| Author | Limbu, Tika Ram |
| Call Number | AIT Thesis no. ET-98-17 |
| Subject(s) | Water-power--Nepal--Economic aspects
|
| Note | A thesis submitted in partial fulfillment of the requirements for the degree of Master of
Engineering, School of Environment Resources and Development |
| Publisher | Asian Institute of Technology |
| Abstract | Like other natural resources, hydro resource that are capable of generating electricity at
cheaper cost give rise to economic rent. Nepal posses huge amount of such hydro resources
that could be developed at the cheaper cost and which is in far excess of the domestic
demand. It has been realized for long time that hydropower is the only strategic resource for
Nepal whose judicious exploitation could help its growth and sustainable development. Hence
hydro rent attached to these resources is the major subject of interest.
The methodology of this study to evaluate the rent of hydropower uses the concept of hydro
rent as a measure of cost savings achievable by the use of hydro resources over the least cost
alternatives. Two generation expansion plans i.e., one with and the other without the selected
hydro resource option are carried out. The difference of the total costs of these two would
give the rent of the selected hydro resource. The WASP-III + optimization software is used to
determine minimum system cost.
Hydropower projects of two types, one is a domestic demand oriented project and another a
large and export market oriented project are considered for the case studies of evaluating
hydro rent for domestic market and export market respectively. The major findings of this
study are: with the given demand level and set of existing and candidate plants, large
hydropower plant does not yield any rent in the domestic market of Nepal. A large export
market oriented storage type Kali Gandaki-2 project considered in this study, however, when
export market is assumed available, would generate a rent of 0.61 USc/kWh in the export
market, which is 10% of the electricity generation cost of the project. Upper-Arnn hydro
project one of the optimal plants to meet domestic demand yields rent of 0.62 USc/kWh in the
domestic market, which is 22% of the electricity generation cost of the project.
Hydro rent is found to be site specific, highly sensitive to changes in the price of fuel and the
level of demand that are responsible for the change of price of electricity. With the increase in
price of fuel by 10%, hydro rent would increase by as high as 43%.
The existing rents levied by the governments are not found to address the potential value of
resources. So, there are considerable amounts of economic rent being dissipated in terms of
heavy consumer's surplus or the windfall profits to the developers at present. |
| Year | 1998 |
| Type | Thesis |
| School | School of Environment, Resources, and Development (SERD) |
| Department | Department of Energy and Climate Change (Former title: Department of Energy, Environment, and Climate Change (DEECC)) |
| Academic Program/FoS | Energy Technology (ET) |
| Chairperson(s) | Shrestha, Ram M.; |
| Examination Committee(s) | Amin, A. T. M. Nurul ;Savin, D. V.; |
| Scholarship Donor(s) | Asian Development Bank/Government of Japan ; |
| Degree | Thesis (M.Eng.) - Asian Institute of Technology, 1998 |