Stakeholders push for innovative financing for clean energy growth

Kathmandu, Jan. 29: Stakeholders have suggested for innovative financing models to achieve ambitious national clean energy target of developing projects with 28,500 Megawatts capacity by 2035 and increase per capita energy consumption to 1500 units. 

Speaking at the 'Energy transition for resilient and low carbon economy summit, 2025' organised by the Alternative Energy Promotion Centre (AEPC) in Kathmandu on Tuesday, they said that as a significant portion of the global climate finance is being channeled to clean and renewable energy, Nepal has an immense opportunity be get benefitted from it. 

Prof. of the Asian Institute of Technology (AIT) in Thailand, Dr. Shobhakar Dhakal, said that more than 40 per cent of the global climate finance goes to renewable energy and Nepal must tap on this opportunity.

"Likewise, investment and financing, especially from the private sector, is instrumental to promote and develop the renewable energy projects," he said. 

According to Prof. Dhakal, sales of solar technology, batteries and electronic vehicles has gone up exponentially, of late. Meanwhile, solar and wind technology have challenged the traditional energy option as their costs are declining while hydropower is increasing. 

He suggested that in order to cope with challenges, Nepal should devise integrated long-term evidence-based energy transition, strengthen institutions and financing, and ensure legislation and regulatory mechanism. 

"Creating far-reaching policies and facilitating the private sector are highly instrumental in this drive to achieve the clean energy goals. We must be clear that the 'piece meal approach' is not enough," said Prof. Dhakal. 

However, he stated that although Nepal's electricity access has reached 98 per cent, more than a third of the population has low quality energy supply which does not help in operating industries and even the consumer durables like washing machines. 

Roping in private sector

Prof. Dhakal suggested roping in the private sector to expand the reach of and access to renewable energy. "Nepal needs intervention in clean cooking especially electrifying it, electrifying the transport sector and creating support infrastructure, modernizing grid with low losses, enhancing energy efficiency, ensuring environmental sustainability," he said. 

Addressing the summit, Minister for Energy, Water Resources and Irrigation, Dipak Khadka, said that the country aimed to increase the per capita energy consumption to at least 1500 unit by 2035 so that the domestic consumption would reach 13,500 MW by the end of the coming decade.  

"We aim to attain zero carbon emission by 2045 although our emission is very low compared to developed countries and the neighbourhood," he said while expressing commitment to explore various sectors in the clean energy sector and support energy transition. 

Nepal has a national target to generate 28,500 MW electricity by 2035 which means it needs to produce 25,000 MW in the next one decade. For it, reservoir-based projects would be facilitated, said Minister Khadka. 

Renewable energy is national interest

Dr. Pema Gyamtsho, Director General of the ICIMOD, said that Nepal is sitting on huge energy resources but efforts must be scaled up to exploit these resources and let economy benefit from it. 

"When we talk about renewable energy, we are talking about national economy and national security," he maintained. Dr. Gyamtsho suggested running tram or other convenient public transport facilities, especially in the Kathmandu valley and other large cities, building on the clean energy prospects. He also suggested Nepal to make risk assessment in the hydroelectricity sector. 

Gauri Singh, Deputy Director General of the IRENA, Abudhabi in the United Arab Emirates, pledged her support in the government's effort in renewable energy deployment. 

Similarly, Pippa Bird, Development Director and Deputy Ambassador of the United Kingdom for Nepal, said that transition to clean and renewable energy would contribute to the savings of foreign currency reserves which could be up to US$ 14 billion. 

According to her, Nepal has a potential to be a clean energy hub in the region, and it has potential to earn US$ 9 billion a year through carbon export. 

Bird suggested supporting the small and medium enterprises in the process of energy transition. "For that, we need stronger policy framework, greater private sector participation and regulatory facilitation. Remove barriers to the Foreign Direct Investment (FDI), access climate finance and utilise the energy bonds," she said. 

Executive Director of the AEPC, Nawa Raj Dhakal, said that private sector cooperation is instrumental in energy transition. "Energy is an important infrastructure for the long-term and sustainable development. AEPC is collaborating with traditional as well as new financing models and organisations to attract more development support to the country," he said. 

Guru Prasad Paudel, Executive Director of the Nepal Rastra Bank, said that there is a capacity gap in terms of implementing the green taxonomy in the banking sector. However, it has the potential to reform the banking and financial sector in the medium and long term, he said. 

Challenge to reduce cost

Dr. Maheshwar Dhakal, Joint Secretary at the Climate Change Management Division at the Ministry of Forests and Environment (MoFE), said that reducing the cost of transition and checking capital flight are the two major challenges in clean energy transition. 

"Green and clean energy policies should be internalised at all sectors of economy, business and society. Only then it can help in sustainable economic growth," he said. 

The summit deliberated upon various themes of energy transition including the sectoral needs, opportunities and challenges, investment and climate finance for energy transition, and regulatory framework, governance and capacity development. 

The summit was held on the occasion of the International Clean Energy Day 2025. The United Nations had decided to celebrate January 26 as the Clean Energy Day which is being marked since 2024.