ERC Opens Nepal’s Power Grid to Producers and Consumers

The Electricity Regulatory Commission (ERC) has issued a directive aimed at ensuring open access to Nepal’s electricity transmission lines for producers, distributors, sellers, and consumers. 

Under the framework, any electricity producer or consumer can use existing transmission infrastructure by paying a specified fee. It is expected to enable industries to purchase electricity directly from projects through any company’s transmission line, while power sellers can also access the network for exports.

The ERC said the “Open Access in Electricity Transmission and Distribution Directive, 2082” issued on Thursday, January 15, non-discriminatory access to transmission infrastructure has been established from a policy perspective.

The move is expected to maximize transmission capacity, increase private sector participation, allow producers to sell directly to the market, and provide a clear regulatory environment for domestic and cross-border electricity trade.

Currently, the Nepal Electricity Authority (NEA) holds a monopoly over the country’s transmission network. The directive appoints NEA as the nodal agency for open access in the initial phase. It will prepare detailed implementation procedures and create standard open-access agreements between license holders and customers.

The directive applies to projects connected at 33 kV or higher with a capacity of 5 MW or above, captive projects with at least 1 MW, and industrial and commercial consumers using 5 MW or more. For cross-border trade, a minimum capacity of 10 MW is required.

Open access has been categorized into three types: long-term (over five years), medium-term (one to five years), and short-term (24 hours to one year), with priority given to long-term access. Long-term users may also be required to contribute to costs for upgrading transmission and distribution systems. The directive opens opportunities for private sector involvement in transmission and distribution infrastructure and clarifies commercial rights for fees associated with building and operating these systems.

Electricity producers can now seek their own markets. The ERC noted, “Since open access connects production to potential markets, skilled promoters and entrepreneurs who can find markets will not have to wait for NEA’s power purchase agreements to build projects.”

Stakeholders Weigh In

NEA’s System Operation Department has been designated the nodal agency for collecting applications and providing services. NEA spokesperson Rajan Dhakal said the authority's own system will function initially, rather than establishing a separate agency. “In the future, if the private sector needs to export electricity on a large scale, a separate agency may be required,” he added. Discussions are ongoing regarding trade licenses for private sector electricity exports.

Dhakal noted that implementation will take time: “Even though the ERC has issued the directive, this provision cannot be implemented within 2–4 months. Additional rules and directives need to be prepared.” He emphasized that the directive will benefit private producers who own transmission lines, allowing them to sell directly to consumers.

Mohan Kumar Dangi, Senior Vice President of the Independent Power Producers’ Association Nepal (IPPAN), welcomed the inclusion of captive power, electricity trading, and projects without power purchase agreements (PPAs). However, he said the legal framework for implementation remains unclear.

“The directive opens possibilities for trading in captive projects up to 10 MW, projects without PPAs, and about 1,200–1,300 MW of ‘waiting’ projects. The goal is positive, but legal validity needs thorough review,” Dangi said. He added that the private sector is ready for exports, noting an MoU with India’s Manikaran Power for trading 2,500 MW. “If necessary, the private sector can also build its own transmission infrastructure to remove bottlenecks,” he said.

Fees for Open Access Users

The ERC has outlined nine types of fees for open access users, which vary by category: transmission charges, wheeling charges, deviation settlement charges, cross-subsidy charges, additional surcharges, standby charges, reactive energy charges, scheduling charges, and operation charges. Not all fees apply to every user, and the Commission may revise them over time.