Nepal’s private sector is poised to invest over Rs 3 trillion in the hydropower sector by 2035, according to projections made by the Independent Power Producers’ Association of Nepal (IPPAN). The forecast is based on the aggressive investment plans currently being implemented by energy developers across the country.
Speaking at IPPAN’s 23rd annual general meeting on Tuesday, IPPAN President Ganesh Karki stated that private developers have already invested more than Rs 1.3 trillion across 725 energy-related projects with a combined generation capacity of 34,484 MW. “The pace of investment is accelerating, and developers are eyeing substantial capacity additions in the coming decade,” said Karki.
In the past 33 years, Nepal’s electricity generation capacity has grown significantly—from 252 MW to 3,625 MW. Of this, 81 percent of the generation is contributed by private power producers, reflecting their dominant role in the country’s energy sector.
According to IPPAN, Nepal’s total electricity production capacity will reach 8,498 MW when including operational, under-construction, and planned projects. Additionally, projects with a combined capacity of 11,421 MW have signed power purchase agreements (PPAs) with the Nepal Electricity Authority (NEA).
Despite the progress, Karki noted several structural and procedural challenges facing private developers. “Government commitments to facilitate hydropower production have not translated into real reforms,” he said, pointing out the legal complexities and lack of an effective one-door system for project approvals.
The government has set an ambitious target of generating 28,500 MW of electricity within the next ten years. However, delays related to forest clearance, environmental permits, and land acquisition continue to hinder project execution. “Without genuine institutional reform, the energy sector will continue to suffer from these long-standing bottlenecks,” Karki added.
In the fiscal year 2023/24, Nepal exported electricity worth Rs 17 billion to neighboring countries, and the government aims to raise this figure to Rs 23 billion this year. But IPPAN argues that increasing domestic consumption should be the first priority. “While export is important, maximizing internal demand for electricity—such as in transportation, industries, and households—should be the focus,” said Karki.
IPPAN has also urged the government to open up electricity transmission, distribution, and cross-border trading to private investors. The association has further called for policy clarity to support hydrogen production and a greater role for the private sector in cross-border energy trade, a move seen as essential to unlock Nepal’s vast hydropower potential.
These demands, if addressed, could be critical to sustaining the private sector’s momentum and ensuring that Nepal’s ambitious energy roadmap translates into real economic gains.
