Core area “Climate and energy, just transition” Untapped energy potential

    Nepal has enormous potential for renewable energy. The expansion of renewable energy and efficient grids is therefore key to economic development, climate action and access to clean energy.

    Solar panels in Nepal

    With its towering mountains and rushing rivers, Nepal offers exceptionally favourable conditions for the generation of hydroelectric power. The country’s largest rivers, including the Koshi, Gandaki and Karnali, have their source in the Himalayas and offer enormous potential for hydroelectric power.

    Thanks to public and private investment, particularly in hydropower, the expansion of renewable energy has progressed steadily in recent years. Due to seasonal fluctuations caused by the rainy season, the country remains dependent on energy imports.

    At the same time, the energy infrastructure suffers from high system losses, outdated technology and limited capacity to reliably transmit electricity from remote hydroelectric power stations to urban and industrial centres. Since March 2024, around 98 per cent of the Nepalese population has had access to electricity. However, the poor quality and reliability of the electricity supply remain major obstacles to the country’s economic development.

    Goals for the sector

    German development cooperation with Nepal is helping to stabilise the country’s energy supply whilst also protecting the climate. The expansion of renewable energy, high-capacity electricity grids and efficient energy use is intended to promote economic development and improve living conditions – particularly in regions without reliable access to modern energy. The aim is to reduce dependence on imported fossil fuels and climate-damaging stopgap solutions such as diesel generators, to cut greenhouse gas emissions, and to strengthen both public and private sector structures in such a way as to ensure a sustainable transition to a climate-friendly and inclusive energy supply.

    Project examples

    • New transmission lines and substations are strengthening Nepal’s electricity grid and enabling the reliable feed-in of hydroelectric power. At the same time, rural communities are being connected to the grid and public facilities such as schools and health centres are being fitted with solar panels.
    • The aim is to support the Nepalese private sector in supplying the population with energy from renewable sources. The project is also thereby establishing the necessary legal, financial and institutional provisions. In addition, women and disadvantaged groups are being supported in developing their skills so that they can participate in energy-related decision-making processes.
    • Greater use of solar energy is intended to reduce the electricity shortfall and reduce CO2 emissions. To this end, ground-mounted solar power stations with a combined capacity of around eight megawatts are being built in order to expand the supply of solar power and support national expansion plans.
    • Through the funding of a transmission system, electricity generated from hydropower in western Nepal can be reliably fed into the national grid. This reduces transmission losses and cuts CO₂ emissions.

    As at: 27/07/2026