Nepal’s energy sector has undergone a dramatic transformation. For decades, the country suffered from severe load shedding. Fast forward to fiscal year 2023-24: Nepal became a net exporter of electricity.
According to the Nepal Electricity Authority (NEA), Nepal exported 94 billion units of electricity while importing 83 billion units, earning almost a million dollars in the last fiscal year.
The company generates more power in the wet season than it must purchase in the dry season when water resources diminish. Most Nepalese hydropower plants belong to the ‘run-of-the-river type’. Their output depends on how much water flows in the rivers that drive their production. When the local output falls below domestic needs, NEA must buy power from India. The going export rate is a bit lower than the current import rate, which used to be a lot higher. This, too, helps to create a much healthier energy trade balance.
While Nepal now exports electricity, NEA also sells more power domestically as the number of electric vehicles, induction cookers and other household appliances rises. The country is also buying fewer petroleum products, which positively impacts its trade balance with India.
Nepal recently started participating in the competitive Indian energy market. Since November 2021, NEA has sold about 700 MW of electricity daily to India, generated by sixteen hydropower plants. Meanwhile, another 400 MW export approval for the Indian states of Haryana and Bihar is pending. Additionally, Nepal aspires to export 40 MW of electricity to Bangladesh shortly
NEA is optimistic about the future import-export scenario, suggesting that for the next few years, the market may still need to import during the dry season while the volume of exports is only set to grow. Another crucial regional agreement recently concluded is Nepal’s contract to export electricity to India, amounting to 10,000 MW for the next 10 years. This agreement indicates the growth of Nepal’s opportunities and desire for energy production.
While Nepal now exports electricity, NEA also sells more power domestically.
Pratikshya Bhatta is a junior editor with Nepal Connect
