Kathmandu: India’s designated authority has recently approved Nepal’s request to export an additional 251 megawatts of electricity from 12 hydroelectric projects. This marks a significant expansion of Nepal’s power export capacity to its southern neighbor, further strengthening the country’s role as a key electricity supplier in the region.
For the first time, Nepal will be exporting electricity to the Indian state of Bihar under a mid-term power purchase agreement. This milestone in cross-border electricity trade comes as a major achievement, highlighting the growing energy cooperation between Nepal and India. With this new approval, Nepal’s total authorized electricity export capacity has now increased from 690 megawatts, sourced from 16 projects, to 941 megawatts from 28 projects.
Before securing this additional export capacity, Nepal had already established itself as a net exporter of electricity
, generating NPR 16.93 billion in revenue from electricity sales during the last fiscal year. This achievement underscores Nepal’s successful transition from being an energy importer to a net exporter, with significant economic benefits.
Nepal’s journey in electricity exports to India began in October 2021 when India first allowed the export of 39 megawatts of electricity. Remarkably, in less than three years, this figure has increased more than 24 times, reflecting the rapid growth in Nepal’s hydropower sector. Nepal initially entered the Indian market through sales on the Indian Energy Exchange’s day-ahead market and later gained access to the real-time market as well. Furthermore, the Nepal Electricity Authority (NEA) has signed mid-term power purchase agreements with distribution companies in Haryana and Bihar, ensuring
stable market for its electricity.
In a move that encourages further hydropower trade, India has introduced a provision allowing hydropower imports from Nepal to be counted towards the hydropower purchase obligations (HPO) for Indian buyers. This regulatory change is expected to increase demand for Nepalese electricity in the Indian market.
The long-term energy agreement between Nepal and India envisions the export of up to 10,000 megawatts of electricity from Nepal to India over the next decade. In the first year of this agreement, nearly 1,000 megawatts have already been exported, signaling a strong start to this ambitious plan.
These developments position Nepal on the path to becoming a major hydropower exporter in South Asia. Despite recent political events in Bangladesh leading to the postponement of a planned agreement to export 40 megawatts of electricity, Nepal’s progress in the regional energy market remains robust and promising. As Nepal continues to expand its electricity exports, it is poised to play a pivotal role in the energy dynamics of South Asia.
