Blackouts in Nepal & Dynamic pricing

Abstract

This paper mainly analyzes the power shortage in Nepal by using the system dynamics (SD) tools. From the last ten years, Nepal has been facing the challenge of load shedding and it is increasing year by year because the demand of electricity is much higher than the generation and price of the electricity is fixed so the dynamic pricing on the Nepalese electricity market solves the blackout in the short time. It also increases the satisfaction of need of the consumers. All the data used in this thesis has been taken from the NEA annual report. By the use of dynamic pricing (DP) policy, the price of the electricity varies according to the demand of the electricity such as higher price during the peak hours and lower price in off hours. This is the best fit policy in the Nepalese electricity market to eradicate blackout. However, without understanding the concept of dynamic pricing (DP) and how it’s affect on demand and supply of power as well as the consumers satisfaction of needs. This thesis tries to address the issue by developing the system dynamics model on the basis of dynamic pricing in the electricity market of Nepal. And the conclusion is that the smart market pricing (SMP) policy able to balance the demand and supply of electricity with the help of price elasticity of demand in the Nepalese electricity market and it also able to increase the satisfaction of customers need.