Electricity imports surge six-fold during lean season

Kuensel | Dechen Dolkar | May 18, 2024

…Bhutan had to import electricity at Nu 10 per unit from IEX

Electricity imports during the lean season increased significantly compared to last year, despite the commissioning of the 118MW Nikachhu Hydropower Project at the end of last year.

From December 2022 to March 2023, Druk Green Power Corporation (DGPC) imported 367.17 million units of electricity, worth Nu 1.75 billion.

From December 2023 to May 13, 2024, DGPC purchased a total of 1,447 gigawatt hours (GWh) of electricity from the Indian Energy Exchange (IEX) at a total cost of Nu 6.07 billion, inclusive of fees and charges. DGPC imported electricity at rates ranging from Nu 1.2 to Nu 10 per unit from the IEX.

The export of electricity has witnessed a significant drop over the years. In 2021, Bhutan exported electricity valued at Nu 24.2 billion. This figure decreased to Nu 22.47 billion in 2022, and last year, Bhutan exported electricity worth Nu 16.67 billion.

However, according to the Power Purchase Agreement (PPA), the 118MW Nikachhu Hydropower Project exports 68 percent of its production to India, with only 32 percent allocated for domestic consumption.

Additionally, DGPC has been importing electricity for almost six months, from December 2023 until May 2024.

In the past, DGPC imported electricity only for three months. This increased to four months in 2022. Given the rise in domestic demand and low hydropower generation, the pressure on imports has been increasing.

According to an official from DGPC, the drastic increase in electricity imports is attributed to the rise in high voltage demand.

The official from DGPC said that based on the historical hydropower generation trend in Bhutan, generation was expected to increase from April onwards. However, observations of hydrology this year indicate barely any increase in river inflows. “Therefore, power continues to be imported during May this year to meet the energy deficit.”

Bhutan is currently importing up to 450 MW during solar hours, importing during daytime only.

The official said that imports were projected to continue until the third week of May if there is some rain and improved hydrology. However, if there is no increase in generation due to the continuing poor hydrology, imports from India might be required until the end of May.

In May 2024, the maximum daily average generation of all the plants until May 13 was 836 MW, while the average daily generation was 762 MW.

The plants incudes Tala, Kurichhu, Chhukha,  Basochhu, Mangdechhu hydropower plant (MHP), Dagachhu projects and  Nikachhu Hydropower project.

Electricity is purchased from the Day Ahead Market (DAM) of the Indian Energy Exchange (IEX) through a competitive bidding process.

In the exchange, the prices are determined through a day-ahead double-sided auction from both buyers and sellers for every 15-minute time block.

The import prices depend on the time of the day and the demand-supply scenario for that 15-minute block period.

Last year, the average daily market clearing price (MCP) at the Indian Energy Exchange (IEX) reached as high as INR 8.99 per unit on February 28, 2023.