ADB announces 20 million USD grant for solar power projects in Nepal

The Asian Development Bank (ADB) has announced a 20 million USD grant to help boost private sector investment in utility-scale solar power projects in Nepal.

Issuing a statement on Thursday, the ADB Nepal office stated that the grant assistance should ensure installation of at least 25 megawatts (MW) of solar power by 2018.

The fund is expected to provide a business model that can be replicated elsewhere in energy-strapped South Asian nation, according to the statement.

"The grant will be used to finance the difference between private sector cost of producing utility-scale solar power and the minimum price that the Nepal Electricity Authority is willing to pay for the power," the statement reads.

Nepal has been suffering chronic power shortages, with peak demand of 1,444 MW far outpacing installed capacity of 885 MW. Solar power is seen as an ideal complement, particularly during the low-water season.

However, private sector investment has largely been in micro- and mini-grid solar power, with utility-scale plants of 4 MW or more attracting little private sector attention.

According to ADB, now the companies will be able to bid to develop solar systems through an international competitive bidding process, with power purchase agreements awarded on the basis of the best offtake prices.

The funding under the grant will be payable on the first day of operation of the solar system, up to end June, 2022. Bidding is expected to start in the first quarter of 2017 and last around 6 to 12 months. Enditem