ERC has recently released a draft regarding open access. Experts have long demanded that the private sector be allowed to use the transmission line by paying certain fees. So, this draft is a positive step forward. In this article, I try to calculate how much an open access user has to pay if we export 10 MW.
Disclaimer: This calculation should be taken with a pinch of salt, as my understanding may differ from what is written in the ERC directive.
Eligible Criteria
- The minimum volume for Cross Border Electricity Trade (CBET) is 10 MW.
- You cannot sell electricity to India if national generation is lower than national demand. In short, you cannot export during the dry season.
- There are three categories:
- i) Long-Term Open Access (LTOA) – applicable for 5 years or longer (highest priority)
- ii) Medium-Term Open Access (MTOA) – applicable for up to 5 years (second highest priority)
- iii) Short-Term Open Access (STOA) – applicable for a period up to 1 year (lowest priority). The minimum period for availing STOA is 24 hours.
- Nodal Agency: The Power System Operation Department (PSOD) of NEA will be responsible for receiving, processing, granting, and settling open access transactions for all categories of Open Access Customers.
- Metering: Main and Check meters must be installed at all points of injection and drawal of power. The cost for installation has to be borne by the Open Access Customer.
- Curtailment: In case of constraints in the transmission and/or distribution system, STOA clients will be curtailed first, followed by MTOA and then LTOA clients.
- Fee:
- LTOA — NPR 50,000 plus taxes for capacity below 5 MW, NPR 100,000 plus taxes for capacity above 5 MW
- MTOA — NPR 25,000 plus taxes for capacity below 5 MW, NPR 50,000 plus taxes for capacity above 5 MW
- STOA — NPR 5,000 plus taxes
8. Scope and Extent of Application: Shall apply to Open Access for use of the Transmission System (66 kV and above) and Distribution System (at 33 kV grid-substation)
Initial Thoughts
The first thing that comes to mind when I hear “open access” is that even the private sector can trade electricity with India. So, let’s examine how much it would cost. From the above criteria, a few things are clear if we go for CBET:
- The minimum is 10 MW.
- You cannot sell during the dry season. For example, in FY 2023/24, Nepal exported 1,946 GWh during the wet season but imported 1,895 GWh during the dry season. So, for this calculation, I assume that only 6 months are available for export and that the 10 MW plant operates at full capacity for 6 months. One can argue there is an exception for export-oriented projects, but clearly that is not the case here. Projects like Arun 3 and Upper Karnali are eligible under the exception.
- The application fee will be NPR 5,000, NPR 50,000, or NPR 100,000 for STOA, MTOA, and LTOA respectively. So for LTOA, it is NPR 100,000.
Calculation
A 10 MW RoR plant would operate for 6 months (182.5 days) in wet season to in full capacity and produce 43,800,000 kWh. This is the input.
Directive 20 talks about transmission and distribution losses and directive 18 mentions “Aggregate kWh scheduled during the accounting period for Open Access Customer”.
- Transmission loss: 4.43% (NEA’s Annual Report)
- Distribution loss: 10%
Distribution loss is not considered since CBET use high voltage transmission line to transport energy. Directive 3 says transmission system is applicable for 66 kV and above.
Therefore:
- Gross generation: 43,800,000 kWh
- After transmission loss: 41,859,660 kWh (Scheduled kWh)
Transmission Charge (Directive 18.1)
For LTOA and MTOA, this is expressed in NPR/MW/Month. For STOA, it is expressed in NPR/kWh.
The formula for LTOA and MTOA is:
ARR / (Projected Peak Load in MW × 12)
As per the directive: “NEA, based on the latest approved ARR, shall determine the rate of transmission charges within 60 days of issuance of this Directive and submit it to the Commission for approval.”
Since there is no data, I assume:
- ARR (Annual Required Revenue for transmission system) = NPR 10 billion
- Nationwide peak demand = 2,218 MW (NEA's data)
So, the annual transmission charge for 10 MW for 6 months would be:
ARR / (Peak Load × 12) × 10 MW × 6 months
= 10,000,000,000 / (2,218 × 12) × 10 × 6
= NPR 22,542,831
This translates to NPR 0.60 per kWh (22,542,831 / 37,673,694 kWh) if distribution loss is also taken into account. However, export are done in high voltage such as Dhalekbar transmission line. This means
18.2 Wheeling Charges
These are paid to the distribution licensee for using the distribution system which is not applicable to CBET as export are not meant for distribution inside the nation. But just for calculation
Rate (NPR/kWh) = Net Admissible Fixed Charges for wheeling / Total Energy wheeled
Again, actual figures are not given. So, assuming:
- Total energy wheeled for export: 1,946 GWh (NEA Annual Report FY 2023/24)
- Total energy in the system for FY 2023/34: 13,966 GWh (NEA Annual Report Fy 2023/24)
- Distribution expenses: NPR 12,268,000,000 (NEA Annual Report, FY 2024 Provisional Figure)
- Proportion for wheeling: 13.93% (1,946/13,966 GWh)
Then,
- Net Admissible Fixed Charges: 13.93% × 12,268,000,000 = NPR 1,708,932,400
- Wheeling charge rate: 1,708,932,400 / 1,946,000,000 kWh = NPR 0.88 per kWh
- Wheeling charge for our example: 41,859,660 × 0.88 = NPR 36,836,501
However, this should be omitted since export use high voltage transmission line. It doesn't use internal distribution. Directive 3 says Open Access for use of the transmission system above 66 kV is applicable.
18.3 Deviation Settlement Charge
The ERC will issue a separate directive. Here, I assume no deviation.
18.4 Cross Subsidy Surcharge
This generally does not apply to CBET since it is meant to compensate NEA for lost domestic cross-subsidies — which doesn’t occur for exports.
18.5 Additional Surcharge
Again, not applicable to CBET because it is designed to cover stranded costs when domestic customers switch suppliers — which does not apply here.
18.6 Stand-by Charges
During the first two years, if a stand-by arrangement is used, the charge is 125% of the tariff for that category. Here, I assume the exporter has a reliable source and does not need this.
18.7 Scheduling Charges
- NPR 500/day for the first two years.
- For 182.5 days: 500 × 182.5 = NPR 91,250
18.8 Reactive Energy Charge
Not payable for the first two years.
18.9 Operation Charge
- NPR 50/MW/Day for the first two years.
- For 10 MW for 182.5 days: 50 × 10 × 182.5 = NPR 91,250
Total Estimated Cost
So, to export 10 MW for 6 months, the cost would be about NPR 22.72 million per year, which equals about NPR per 0.54 kWh (22,725,331/41,859,660) besides licensing cost of NPR 100,000
Item | Amount (NPR) |
Transmission Charge | 22,542,831 |
Scheduling Charge | 91,250 |
Operation Charge | 91,250 |
Total | 22,725,331 |
Final Note
This calculation is indicative only and should be interpreted cautiously, as they rely on assumed ARR (NPR 10 billion) and peak load (2,218), pending NEA's submission and ERC approval within 60 days of the directive's issuance. CBET excluded wheeling charges and distribution losses, as exports in transmission line, not Nepal's distribution system. Interested stakeholders should review the draft directive carefully and engage with the ERC’s consultation process.
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