…import tariff could go as high as Rs 6-8 per kWh
The overall hydropower generation of Druk Green Power Corporation’s (DGPC) power plants for the year was forecast to be around 6,914 Gigawatt hours (GWh) with expected revenue of Nu 11.51 billion (B).
This, according to the DGPC, would be a decrease of about 4 percent or Nu 497.54 million (M) from last year. In 2021, the country generated Nu 12B from electricity.
As of November this year, the DGPC’s power plants generated 6,919.12GWh of electricity, less by 34.68GWh compared to the same month last year. The country generated 6,953.8GWh of electricity as of the same month last year.
The four power plants under DGPC are Tala, Chukha, Kurichhu, and Basochhu.
On the current demand for electricity in the country, DGPC’s Managing Director, Dasho Chhewang Rinzin said that the domestic load is about 512 megawatt (MW). At the same time, the generation is about 584MW as on December 15 this year.
“By the end of December, the generation will be lower than the domestic load thus creating an energy supply deficit, which will then have to be met through imports,” he added.
For 2023, Dasho Chhewang Rinzin said that Bhutan has availed the approval of the designated authority, the Indian government for the import of up to 600MW of electricity until April 30, 2023.
“The indications from the Indian power markets are that the Market Clearing Price (MCP) for this lean season could be high as Rs 6 to Rs 8 per kilowatt-hour (kWh) and with the flexible operation of Bhutan’s hydropower plants, the delivery tariffs at the border could be managed to be kept lower,” he added.
Dasho Chhewang Rinzin also said that the DGPC is working with other related power entities and industries to ensure that imports can be managed when the MCPs are not so high. “With the similar flexi-operation of the hydropower plants during the import period, the import of electricity during the peak hours shall be minimised to the extent possible to reduce the import cost.”
Bhutan’s import of electricity from India was minimal until the year 2021.
The country imported 29.39 GWh of electricity in 2018 (19.25GWh in February and 10.14GWh in March).
Similarly, Bhutan imported 12.55GWh in 2019 (11.29GWh in January and 1.26GWh in February).
“Any import during the month was adjusted with the subsequent months’ export bills and there was therefore no import cost,” he said adding that the export billing is carried out based on the net monthly energy flow, where export and import are netted off to derive net export or import on a monthly basis.
However, in 2022, Dasho Chhewang Rinzin said that Bhutan initiated the import of power from the Indian Energy Exchange (IEX), India to meet the supply deficit during the lean season because of the increase in domestic load which was further exacerbated by the shut down of the Tala hydropower plant during the period January until March 2022.
He added that the DGPC signed a power sale agreement with Power Trading Corporation of India to import up to 400 MW of power in 2022.
Bhutan imported 240.11 GWh of electricity worth Nu 798.22M from IEX in the month of January to March 2022.
The MCP at the IEX was as high as Rs 14 per KWh during the peak hours (around 6am to noon in the morning and 5pm to 10pm in the evening).
However, Dasho Chhewang Rinzin said that the DGPC used the operation flexibility with the hydropower plants to avoid import during the peak hours when the rates were high and imported during off-peak hours when the rates were lower. “The average import tariffs during the period worked out to Nu 3.32 per kWh.”
Bhutan’s export of electricity from the DGPC’s power plants touched Nu 10.07B in 2020, one of the highest ever recorded. However, it declined to Nu 8.43B in 2021.
In an earlier interview, Dasho Chhewang Rinzin said that an increase in domestic consumption affects the overall revenues to the DGPC since the domestic generation tariff is lower than the export tariff.
Bhutan sells electricity from the Chukha hydropower plant at Nu 2.55 per kWh from January 1, 2017 until December 31, 2020, a revision from Nu 2.25 per kWh.
“The export tariff is due for revision since January 2021. Bhutan is pursuing with the Indian government for the export tariff revision,” Dasho Chhewang Rinzin said.
Similarly, the export tariff for the Tala hydropower project was last revised to Rs 2.23 per kWh on December 1, 2021 and the next revision will be due on December 1, 2026.
Dasho Chhewang Rinzin said that the tariff is to be increased by 10 percent every five years till the loan is fully paid and thereafter at 5 percent every five years. “Now with the Tala hydropower project loan fully paid, the revision would be a 5 percent increase every five years.”
He also said that the protocol to the agreement between the Indian and Bhutan governments agreed to merge the tariffs for Kurichhu with the prevalent tariffs for Tala on April 4, 2008.
“Every time the Tala tariff is revised, the Kurichhu tariff also gets automatically revised,” Dasho Chhewang Rinzin said.
Mangdechhu’s export tariff is at Nu 4.12 per kWh. Mangdechhu’s tariff will increase by 10 percent every five years until the loan is repaid for 35 years. After the loan repayment, it will be increased by 5 percent every 5 years.