Nepal’s energy mix is characterized by a stark contrast between its total energy consumption, which is dominated by traditional biomass, and its electricity sector, which is almost entirely renewable.

Biofuels and Waste (approx. 65-66%): Traditional biomass—primarily firewood, agricultural residues, and animal dung—remains the largest energy source. It is used by over 60% of rural households for cooking and heating.

All petroleum is imported, mainly from India. It is the second-largest fuel source, used primarily for transportation (62%) and as a secondary cooking fuel (LPG).

Nepal has achieved nearly 98% electrification as of 2025, a massive increase from just 51% a decade ago. The power grid is one of the “cleanest” in the world. Hydropower (approx. 95-98%) is the backbone of the national grid. Nepal has an estimated 42,000 MW of economically viable hydro potential. Nepal aims to export 15,000 MW by 2035.

Nepal is actively developing a green hydrogen economy to utilize its surplus monsoon hydropower, aiming to decarbonize its transport and industrial sectors while reducing fossil fuel dependency. With 42,000 MW of techno-economic hydropower capacity, Nepal can produce green hydrogen from excess electricity, particularly during the monsoon season.

The Green Hydrogen Lab (GHLab) at Kathmandu University, supported by the Nepal Oil Corporation, is developing pilot projects and, as of late 2025, is collaborating with Korea’s G-Philos on a $51 million commercial-scale hydrogen and fuel cell plant.