Green Hydrogen: The Future Prospect for Nepal's Energy Sector

Sunil Adhikari

Nepal possesses an immense technically and economically feasible renewable energy potential of 45,000 MW, yet its current energy consumption remains heavily dominated by traditional sources and imported carbon-based fuels, driving a massive national trade deficit. This study investigates whether green hydrogen, produced using surplus hydroelectricity, serves as a viable prospective pathway toward achieving energy independence and economic prosperity by assessing its contextual suitability and projecting its potential structural role in the national economy through 2050. Adopting a Multi-Criteria Decision Analysis (MCDA) approach, ten key technological, economic, environmental, and socio-political dimensions were evaluated using secondary literatures. The findings reveal a distinct capability paradox: green hydrogen demonstrates outstanding prospects for environmental impact and resource potential due to a projected 3,000 MW monsoon hydropower surplus by 2030—a surplus that is poised to rise exponentially as Nepal targets an ambitious roadmap of 28,500 MW installed capacity by 2035. Similarly, strong policy alignment via the Green Hydrogen Policy 2024 further anchors this potential, though acute barriers persist regarding low technology maturity and high production costs (Cost-effectiveness) due to a complete reliance on international technology transfer. Furthermore, to explore the economic scale of this transition, a logical projection using the GDP expenditure approach was done, which indicates that green hydrogen could theoretically contribute a cumulative structural value of $13.52 billion between 2026 and 2050 in national GDP. This is calculated based on assumed baseline targets of $6 billion in long-term capital investments, $2.4 billion in domestic wage circulation, and $5.12 billion in potential import substitution across the fertilizer, diesel, coal, and LPG sectors. Ultimately, this analysis underlines that if Nepal is to sustain an ambitious 7.0% economic growth trajectory, the traditional "Business as Usual" model will be fundamentally insufficient; a transformative, extraordinary intervention like a green hydrogen economy is necessary to utilize this rapidly rising surplus, break the trade deficit trap, and shift the nation toward self-sustaining development.