As of 2023, Nepal has installed solar power capacity, with a total of 115 MW.⁵

Available data indicates that Nepal has a projected solar energy potential of approximately 47,628 MW, solely from solar power. ⁶

The major source of electricity generation is hydro in Nepal i.e. 99%.

• The average cost of electricity generation from large hydropower is approximately USD 1,865 per kW, with costs ranging from USD 1,046 to USD 7,582 per kW. ⁷

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Nepal is described as “load-shedding free” since early 2018, meaning there are no scheduled power cuts for residential users. ⁹

• Assuming 24 hours of electricity per day for residential users and most industrial sectors.
• Occasional power outages during peak demand periods might slightly reduce this.

Approximately 1.1 million solar home systems, with a combined capacity of nearly 30 MWp, have been installed throughout Nepal. ¹⁰

Projected installations ¹¹

Exact number is not given but;

• Over the next 50 years, Nepal will install 200 watts of solar panels per person annually, equivalent to approximately one square meter of panels per individual.

Installed Solar Farms ¹²

There are currently 21 solar projects in operation.

 Projected Solar Farms ¹³

An additional 17 projects planned for the future.

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Current Off-Grid Solar Market Demand in Nepal:

• The off-grid solar market in Nepal is expanding, with an estimated 3 million off-grid households, 97% of which are located in rural areas.
• The rural electrification rate is as low as 34%, significantly below the national average of 44%. Many of these households rely on kerosene lamps for lighting, which not only contributes to indoor air pollution but also results in high greenhouse gas emissions.
• On average, households consume approximately 3.6 liters of kerosene per month, spending about 2.1 Euros, which is 13% of their monthly household expenditure.
• To address these challenges, solar-powered solutions like solar irrigation pumps (SIPs), solar mini-grids (SMGs), and small-scale solar PV systems are increasingly deployed in rural and semi-urban regions. For example, solar PV systems ranging from 1 kW to 3 kW are being installed in health centers, schools, and community facilities to ensure a reliable power supply for essential services.
• The Nepalese government, in partnership with international organizations such as AEPC, is also focusing on solar installations in off-grid areas, making significant strides in rural electrification.

Future Off-Grid Solar Market Demand in Nepal:

• The off-grid solar market in Nepal is expected to experience rapid growth, driven by government initiatives and increasing private sector involvement.
• Under the “Promotion of Solar Energy in Rural and Semi-urban Regions of Nepal” project, the government plans to install 0.6 MW of solar irrigation pumps and 0.4 MW of solar mini-grids in underserved regions.
• The demand for solar irrigation solutions is expected to rise, especially in agriculture-dependent regions, to enhance productivity and reduce reliance on diesel-powered pumps.
• Additionally, the deployment of solar mini-grids will expand, particularly in remote regions like Karnali, Rukum, Dolpa, and Mustang.
• As the cost of solar technology continues to decrease, more affordable and efficient solar systems will become accessible, further boosting market demand. The entry of private developers into the sector will accelerate this growth, making off-grid solar solutions scalable and sustainable.
• These developments will play a crucial role in meeting Nepal’s rural energy needs, promoting environmental sustainability, and improving the livelihoods of remote communities.

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Current On-Grid Solar Market Demand in Nepal:

• Nepal’s on-grid solar market is still developing, with only small-scale solar projects in operation and no large utility-scale plants yet.
• However, the declining costs of solar technology have made it a competitive option. By 2020, the global levelized cost of energy (LCOE) for solar PV dropped to 0.057 USD/kWh, making it an attractive alternative for Nepal.
• The country has significant solar potential, especially in the Tarai and hilly regions, which provides an opportunity for grid-connected solar projects.
• The increasing energy demand, coupled with the reliance on costly energy imports, underlines the need for sustainable energy solutions.
• In June 2024, the Nepal Electricity Authority (NEA) opened a tender for 800 MW of grid-connected solar projects, with bids due by July 9. This marks a significant step toward increasing the country’s solar capacity and meeting its growing energy needs.

Future On-Grid Solar Market Demand in Nepal:

• The on-grid solar market in Nepal is set for substantial growth. The government is pushing to diversify its energy mix and reduce dependence on imported fossil fuels, which will accelerate the development of large-scale solar installations.
• The 800 MW tender and the country’s potential to install up to 2.1 GW of solar capacity show that solar PV will play a crucial role in Nepal’s energy future.
• The seasonal variability in hydropower generation, especially during the winter months, further strengthens the case for integrating solar PV to ensure a stable and reliable energy supply.
• As technology costs continue to decline and funding opportunities grow, solar projects are expected to be key in meeting Nepal’s increasing energy demand while enhancing energy security and sustainability.

A Solar Energy Systems Engineer in Nepal typically earns around 7,000 USD per year. The salary range can vary from approximately 3,500 USD to 11,000 USD, with the lowest average salary around 3,500 USD and the highest average salary reaching 11,000 USD. ²¹

Nepal 2024 population is estimated at 29,651,054 people. ²²

Estimate for Factory Rent

Monthly Average Warehouse Rental Cost ²³

The minimum and maximum warehouse rental prices in Nepal are as follows:

• Minimum Rent: 163 USD per month (for 861 sqft in Dhungedhara, Kathmandu).
• Maximum Rent: 2,778 USD per month (for 4300 sqft in Chabahil, Kathmandu).

Key Components of Administrative Costs

Salaries and Wages: ²¹

A Solar Energy Systems Engineer in Nepal typically earns around 7,000 USD per year. The salary range can vary from approximately 3,500 USD to 11,000 USD, with the lowest average salary around 3,500 USD and the highest average salary reaching 11,000 USD.

Commercial Electricity Prices ³

The commercial electricity rate is USD 0.068.

Monthly Rents for Office Space ²⁴

Standard options start at approximately 105 USD per person per month, and premium options start at approximately 126 USD per person per month.

Electricity Generation ²⁵

• Nepal’s electricity generation is primarily driven by hydropower.
• In addition to hydropower, Nepal also generates electricity from other sources such as solar, wind, geothermal, biomass, and waste. In 2022, the country produced a total of 1,584 GWh of electricity.
• Despite its domestic production, more than half of Nepal’s electricity is imported from India.

Transmission & Distribution ²⁶

• In Nepal, electricity transmission is primarily managed by the Nepal Electricity Authority (NEA) through a network of power lines.
• The majority of these transmission lines operate at 132kV, with smaller sections of 66kV and 33kV lines used for distribution across the country.
• In recent years, the total length of transmission lines in Nepal has significantly expanded, now exceeding 6,500 circuit kilometers.

 Energy Access ²⁵

• Around 86% of Nepal’s population has access to grid electricity, while about 10% rely on off-grid distributed generation.

Energy Exports ²⁷

• Nepal’s top exports include palm oil ($184M), soybean oil ($180M), non-retail synthetic staple fibers yarn ($92.3M), knotted carpets ($90.4M), and fruit juice ($48.6M).
• The country’s primary export destinations are India ($956M), the United States ($152M), Germany ($43M), Turkey ($28.3M), and the United Kingdom ($26.2M).

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The legal framework governing renewable energy projects includes several key licenses issued by the Ministry of Energy (MoE):

• Survey Licenses: The MoE grants survey licenses to allow the holder to conduct feasibility studies and environmental impact assessments for renewable energy projects. These licenses are valid for one or two years and can be extended up to five years.
• Generation Licenses: The MoE also issues generation licenses to developers, enabling them to construct, operate, and maintain renewable energy facilities. These licenses can last up to 30 years.
• Transmission Licenses: If a transmission line is required to connect a generation facility to the national grid, a transmission license must be obtained. These licenses are typically co-terminus with the generation license.

Pending Legislative Proposals

A proposed Electricity Bill aims to replace the current Electricity Act and establish clearer procedures for the licensing of renewable energy projects. However, progress on this bill has been slow in Parliament.

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The government of Nepal has implemented several initiatives to promote solar energy, including substantial subsidies and incentives for solar panel production and deployment.

Subsidies for Renewable Energy Technologies

• The Renewable Energy Subsidy Policy of Nepal, introduced in 2016, provides financial support for the deployment of renewable energy systems, especially targeting households in very poor regions. This policy revises earlier subsidy frameworks, including the Renewable Energy Subsidy Policy – 2012 and Urban Solar System Subsidy and Credit Mobilization Guidelines.
• Under this policy, subsidies typically cover about 40% of the total costs for renewable energy systems, with contributions from credit sources (30%) and private sector or community investments (30%).
• The subsidies are aimed at off-grid renewable energy solutions, such as mini/micro hydropower, solar energy (home systems, mini-grids, grid-connected systems), biogas, and wind energy.

Specific Subsidies for Solar Energy Systems

Solar PV Mini-Grid

• Generation Equipment: approx. USD 1640 to 1410 per kWp
• Distribution per Household: approx. USD 300 to 260 per kWp.

This subsidy is designed to support solar mini-grids in remote areas, where the cost of installing grid infrastructure is prohibitive.

Solar PV in Grid-Connected Areas: Subsidies are also available for solar PV systems in areas with an unreliable grid supply, such as for solar street lighting, and installations in households, educational institutions, health facilities, and religious places.

Additional Incentives

• Tax Holiday: The government offers a 10-year income tax exemption starting from the commercial operation date for renewable energy projects, with a 50% exemption for the next five years for projects operating by April 12, 2024.
• VAT Refund: Developers who achieve commercial operations by the deadline can also receive a VAT refund of up to 5 million Nepalese rupees per megawatt.

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Current Projects

Solar Energy Project

• Capacity: 0.680 MW
• Location: Bungamati (Lalitpur), Kathmandu, Nepal
• Inauguration Date: December 10, 2024
• Promoter: Kathmandu Upatyaka Khanepani Byawasthapan Board
• Details: A small-scale solar energy project.

Bishnu Priya Solar Farm Project

• Capacity: 1.00 MW
• Location: Ramnagar (Nawalparasi), Kathmandu, Nepal
• Inauguration Date: August 13, 2023
• Promoter: Surya Power Company P. Ltd.
• Details: A 1 MW solar farm project in Nawalparasi.

Grid-Connected Solar Power Project (Butwal)

• Capacity: 8.5 MW
• Location: Butwal N.P. (Rupandehi), Nepal
• Inauguration Date: July 15, 2024
• Promoter: Ridi Power Company Ltd.
• Details: A large grid-connected solar project in Butwal with 8.5 MW capacity.

Future Projects

Block No 1 Solar Farms Project

• Location: Charghare (Nuwakot), Nepal
• Details: The project has a capacity of 5.1 MW and is being promoted by Nepal Electricity Authority. It is part of Nepal’s efforts to increase renewable energy production in rural regions.

Block No 2 Solar Farms Project

• Location: Charghare (Nuwakot), Nepal
• Details: This project, also promoted by Nepal Electricity Authority, will provide 8.3 MW of solar energy. It is a continuation of the solar farm development in Charghare to support the national grid.

Bel Chautara Solar Farm Project

• Location: Khairenitar (Tanahu), Nepal
• Details: With a capacity of 5 MW, this solar farm is promoted by Solar Farm Pvt. Ltd. It is a significant step towards increasing the solar energy contribution in Nepal, especially in the Tanahu region.

Sunshine Energy Private Limited (SSE)

Location: Samakhushi, Kathmandu, Nepal

Website: sunshine.com.np

Products and Services:

• Products: Solar Home Systems (SHS), Hybrid Solar PV systems (HSS), Institutional Solar PV systems (ISPS), Solar PV Water Pump Systems (SWPS), Solar PV Vaccine Refrigerator, Solar Fencing.
• Services: Installation of solar systems, maintenance and repair of solar products, warranty and after-sales service. They also import and distribute solar products to various establishments across Nepal.

Gham Power

Location: House #292, Chundevi Marg, Maharajgunj-3, Kathmandu, Nepal

Website: ghampower.com

Products and Services:

• Products: Solar Minigrid, Commercial & Industrial Solar, Solar Pump.
• Services: Solar solutions for commercial and industrial sectors, power infrastructure development for rural communities, and solar-powered pumps for smallholder farmers to improve farming yields sustainably.

Smart Solar Nepal

Location: 4th Floor B & S Building, Shankhamul Marg, New Baneshwor, Kathmandu

Website: https://smartsolar.com.np/

Products and Services:

• Products: Battery-equipped photovoltaic power generators for stable electricity.
• Services: Domestic and international solar energy solutions.