Solar Energy in Nepal: Status, Potential, and Actionable Steps

Solar Energy in Nepal: Status, Potential, and Actionable Steps

Among the sources of energy—coal, nuclear, hydropower, solar, and wind—solar energy is one of the key components of renewable energy. Essentially, sunlight received during the day can be harnessed through solar panels to generate energy. Therefore, adequate solar radiation, solar panels, and suitable land for installation are required for solar power generation.

Sunlight is free and accessible to everyone—this is the strongest point of solar energy. Considering that strong sunlight is essential for solar production, Nepal receives an average of 300 sunny days per year. Experts state that on average, 47 units of electricity per square kilometer per day can be generated. Using just 0.5% of Nepal’s total land area, it is possible to produce 429,000 MW of electricity. With technological advancements, power generated from solar panels can be directly connected to the grid without battery installations. Moreover, a World Bank study has shown that Nepal has the potential to generate 30,000 MW of solar energy.

Solar projects can be completed within 1.5 to 2 years. As the annual cost of solar plants decreases, electricity can now be produced at a cost of NPR 60–70 million per MW. Investors with solar systems ranging from 5 to 20 kW can earn NPR 50,000 to NPR 200,000 annually. A 5kW system costs around NPR 300,000 to install and has an average lifespan of 30 years.

The government provides subsidies on solar installations, further reducing costs. If a 5kW plant generates an average return of NPR 50,000 per year, the investment can be recovered in 7–8 years, and profit is earned thereafter. Furthermore, international agencies provide Green Climate Fund grants for solar power production.

According to Professor Gunnar Luder of the Technical University of Berlin, the cost of solar energy has been declining due to technological innovations. Over the past decade, solar production costs have dropped by 80%, and by 2050, it is expected to be the cheapest source of energy globally. Despite Nepal’s high potential for solar energy, its utilization remains extremely poor. Also, 1 MW of installed solar capacity is not equivalent to 1 MW of hydro capacity—hydro can produce power at night and during cloudy days, while solar cannot.

A 1 MW hydropower plant can produce 4–5 GWh/year, while a 1 MW solar plant only produces 1–2 GWh/year. Moreover, solar components and equipment are expensive and need to be imported. A large area of land—about 20 to 25 ropanis (roughly 1 to 1.25 hectares)—is needed to produce 1 MW of solar power. Legally, land with irrigation cannot be used for solar installations, and most of the other land is classified as forest.

India, Nepal’s major electricity buyer, is aggressively investing in solar power. India installs 1 MW solar plants at a cost of just INR 50 million (approx. NPR 80 million) and has fixed the PPA rate at INR 2 per unit, while Nepal’s rate is NPR 5.94 per unit.

In Nepal’s Electricity Bill 2080, hydropower is proposed with longer licensing periods, but solar projects are limited to 25 years. As of Falgun 2080, Nepal's total installed capacity is 3,060.1 MW, with solar accounting for only 94.4 MW—just 3.08% of the total capacity.

Since Magh 25, 2074, the Ministry of Energy, Water Resources, and Irrigation has enforced a Regulatory Framework for Alternative Electricity Development. It allows PPAs through competitive bidding with a maximum base price of NPR 5.94 per unit. NEA (Nepal Electricity Authority) is also developing solar power like hydro, including a 25 MW project at Devighat. Land acquisition for solar is underway in Gandak, Middle Marsyangdi, and Surkhet.

Several private developers are advancing solar projects:

• 3 MW in Dang by Gorkha Cognial Energy

• 4 MW in Siraha by Asian Tech Corporation

• 9.9 MW in Tumlingtar by Wist Energy House

• 9.5 MW in Mahottari by Fortune Developers

• 10 MW in Jhapa by Shivshakti Solar

• 65 MW in Banke, 70 MW in Kailali, and 65 MW in Bardiya by Hive Nepal

NEA has already called for PPAs to add 960 MW of solar energy within two years in various substations across Terai and Hill regions. Previously, solar PPA was limited to 10% of grid capacity, and NEA has retained that cap.

India, which receives 300 sunny days annually, has been actively expanding solar energy since 2010. India’s installed solar capacity increased from 2,630 MW in 2014 to 84,277 MW in 2024—making up 18.9% of total energy. Projects of 36,650 MW are under construction, and 24,560 MW are in pre-construction phases. India aims to reach 800,000 MW by 2030, including 400,000 MW of solar.

In Gujarat, Adani Group is building the Khavda Energy Park, the world’s largest at 32,000 MW across 726 sq. km—a potential global game-changer.

India has 240 million households, and just 1 million households already generate 2,000 MW. If all homes adopt rooftop solar, India could generate 637 GW. India aims to produce 500 GW from renewable sources by 2030, including 280 GW from solar.

Due to increased solar production, India has saved 13.2 million tons of oil and reduced 61.3 million tons of CO₂ emissions. In 2023/24, India’s average solar tariff dropped to INR 1.99 per unit (from INR 6.47 in 2013/14) due to falling component costs. Solar plant installations typically take 2 years. India also provides grants to promote solar installations.

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Solar is not a competitor to hydropower, but a complementary component. The proposal to have a 10% share of solar in 28,500 MW installed capacity by 2035 is positive. Promoting solar will naturally increase energy availability.

Nepal has ample marginal land—terraces, slopes, unused hilly areas—not viable for agriculture, suitable for solar panels. Southern/eastern-facing rooftops also offer installation potential. The government should provide subsidies to encourage rooftop solar systems among homeowners.

In summary, Nepal has immense solar potential but is lagging behind in implementation. With strategic land use, subsidies, and policy support, solar can significantly enhance Nepal’s clean energy future.