Nepal to Export Additional 251 MW of Hydropower to India, Expanding Energy Trade

India’s Designated Authority for Cross Border Trade has approved an additional 251 MW of power exports from 12 hydropower projects in Nepal. This decision marks a significant milestone, increasing Nepal’s total export capacity to India from 690 MW across 16 projects to 941 MW across 28 projects.

For the first time, Nepal will export electricity to the Indian state of Bihar through a medium-term power sales agreement, further solidifying the energy partnership between the two nations. This expansion in power exports underscores Nepal’s growing role as a key electricity provider in the region.

Prior to this latest approval, Nepal had already established itself as a net exporter of electricity, generating NPR 16.93 billion in revenue from electricity sales in the last fiscal year. Nepal’s journey in power exports began modestly in October 2021 when India approved the export of 39 MW of electricity. In less than three years, this figure has increased more than 24 times.

Nepal initially entered the Indian energy market through the Day Ahead Market of the Indian Energy Exchange. The partnership has since evolved, with India granting Nepal access to the Real-Time Market. Additionally, the Nepal Electricity Authority has secured medium-term power sales agreements with distribution companies in Haryana and Bihar.

India has further incentivized the purchase of hydropower from Nepal by allowing these imports to count towards India’s Hydropower Purchase Obligation (HPO). This policy encourages Indian buyers to source their power from Nepal, strengthening the bilateral energy trade.

Looking ahead, the long-term power agreement between India and Nepal envisions the sale of up to 10,000 MW of electricity from Nepal to India over the next decade. In just the first year of this agreement, exports have already reached approximately 1,000 MW, putting Nepal on track to become the leading hydropower exporter in South Asia.

In addition to its growing exports to India, Nepal has also finalized an agreement to sell 40 MW of power to Bangladesh. Although the signing of this deal, originally scheduled for July 28, 2024, was postponed due to recent political developments in Bangladesh, it highlights Nepal’s expanding influence in the regional energy market.