2025, the Nepalese energy sector has entered a new era. For years, each unit of electricity passed through one channel as the Nepal Electricity Authority (NEA) purchased and sold the energy, thereby controlling the flow of money. The private hydropower firms did heavy work—they constructed the plant and did everything to produce energy. And after starting energy production, they were compelled to go to the NEA’s doorstep to sell power, which clearly showed that they did not have another option. Hence, the price quoted by the NEA did not depend on demand, and they depend on the electricity authority for getting money. Therefore, the way of energy sale confined the private firms to a corner. The Open Access Directive has removed this problem, as now the private firms can sell energy directly to their customers through the national grid. The captive plants of 1 MW and contract energy projects of 5 MW or more connected to 33 kV lines can supply energy to industries, hotels, and large-scale commercial institutions. For export purposes, the criteria is 10 MW. This does not close the door to the NEA.
Cobain ‘MTV Unplugged’ guitar sells for sky-high $6 million
This is the result of a months-long effort of the Electricity Regulatory Commission, whose framework was approved this month. Open access will not make the presence of the state-owned NEA disappear from the scene. The System Operation Department of the NEA is still the one responsible for keeping everything under control. They evaluate applications, determine the capacity of the power that can flow through the system, handle the schedule, and allow the use of the grid. Without NEA’s management, the power grid will immediately go into chaos. The selling of power under open access also has its own cost. Buyers may be forced to pay various tariffs. These tariffs will, however, help handle the transmission cost, distribution wheeling charge, cost of deviation, cross subsidy, cost of standby services, cost of schedule, cost of reactive energy, and cost of system operations. Clearly, this approval offered private hydropower firms a chance to breathe. Direct sales will make the industry less dependent on one buyer. This will also make the income less vulnerable.
It is worth noting that Nepal has agreed to sell 10,000 MW to India in ten years. Bangladesh wants to buy 9,000 MW by 2040, and export has already started. To make this happen, power producers need to build infrastructure fast, for which they need lots of money. The NEA cannot do it all alone. To generate 28,500 MW by 2035, they need private money. This open access thing has shown the market's opening. They need to follow through by keeping the rules easy and identical for all. Getting approvals done quickly and keeping costs reasonable and predictable would help a lot. If they change policies suddenly or take too long to make decisions, investors will feel discouraged. At the same time, the NEA has to stay strong because they run the grid and powerhouses and keep everything working. Subsidies and other plans need to be supervised closely so that the households do not need to pay extra tariffs because of new changes. Since a closed market has opened up by ending NEA’s power trade monopoly, what happens next depends on how carefully private firms move ahead with their investment and sell off power for domestic use and export to other nations.
