Domestic Socioeconomic Barriers to Hydropower Trading: Evidence from Bhutan and Nepal

Abstract

Bhutan has increased exports of surplus hydropower generation, whereas Nepal has been suffering from domestic power shortages. Why has Bhutan successfully promoted hydropower development and exports, while Nepal has failed to do so? This paper focuses on inherent development barriers that stem from domestic power supply, internal governance systems, and indigenous societal sensitivity. There are lessons to be learned from Bhutan’s practices that could be applied in Nepal. First, hydropower development can be severely affected by electricity scarcity that arises when power export is privileged over domestic power supply. Nepal has fallen into this negative loop, whereas Bhutan has overcome it through policy interventions that ensure visible links between power exports and domestic power consumption. Second, the sector reforms in the two countries contrast in terms of institutional, operational, and financial efficiency. Without fundamental reforms, Nepal’s sector-wide inefficiency fuels a vicious circle. Third, local resource conflicts and social complexities have made Nepal’s hydropower projects more complicated than Bhutan’s. In planning hydropower projects, it is crucial to pay careful attention to domestic stakeholders and local benefits. Planners and governments must ensure that projects are designed with extensive benefit sharing mechanisms, sustainable value chains, effective sector reforms, and sufficient societal conflict management.

Renewable Energy Transition for the Himalayan Countries Nepal and Bhutan: Pathways Towards Reliable, Affordable and Sustainable Energy for All

“…The price of electricity for three prosumer categories i.e. residential, commercial, and industrial, in the year 2015 were assumed from [7], [29], [62]. Based on a method developed by Breyer and Gerlach [63], the future electricity prices until 2050 was projected.…”

“…Hydropower is and has been the main renewable electricity generation source in Nepal and Bhutan. While it is the main source of income for Bhutan due to hydropower export to India, Nepal has been not able to replicate this model due to various issues and utilises all its hydropower domestically [7]. In 2016, Bhutan's hydropower export provided a contribution of about 8% to its gross domestic product (GDP) [8].…”

“…Majority of the hydropower is run-of-river, depending on the monsoon and glacier melt, thus reducing the power output during the dry seasons. Even though with large hydropower potential, these countries are not able to provide uninterrupted power, with unplanned power blackouts on daily basis lasting several hours to some lasting for several days [7]. These conditions are hampering economic growth and not to forget the daily hardship faced by the common people [9].…”

A Review of Domestic Socio-economic Barriers on Hydroelectricity Trading in Nepal

“…The average water output from Nepal's rivers is around 222 m 3 /s, with the snow-fed melting river alone accounting for roughly 4930 m 3 /s (1). Nepal has an estimated hydropower capacity of 83,000 MW, of which 43,000 MW is commercially viable (2). Precipitation from December 2019 to February 2020 and December 2020 to February 2021 (3).…”

Construction Diversion Risk Assessment for Hydropower Development on Sediment-Rich Rivers

“…Current studies about CDR are mostly carried out under the condition of clear-water river [13,[17][18][19][20][26][27][28][29], but actual hydropower development is not limited to clear-water watersheds [9]. Many rivers in Asia, Africa, North America and other regions possess high sediment concentration [30][31][32][33][34][35], and these sediment-rich watersheds have great hydro-energy storage and promising development prospect [1,[36][37][38][39]. Case studies about CDR assessment on a specific sediment-rich river exist [15], but they only provide limited reference as sediment-rich rivers vary in types.…”