Nepal’ state-owned power utility, Nepal Electricity Authority (NEA) has issued a Request for Proposals to select independent power producers for the construction of several solar PV power plants across the country.
Selected projects will be granted a 25-year PPA, while the NEA will also provide incentives in the form of viability gap funding (VGF) — a scheme which has often been used in the Indian solar market.
The VGF scheme is usually utilized through public private partnerships to support large infrastructure projects, by providing a capital grant at a certain stage of project construction. This kind of support is, in general, available only when projects are selected through a process of competitive bidding.
The NEA will finance the tender with the US$20 million it received for its viability gap funding in solar energy from the Strategic Climate Fund — the multi-donor climate investment fund — administered by the Asian Development Bank (ADB) in late 2016.
“The funding,” said ADB at the time, “should ensure installation of at least 25 MW of solar power by 2018, but more importantly, it will provide a business model that can be replicated and scaled up elsewhere in the energy-strapped South Asian nation.”
Later in May 2017, the NEA launched a project, supported by the World Bank, to improve the power losses of its electricity network and create the conditions for the installation of 25 MW of solar capacity.
Chronic power shortages are currently making the country’s power system instable. Around 65% of its population currently has access to electricity.