Bangladesh-Nepal power-sharing potential and an unexplored regional green energy outlook

Bangladesh has its peak energy demand in April. During this time, Nepal has surplus energy with a trough in demand. And in December, when the demand is at a trough in Bangladesh, Nepal's energy demand peaks, as they suffer load shedding. 

This congruence in energy consumption between these countries was one of the important notes of our discussions back in February when we attended a workshop organised by IUCN supported by the Asia Foundation in Nepal. 

Energy experts, environmentalists, CSOs and journalists from Bangladesh, Nepal, India and Thailand attended various sessions on the prospects of green energy in the region. We travelled to Nuwakot and visited several hydropower stations built on the Trishuli River, and several solar power stations in that area. 

Thanks to the rapidly increasing number of hydro projects, Nepal is significantly improving its renewable energy mix, whereas Bangladesh's energy mix largely relies on burning fossil fuels. Thus, Nepal could be a potential energy investment destination that authorities have taken note of. 

What inspired us to write this piece is that the bulk of Nepal's power generation comes from hydropower and Nepal has a hydro potential of around 80,000 MW, whereas the potential for economically viable hydropower in Nepal is estimated at 40,000 MW. 

Nepal spills a significant portion of water from its hydropower plants without producing electricity in the monsoon and summer, as it does not have the demand for all the electricity that can be produced in the monsoon and summer,  and a similar case of reduced demand occurs in Bangladesh in December. 

Additionally, Bangladesh has its peak demand in the summer and monsoon when there is a shortage of power. Bangladesh witnessed massive load shedding last year during this time. And, the demand is lower in winter, which enables Bangladesh to run power plants at a lower capacity. 

So, here lies an opportunity for a transboundary energy transition between Nepal and Bangladesh that authorities in both countries have considered exploring. The cost of generation of hydroelectricity in Nepal is below 2 US cents, whereas in Bangladesh the cost of electricity generation is around 8.5 US cents, based largely on fossil fuels.

The key challenge to this is to obtain the support of India for the power corridor, and to convince political stakeholders to think of regional rather than national solutions. If these challenges are resolved, the complementary power generation capacities of the different countries can turn out to be an effective regional energy solution encompassing countries including Bhutan, Bangladesh, India and Nepal. 

Import or export to Nepal?

The discussion on Bangladesh's energy pact with Nepal, however, is nothing new. Last year, two reports published six months apart created curiosity in Dhaka. 

It was reported in the media last April that the energy minister Nasrul Hamid had a bilateral meeting with his Nepali counterpart Pampha Bhusal on the possibility of Bangladesh exporting electricity to Nepal in the winter. 

However, soon after that, Bangladesh fell into a massive energy crisis, and citizens suffered from frequent load shedding. So, when again in October a report was published that Nepal wants to export a significant amount of electricity to Bangladesh, there was confusion about who is exporting to whom. 

During the bilateral meeting with Bhusal, Bangladesh's energy minister not only talked about exporting to Nepal but also discussed the potential for a  bilateral pact, which was not highlighted at the time. 

"We can import Nepal's surplus electricity during the summer and monsoon seasons. When their [Nepal's] power production decreases during the winter season, they can take power from our country. Both countries will benefit from this," Nasrul Hamid said. 

So parties from both Bangladesh and Nepal are already aware of the benefits of this arrangement and there has already been such an agreement about this at the bilateral level, that awaits a nod from India to use their infrastructure in the connecting Indian territory. 

The India question 

Back in October 2022, Bangladesh and Nepal wrote to India to ink an agreement so that Bangladesh could receive electricity from Nepal. 

According to a report published by The Kathmandu Post (TKP) in October, in line with the agreement reached with Bangladesh, the country's electricity authority (NEA) sent a request to the Indian NTPC Vidyut Vyapar Nigam. 

The TKP quoted Kul Man Ghising, the managing director of NEA, saying "Initially, India's existing transmission infrastructure may not have extra capacity to accommodate Nepal's power to send it to Bangladesh." 

However, Nepal made a second request to the Indian side and Kul Man said that they would reassess the transmission capacity and respond. 

In January 2023, the Economic Times, with reference to some sources, reported that New Delhi is considering Nepalese and Bangladeshi proposals to allow Kathmandu to sell electricity to Dhaka via Indian territory and Indian infrastructure. 

The report said, "This comes in the backdrop of a number of Indian companies showing interest in developing hydropower projects in Nepal amid positive momentum in creating a common South Asian electricity market, particularly in the sub-region involving Bangladesh, Bhutan, India and Nepal (BBIN)."

The regional green outlook

In recent years Bangladesh finalised a power purchase agreement with Nepal to import 500 megawatts from Upper Karnali Hydropower Project – a 900MW run-of-the-river hydroelectric power plant built by the Indian GMR Group in Nepal, stationed more than 700 KM from the Bangladesh border. 

Bangladesh's power development board (BPDB) plans to draw electricity from this hydro project in 2026. 

In comparison to Bangladesh's 230 MW hydro451 MW ground-mounted grid-tied solar power capacity, Nepal's green energy profile is stronger. The country has 122 hydro projects with a capacity of 2,123.54 MW. However, the combined capacity of solar, thermal and CO-generation remains around only 80MWs. 

India, on the other hand, is a giant in renewable energy. The country has achieved its NDC target with a total non-fossil-based installed energy capacity of 159.95 GW, which is 41.4% of the total installed capacity. It has 41.93GW of wind, 63.30 GW of solar, 4.93 GW of small hydro, 46.85 GW of large hydro and 10.61 GW of biomass power capacity as of 31 December 2022. 

So can we tap into some regional benefits from the diverse green portfolios of these countries to solve the regional power problem? 

A Bangladesh-Nepal or a multilateral energy deal involving India and Bhutan could provide some respite in the region's energy dilemma. However, this depends on energy politics and the decision of India. 

India simply has a lot of solar energy potential in its western states of Rajasthan and Gujrat. 

There are thousands of acres of land in the desert area, where India is developing solar power, and Nepal has a hydropower potential of 80 GW.  

A country like Bangladesh with a smaller land mass but a huge population can invest in solar stations in India, just like it is planning to draw electricity from Nepal's Karnali project, or like Bangladesh is buying fossil fuel electricity from Indian facilities. 

If we create a regional power corridor between India, Bangladesh and Nepal with the option to connect Bhutan, we can tap into this renewable energy potential. This way, we can divest from some fossil fuel-based power. 

There is cross-boundary trading already there. We have two common corridors between Bangladesh and India to import power from India. India has bilateral trade with Nepal, Bhutan and Bangladesh. What we should do here is a tri-party or multilateral deal. 

Europe at present has a single grid. If we can create a single grid targeting these four countries (Bhutan, Bangladesh, India and Nepal), we can reduce the cost of production, and we can tap the potential of regional solar and hydro energy. 

Bangladesh at present is spending $8.5 cents per unit on electricity. Dhaka can offer both India and Nepal competitive prices. We can either build a new transmission line, or we can use the Indian grid line, and provide them with a wheeling charge. 

So it is a business model, beneficial for India, Nepal and Bangladesh. 

If the political challenges are tackled, a green energy solution may be brought to the region and this may take us one step closer to an open South Asia, based on faith and friendship. 

Shahriar Ahmed Chowdhury is the Director of the Centre for Energy Research at United International University and Masum Billah is a journalist at The Business Standard.