Record Power Exports Signal Nepal's Shift from Energy Importer to Regional Supplier

Kathmandu: Nepal's electricity sector reached a historic milestone in the fiscal year 2025/26 (FY 2082/83), earning a record Rs 29.32 billion from electricity exports while posting its largest-ever energy trade surplus. The latest figures released by the Nepal Electricity Authority (NEA) show that rising hydropower generation, expanding cross-border transmission infrastructure and growing access to regional electricity markets have fundamentally changed the country's energy trade position.

During the fiscal year, Nepal exported 3.877 billion units (kWh) of electricity to India and Bangladesh through multiple trading channels, including the Indian Energy Exchange's Day-Ahead and Real-Time Markets, NVVN, and the recently launched trilateral electricity trade with Bangladesh. Electricity was sold at an average price of Rs 7.56 per unit, generating total export earnings of Rs 29.32 billion, the highest annual revenue ever recorded from power exports.

The growth has been exceptionally strong compared with the previous fiscal year. Export revenue increased by 67.96 percent, while export volume rose by 62.89 percent within just one year. The close alignment between the growth in export volume and revenue suggests that the increase was primarily driven by larger electricity availability rather than unusually high market prices. In other words, Nepal generated more income because it had substantially more electricity available for sale, reflecting the continued expansion of domestic hydropower production.

At the same time, Nepal's dependence on imported electricity declined significantly. The country imported 1.15 billion units of electricity during the fiscal year, down 31.57 percent from the previous year. Consequently, spending on electricity imports fell to Rs 10.56 billion, an 18.29 percent reduction compared with the previous fiscal year. Lower import requirements indicate that domestic generation increasingly met national demand, reducing reliance on external electricity supplies and easing pressure on foreign currency outflows.

The combined effect of higher exports and lower imports produced an unprecedented improvement in Nepal's energy trade balance. After deducting import expenditure from export earnings, the country recorded a net electricity trade surplus of Rs 18.76 billion. This represents an increase of approximately 313 percent from the Rs 4.54 billion surplus achieved a year earlier. The sharp rise demonstrates how quickly electricity has evolved into a meaningful source of foreign exchange earnings for Nepal.

Several structural developments explain this transformation. The steady commissioning of new hydropower plants has increased domestic electricity generation, while expanded cross-border transmission lines with India have enabled larger volumes of power to be exported. At the same time, Nepal has benefited from wider access to India's competitive electricity markets, allowing surplus generation to be sold through both day-ahead and real-time trading platforms. The commencement of electricity exports to Bangladesh under a trilateral arrangement has further diversified Nepal's export destinations, reducing dependence on a single external market.

The latest performance also reflects a broader shift in Nepal's energy strategy. Historically, the country relied heavily on electricity imports during periods of domestic shortage. Today, seasonal surplus generation is increasingly being converted into export revenue instead of remaining underutilised. This transition not only improves the country's trade balance but also enhances the commercial sustainability of investments in the hydropower sector, creating additional incentives for future private and public investment.

Despite the record results, the data also underline the importance of expanding domestic electricity consumption alongside exports. Nepal's hydropower capacity continues to grow, and unless industrial demand, electric mobility, irrigation and other productive uses increase at home, seasonal surpluses will continue to depend heavily on external markets. Expanding long-term export agreements therefore remains essential to ensuring stable revenue as additional generating capacity enters the system.

Energy officials expect electricity exports to rise further as dozens of hydropower projects currently under construction begin commercial operation over the next few years. To support this expansion, Nepal is prioritising additional cross-border transmission infrastructure and negotiating long-term electricity purchase agreements with both India and Bangladesh. If these investments proceed as planned, the country's record performance this year may represent not the peak of its export potential but the beginning of a broader transformation into a regional supplier of clean hydropower.

The latest figures suggest that Nepal's electricity sector is entering a new phase. What was once largely viewed as an import-dependent utility service is increasingly emerging as a strategic export industry capable of generating foreign exchange, strengthening energy security and supporting long-term economic growth.