Nepal’s large solar potential blocked by policy and borders ^{CEFR B1}

An EMBER report in October 2025 finds that renewables have overtaken coal in the global electricity mix, with solar accounting for 83 percent of the rise. Nepal sits within this shift but has not yet used its full solar potential. The country’s technical solar potential is 432 gigawatts, far above its hydropower potential of 42,000 megawatts, and it receives more than 300 days of sunshine each year. At the same time, glacial lake outburst floods make some Himalayan hydropower sites increasingly unstable.

Policy and economics limit solar growth. The government caps solar at 10 percent while solar now supplies only 5 percent. Solar projects face competitive bidding and a tariff of NPR 5 (USD 0.035) per unit, whereas hydropower operates on a first-come, first-served basis and receives NPR 6.5 (USD 0.046) per unit. This arrangement makes hydropower supply-driven and solar demand-driven, which discourages many solar investments.

Geopolitical concerns have blocked several projects near borders. In 2018 a proposed 150 MW site with 20 MW battery storage in Mustang was halted by the Mines Department. A planned USD 190 million project by Risen Energy for two 125 MW plants with 20 MW storage in Banke and Kapilvastu was not signed after India raised security concerns. Smaller China-backed projects went ahead in 2024 in Lalitpur. Possible next steps include raising the cap to 30 percent, expanding zoning to high-radiation areas, and using net metering and rooftop installations.