Electricity sits squarely at the heart of Nepal’s spending plan for fiscal year 2026/27, with the government pledging to bring an additional 1,040 megawatts onto the national grid over the next twelve months. The mix is telling: roughly 670 MW is slated to come from hydropower and another 370 MW from solar, a clear nod toward loosening the country’s longstanding dependence on run-of-river projects. Should the target hold, installed capacity would climb to about 5,535 MW, extending Nepal’s remarkable turnaround from the blackout years that defined daily life barely a decade ago.
The money behind the rhetoric is not trivial. Around Rs 85.54 billion (about €489 million) has been set aside for generation, transmission, and distribution, with an additional Rs 70 billion (about €400 million) ringfenced for transmission lines and substations, which have long been the system’s Achilles’ heel. The plan keeps a roster of marquee projects moving, including the 1,061 MW Upper Arun, the 670 MW Dudhkoshi reservoir scheme, and the 1,200 MW Budhi Gandaki, while greenlighting feasibility studies and tenders for a string of mid-sized plants. Most consequentially, it resurrects the perennially stalled breakup of the Nepal Electricity Authority into distinct generation, transmission-and-distribution, and trading entities, a reform pitched as the cure for a sluggish state monopoly.
A handful of debut initiatives reveal where the government hopes the sector is heading. The budget floats a 2.5 MW green hydrogen pilot in Hetauda with an eye toward commercial output, alongside a 100 MW battery storage installation for the Kathmandu Valley to blunt the evening demand spikes that generation alone cannot tame. To bankroll the expansion, officials intend to float green energy bonds and diaspora bonds, courting both climate-minded financiers and the vast Nepali workforce overseas, sweetened by perks such as letting fully funded reservoir schemes list a larger slice of shares in their first year.
Yet the grand figures bump up against an awkward truth the document itself can’t fully sidestep. Domestic appetite for power is modest, storage to bank the monsoon glut is scarce, and overseas buyers are far from guaranteed, which is why the government now wants to strip licenses from developers who signed purchase agreements but never started digging, and to roll out take-or-pay terms and dry-season pricing. Kathmandu is also widening transmission links toward India and a line in the direction of China, wagering that regional trade can soak up whatever the country fails to use itself. Generating the megawatts, in short, is the straightforward half of the equation. The riddle that has dogged planners for years remains unanswered: who, exactly, will buy all this electricity.