Power sector in 2030

While power generated domestically for the central grid is next to fully decarbonised, Nepal imports on average around 33% of the electricity from its neighbouring India, where the sector is still largely reliant on fossil fuels.^6-10 Power consumption thus remains somewhat carbon intensive, with approximately 25% of central grid consumption in 2021 relying on such imported fossil fuel-generated electricity.^6,7

Increasing Nepal’s renewable energy capacity to 15 GW by 2030, as outlined in the country’s 2020 NDC,would replace electricity imports from Indian power plants and lead to further decarbonisation of power consumption within the upcoming decade.¹ Nepal’s LTS envisions further increasing its renewable energy capacity to 53.2 GW by 2050 with the aim of electrification of major end-use sectors and trade of surplus clean energy.⁵

In addition to increasing hydropower and renewable energy generation, such substantial change in the power sector requires holistic cross-sectoral policy packages, including those that upgrade the power transmission and distribution infrastructure.

Towards a fully decarbonised power sector

As envisioned in its NDC and LTS, with increasing domestic production of clean energy, Nepal can drive decarbonisation through electrification of its end-use sectors. Promoting electric transportation and cooking technologies as well as industries that run on this clean energy would significantly reduce fossil fuel usage and curb household biomass combustion.

Around 5% of Nepali households, mostly in remote areas, still do not have access to electricity.²³ In other parts of the country, despite accessibility, reliability and quality of service remains low.²³ To improve energy access and security and promote electrification of end-use sectors, the government will need to expand and improve grid accessibility and load capacity, invest in pumped and storage hydro, improve energy mix by establishing large scale solar and wind projects, promote standalone energy storage systems, increase affordability of electricity, and provide subsidies and tax incentives on clean technologies.^14,21

¹ Government of Nepal. Second Nationally Determined Contribution (NDC). 0–21 (2020).

² Climate Action Tracker. Nepal. December 2020 update. CAT Climate Target Update Tracker. (2020).

³ Ministry of Forest and Environment. National Level Forests and Land Cover Analysis of Nepal using Google Earth Images. 46 (2019).

⁴ Central Department of Environmental Science Tribhuvan University. Nepal’s GHG Inventory for Third National Communication. (2017).

⁵ Government of Nepal. Nepal’s Long-term Strategy for Net-zero Emissions. (2021).

⁶ Climate Analytics. 1.5°C national pathway explorer — India (sectors: power). (2022).

⁷ Nepal Electricity Authority (NEA). Nepal Electricity Authority: A review in fiscal year 2020/2021. (2021).

⁸ Nepal Electricity Authority (NEA). A year in review (fiscal Year 2016/2017). (2017).

⁹ Nepal Electricity Authority (NEA). A year in review (fiscal Year 2017/2018). (2018).

¹⁰ Nepal Electricity Authority (NEA). A year in review (fiscal Year 2018/2019). (2019).

¹¹ Nepal Electricity Authority (NEA). A year in review (fiscal Year 2019/2020). (2020).

¹² IEA. Data & Statistics – IEA. (2021).

¹³ Government of Nepal. Nepal’s 15th Five-Year Plan, (Fiscal Year 2019/20 – 2023/24). (2019).

¹⁴ Ministry of Forests and Environment (MoFE). Assessment of Electric Mobility Targets for Nepal’s 2020 Nationally Determined Contributions (NDC). (2021).

¹⁵ National Planning Commission Central Bureau of Statistics. Report on the Nepal Labour Force Survey. (2019).

¹⁶ Ministry of Finance. Economic Survey 2020/21. (2021).

¹⁷ Ministry of Finance. Economic Survey 2018/19. (2019).

¹⁸ CBS. Annual Household Survey 2016/17. (2017).

¹⁹ Nepal Rastra Bank. Macroeconomic Indicators Of Nepal. (2021).

²⁰ Government of Nepal. Nepal Fiscal Budget 2021/22. (2021).

²¹ Ministry of Forests and Environment (MoFE). Assessment of Electric Cooking Targets for Nepal’s 2020 Nationally Determined Contributions (NDC). (2021).

²² FRTC. National Land Cover Monitoring System of Nepal. (2022).

²³ ESMAP. Nepal: Beyond Connections Energy Access Diagnostic Executive Summary Based on the Multi-Tier Framework. ENERGYDATA.INFO. (2019).

²⁴ Water and Energy Commission Secretariat. Final Report on Energy Sector Vision 2050 A.D. (2013).

²⁵ DoTM. Details of Registered Vehicles till End of Falgun of Fiscal Year 2075-76.

²⁶ See the Climate Action Tracker for assumptions on the conditional NDC assessment. It was not possible to estimate the impact of all of the listed mitigation actions, which means the total reduction under the conditional NDC could potentially be higher than our estimates and high uncertainty remains regarding the NDC assessment.

²⁷ The 1.5°C compatible range is based on the Paris Agreement compatible pathways assessed by the IPCC SR1.5 filtered with sustainability criteria and downscaled from regional to national level. The median (50^th percentile) to 5^th percentile are provided here. Underlying global pathways and detailed methodology are made available here.

²⁸ In analysed global-least cost pathways assessed by the IPCC Special Report 1.5°C, the energy sector assumes already a certain amount of carbon dioxide removal technologies, in this case bioenergy carbon capture and storage (BECCS). While this is unlikely to be developed in Nepal, already benefiting from a high level of land sink, these pathways tend to attribute technological CDR regardless of countries potential. Thus, the level of sinks indicated in the analysed are rather a lower estimate of what the country would need to balance by 2050.

²⁹ While global cost-effective pathways assessed by the IPCC Special Report 1.5°C provide useful guidance for an upper-limit of emissions trajectories for countries, they underestimate the feasible space for developed countries to reach net zero earlier. The current generation of models tend to depend strongly on land-use sinks outside of currently developed countries and include fossil fuel use well beyond the time at which these could be phased out, compared to what is understood from bottom-up approaches. The scientific teams which provide these global pathways constantly improve the technologies represented in their models – and novel CDR technologies are now being included in new studies focused on deep mitigation scenarios meeting the Paris Agreement. A wide assessment database of these new scenarios is not yet available; thus, we rely on available scenarios which focus particularly on BECCS as a net-negative emission technology. Accordingly, we do not yet consider land-sector emissions (LULUCF) and other CDR approaches.

³⁰ Benchmarks across countries cover combined share of hydrogen, district heating and electricity for the buildings sector. In the case of Nepal, hydrogen and district heating are unlikely to happen in Nepal which has a high renewable potential and could rely mostly on electricity which is the main component of these benchmarks in the case of Nepal.

³¹ Benchmarks across countries cover combined share of hydrogen, biomass and electricity for the industry sector. In the case of Nepal, hydrogen and biomass are unlikely to happen in Nepal which has a high renewable potential and could rely mostly on electricity which is the main component of these benchmarks in the case of Nepal.

³² See the Climate Action Tracker for detailed assumptions. It was not possible to estimate the impact of all of the listed mitigation actions, which means the total reduction under the conditional NDC could potentially be higher than the estimates.

³³ Global cost-effective pathways assessed by the IPCC Special Report 1.5°C tend to include fossil fuel use well beyond the time at which these could be phased out, compared to what is understood from bottom-up approaches, and often rely on rather conservative assumptions in the development of renewable energy technologies. This tends to result in greater reliance on technological CDR than if a faster transition to renewables were achieved. The scenarios available at the time of this analysis focus particularly on BECCS as a net-negative emission technology, and our downscaling methods do not yet take national BECCS potentials into account.