Nepal consumes approximately 14.46 Mtoe of energy per year, of which 70% is fuelled by traditional biomass and 16% by petroleum products and coal. On-grid electricity accounts for only 3.4% of total energy demand. Nepal's per capita electricity consumption of 270kWh/year, one of the lowest rates among South Asian countries, although this is expected to grow significantly with an increase in the reliability of supply and transmission infrastructure.
Nepal's annual electricity consumption of 8,742GWh in 2020/21 has been increasing at a CAGR of 20% for the last five years. According to government estimates, the country needs 10,000 MW of additional installed electricity generation capacity by 2030 to meet demand. Currently, 32% of total electricity supply is through coal-based electricity imported from India. The government aims to substitute dirty coal power by building 10,000 MWs of clean electricity generation capacity.
The increasing demand for electricity along with the need to substitute coal-based electricity to mitigate climate change impacts demands investment in more hydropower plants and solar PV, coupled with battery storage systems.