NEA's new grid connection agreement clause.

I just came across with a new grid connection agreement clause. This clause is effective from 22^nd June, 2014. I was not aware of this clause until yesterday. I will read out the exact lines.

The Grid Impact Study carried out by System Planning Department of NEA reveals that, for the evacuation of power from the Project, it is prerequisite to commission the 220/132 kV Udipur Substation, Udipur-New Marsyangdi 220 kV Transmission line, New Marsyangdi-Bharatpur 220 kV transmission line, Bharatpur-Hetuada 220 kV transmission line, Hetauda-Dhalkebar 400kV transmission line (charged at 220 kV) before commissioning of the Project. The Grid Impact Study has recommended that the Project can be connected to Udipur Substation in FY 2018/19 AD provided that 400 kV Dhalkebar-Muzaffarpur transmission line is commissioned before commissioning of the project. If the above mentioned lines and related substations are delayed, the commissioning of the project shall be delayed accordingly and the Grid Users shall not claim any financial compensation from NEA for such delays.

The Grid User agrees to generate according to the dispatch instructions of the Load Dispatch Center (LDC) of NEA from FY 2018/19 AD up to the end of FY 2026/27 AD. The Grid User agrees not to claim financial compensation from NEA for such reduced generation/energy. If Grid Impact Study criteria are modified by any future decision, the above conditions may be modified accordingly.

This connection agreement belongs to a project that lies in Lamjung district. But I was surprised to know that this is the standard format for any projects that signs Grid Connection Agreement with NEA after 22^nd June, 2014 AD. Of course, the name of the transmission lines and substations will be changed depending upon the project location.

What does this mean?

Dhalkebar-Muzaffarpur transmission line is in the full swing. It is one of the first cross border transmission line that is the expected to be commissioned soon. The excess energy can exported via this line. But the capacity of this transmission line is already full if the entire PPA signed project is timely constructed. In order to export the excess energy, other cross boarder transmission line has to be constructed. And NEA assumes that there will be other cross boarder transmission lines by 2026/27 AD. During this period, NEA wants to be in safe side by putting a clause of Load Dispatch Center (LDC).

This means, NEA can reject to buy energy produced by the developers during this period and the developers will not be entitled to claim any financial compensation. Earlier, NEA signed PPA on "Take or Pay" basis.

With this new clause, I wonder no investor/bank will put money in Nepal’s hydropower.