Rethinking Nepal’s Electricity Market

Nepal has traditionally persuaded its consumers to reduce electricity consumption for fear of potential supply constraints. This approach continued for around eleven-and-a-half decades following the commissioning of the country’s first hydropower plant. Now that per capita electricity consumption has reached 479 units and the installed generation capacity stands at 4,120 megawatts, national demand cannot be expected to grow rapidly without deliberate efforts to stimulate consumption. There are mainly two reasons for this. First, consumers are far more fragmented than generators, requiring a granular and sector-specific approach to stimulating power demand. Second, domestic electricity demand is the result of various policy decisions and the economic activities generated by a robust economy.