As Nepal’s Independent Power Producers’ Association (IPPAN) celebrates its 25th anniversary, the government has announced an ambitious target to generate 28,500 MW of electricity by 2035.
Leveraging Nepal’s abundant water resources, the plan aims to usher in an era of sustainable energy, energy security, and regional cooperation. To achieve this vision, Nepal must not only harness its hydropower potential but also integrate solar energy and develop a climate-resilient infrastructure.
Hydropower: The Backbone of Nepal’s Energy Ambitions
Hydropower forms the cornerstone of Nepal’s energy strategy. With more than 6,000 rivers and a theoretical generation potential of 83,000 MW—of which approximately 43,000 MW is deemed economically viable—it provides Nepal with a sustainable and renewable energy solution. Currently, Nepal’s installed hydropower capacity is approximately 3,000 MW, which has left a significant untapped potential. One notable example of private-sector involvement is the Solu Khola (Dudhkoshi) Hydroelectric Project, an 86 MW initiative that stands out as a symbol of domestic capability. Fully developed with indigenous funding and manpower, this project highlights the potential of Nepal’s private sector to contribute to the nation’s energy goals.
The role of Independent Power Producers (IPPs) has been instrumental in the growth of Nepal’s energy sector. Over 90% of hydropower projects in Nepal have been initiated by IPPs, highlighting the private sector’s commitment to addressing the country’s energy demands. These IPPs not only attract domestic and foreign investment but also bring innovation and efficiency to project execution. Strengthening partnerships with IPPs and fostering an enabling environment will be critical to achieving the 28,500 MW target.
Nepal must prioritize climate-resilient infrastructure, such as flood-resistant designs, sediment management systems, and enhanced disaster preparedness.
Challenges
Achieving the 2035 target for hydropower generation requires addressing several critical challenges. One major obstacle is the impact of climate change, as unpredictable monsoons and glacier melt can significantly affect river flow, making consistent power generation difficult. Environmental concerns pose another challenge, as large-scale hydropower projects often disrupt ecosystems and displace local communities. Furthermore, infrastructure gaps must be bridged, particularly by developing efficient transmission lines to connect power plants to the national grid and export markets.
To address these issues, Nepal must prioritize climate-resilient infrastructure, such as flood-resistant designs, sediment management systems, and enhanced disaster preparedness.
Solar energy: Diversifying Nepal’s energy portfolio
While hydropower remains the focal point, solar energy is emerging as a complementary solution. Nepal’s high-altitude regions and sunny climate offer immense potential for solar power development. Solar energy not only provides a reliable alternative during dry seasons when hydropower generation may dip but also supports rural electrification in remote areas where grid access is limited.
Current solar initiatives include the development of grid-tied and off-grid solar systems, with opening the bid of 960 MW projects for PPA with competitive bidding. However, to scale up solar energy production significantly, Nepal must encourage private-sector investment through subsidies and tax incentives, develop large-scale solar farms with integrated battery storage systems, and enhance research and development to lower costs and improve efficiency.
Integrating solar with hydropower will create a robust and flexible energy system capable of meeting fluctuating demand and mitigating climate-related risks.
Key measures to build resilience in Nepal’s energy sector include several strategic actions. Adaptive infrastructure design is essential, involving the construction of hydropower plants and solar farms that can withstand extreme weather conditions.
Climate change and resilient energy infrastructure
Climate change poses significant risks to Nepal’s energy infrastructure. Melting glaciers, erratic rainfall, and extreme weather events can disrupt power generation and damage infrastructure. Therefore, climate resilience must be at the heart of Nepal’s energy strategy. Key measures to build resilience in Nepal’s energy sector include several strategic actions. Adaptive infrastructure design is essential, involving the construction of hydropower plants and solar farms that can withstand extreme weather conditions. Sustainable river basin management is another critical approach, emphasizing integrated water resource management to balance energy production, agriculture, and ecological conservation. Additionally, deploying early warning systems with advanced monitoring and forecasting capabilities can help anticipate and mitigate climate impacts. By embedding climate resilience into energy planning, Nepal can safeguard its investments and ensure a reliable power supply for the future.
The government’s role in achieving the 28,500 MW target
The success of Nepal’s energy vision depends heavily on proactive government policies and effective implementation. To achieve this, the government must focus on several critical steps.
Policy and regulatory framework: First, simplifying licensing processes for hydropower and solar projects is essential to attract both domestic and international investors. Clear guidelines for environmental and social impact assessments should also be established to ensure sustainable development. Additionally, introducing feed-in tariffs and other incentives can encourage the adoption of renewable energy. Lastly, reforming existing electricity acts to allow private-sector participation in power trade and establishing open-access guidelines will facilitate fair and competitive electricity trading, further strengthening Nepal’s energy framework.
Infrastructure development: Infrastructure development is a critical component of Nepal’s energy vision. To enhance the sector, the government must invest in modernizing and expanding the national grid to reduce energy losses and improve reliability. Additionally, constructing high-capacity cross-border transmission lines is essential to facilitate energy exports, particularly to India and other South Asian countries. Furthermore, the development of energy storage solutions, such as pumped-storage hydropower and advanced battery systems, will play a key role in stabilizing the power supply and ensuring energy security.
By harnessing its hydropower and solar potential, building climate-resilient infrastructure, and enacting supportive government policies, Nepal can turn its energy aspirations into reality.
Financial incentives and Public-Private Partnerships (PPP): Financial incentives and PPP are vital for advancing Nepal’s energy ambitions. Providing low-interest loans and grants for renewable energy projects can encourage investment and accelerate development. Promoting PPP models is equally important, as they allow the government to leverage private-sector expertise and funding to drive innovation and efficiency. Additionally, seeking international funding from organizations such as the World Bank, the Asian Development Bank, and climate funds can provide the financial resources needed to implement large-scale energy projects and support sustainable growth.
Capacity-building and public awareness: Capacity-building and public awareness are crucial for the successful implementation of Nepal’s energy vision. Training local engineers and technicians to operate and maintain advanced energy systems will ensure the sustainability and efficiency of these projects. Public awareness campaigns are equally important to garner community support for renewable energy initiatives and promote their benefits. Furthermore, encouraging academic and research institutions to innovate in renewable energy technologies can drive advancements and position Nepal as a leader in sustainable energy development.
Regional cooperation: Regional cooperation plays a pivotal role in advancing Nepal’s energy goals. Strengthening energy trade agreements under initiatives such as the SAARC Energy Framework and BBIN (Bangladesh, Bhutan, India, Nepal) can yield mutual benefits and enhance regional energy security. Additionally, collaborating with neighboring countries on joint infrastructure projects and fostering knowledge exchange will help optimize resources, share expertise, and promote sustainable energy development across the region.
Opportunities and benefits: Achieving the 28,500 MW energy target presents transformative opportunities and benefits for Nepal. Economically, exporting surplus electricity can generate substantial revenue, boost Gross Domestic Product (GDP), and help reduce trade deficits. Improved energy access will electrify rural areas, enhancing living standards and supporting the growth of local industries. Environmentally, a renewable energy-dominated system will significantly reduce carbon emissions, aligning with global climate goals. Additionally, Nepal has the potential to establish itself as a regional leader in South Asia’s energy market, strengthening its geopolitical influence and fostering stronger international partnerships.
Conclusion
Nepal’s plan to generate 28,500 MW of electricity by 2035 is a visionary step towards sustainable development and energy security. By harnessing its hydropower and solar potential, building climate-resilient infrastructure, and enacting supportive government policies, Nepal can turn its energy aspirations into reality. This journey will not only transform Nepal’s economy but also position the nation as a leader in renewable energy in South Asia. The journey may be challenging, but with unwavering determination, innovative solutions, and collaborative efforts, Nepal’s energy future holds immense promise and potential.
(Mr. Chaudhary is VP of IPPAN)
