Policy-aligned energy transition pathways for Nepal: demand projections and decarbonization strategies through 2035

Nepal stands at a pivotal juncture in its energy transition, striving to meet climate commitments while advancing national development goals. This study applied an elasticity-driven bottom-up energy model to project Nepal’s final energy demand and mix from FY2021/22 to FY2034/35 under three scenarios: Business-as-Usual (BAU), a Nationally Determined Contribution (NDC 3.0)-aligned scenario, and a Long-Term Strategy (LTS) pathway consistent with achieving net-zero emissions by 2045. The baseline scenario forecasts energy demand rising by 40 percent to 20 million tonnes of oil equivalent (Mtoe), sustaining biomass and fossil fuel dependence. In contrast, the NDC scenario limits growth to 17 Mtoe and boosts electricity’s share to one-third through widespread adoption of electric mobility and clean cooking. The LTS scenario envisions a transformative shift: total energy demand falls to 12 Mtoe by 2035, with electricity supplying over half of all energy needs. These pathways imply significant infrastructure shifts, requiring up to 30 GW of renewable generation capacity and major grid and storage upgrades. The findings underscore the urgency of accelerating electrification, investing in hydropower and solar, strengthening transmission systems, and deploying enabling finance and policies. Together, these measures can position Nepal for a resilient, low-carbon energy future.