CAPTIVE POWER PLANTS: AN ANSWER TO THE CURRENT ENERGY CRISIS?

ANJAL NIRAULA Proper access to energy is vital to the economic development of any country. So, with numerous hours of load shedding every day in Nepal, there is little surprise to how the economic growth of Nepal has been stifled in the recent years. And, with the latest reports from the Nepal Electricity Authority (NEA) suggesting that the load shedding could very well continue for 10 more years at least, the struggle for energy could very well continue for a long time, unless of course we look elsewhere for the answers. The answers may very well lie in the world of renewable energy. There are many sources of free energy that is often simply wasted for want of an effective way to convert it into useful energy. And, effective use of such free energy sources such as sun or wind will be key to satisfying this increasing demand for energy in Nepal. In the last few years harnessing solar energy for electricity is becoming popular in urban Nepal. Residential buildings, offices, small industries, and commercial buildings are favoring solar energy as a longer term investment compared to the conventional battery inverter or Diesel generator set. Gham Power Nepal Pvt. Ltd. alone has installed more than 150kWp of solar power within Kathmandu in past one and a half years. One of the main reason for the increasing popularity is its cost competitiveness when used in an energy mix with the national grid and the diesel generator compared with the existing single sourced alternatives. However, despite its growing popularity, solar electricity does have a few shortcomings. Solar energy is an intermittent source and requires battery storage. Batteries can be costly and they usually need to be replaced every 4 to 5. Heavy initial investments may be another deterrent for people wanting to install such systems. Also, a constant supply of electricity cannot be guaranteed throughout a day, because of the intermittent nature of the sunlight. While such deterrents prompt most industries in Nepal to resort to the use of diesel generators, there are several issues associated with diesel generators as well. Besides the obvious environmental harm, and inefficient operation by running at partial loads, the availability of diesel, and the rising fuel prices are big issues for all generator owners to contend with. Thus, despite the low initial capital, the costs of owning and maintaining a diesel generator are astronomical. So, how do these systems need to be altered to better serve the energy deficient markets of Nepal? Captive power plants may be just the right way to get about it. Captive power plants, also known as in-house power plants, are energy generating systems whose output is entirely consumed by the industries or facilities in which they are housed. In a captive power plant single or several energy sources are optimized to provide reliable and cost effective energy service. They could be a combination of diesel / wind /solar systems/utility or any other energy generating system. For facilities with high energy demand during the day, various research and analysis conclude that

the solar-diesel-utility is an ideal energy mix for captive power plants with connected load greater than 30kVA in Nepal. The captive power plant (solar-diesel-utility) works as a mini AC-coupled grid, during the time of power outages, providing the consumer with a constant supply of electricity at all times. During the day time, when the sun is plentiful, the load demand is directly met by the solar PV generated electricity and only the excess energy is stored in the battery banks. Such systems avoid the need of large battery banks and the associated losses (~20% energy is lost in battery each way during storage and retrieval). The diesel generator merely functions as an auxiliary energy generating equipment during the time of energy deficiency. This avoids the uncertainty involved with solar systems and keeps the use of the diesel generator to bare minimum, thus getting the optimized output of both energy generating sources. The preliminary financial analysis has shown that such captive power plants can generate energy at a price which is competitive with present diesel generators. The operation and maintenance cost is minimum hence energy cost can remain fairly constant over the project life cycle. However the major challenge is the initial capital cost, to which a financially feasible solution is the power purchase agreement model. The project is financial viable at aforementioned PPA rate during the load shedding months and standard utility rate during non-load shedding months, for a minimum of 10 years. Under such model the end users dont have to bear the initial investment and are also free from the maintenance and operation hassles. Captive power plants not only promote the use of renewable energy but also offset/reduce dependency on fuel imports. And with the ongoing energy crisis, efficient and economical utilization of all the energy sources in unison, such captive power plants can be key in securing viable energy supply.