Despite devastating August floods that crippled key hydropower plants, Nepal exported over 633 million units of electricity to India in one month, underscoring the Himalayan nation’s rapid rise as a regional clean energy supplier.

Nepal’s electricity exports to India continue to demonstrate resilience and growing strategic importance in South Asia’s energy landscape. In the Nepali month of Ashoj (mid-September to mid-October 2026), the Nepal Electricity Authority (NEA) sold 633.99 million units of electricity to India, generating Rs 5.925 billion (Nepali Rupees – approximately USD 39 million). This marked a clear increase over both the same period last year (Rs 4.963 billion) and the preceding month (Rs 5.0925 billion).

The figures come even as the country recovers from catastrophic flash floods on 26 August 2026. Triggered by an ice-rock avalanche near the Nepal-Tibet border, the disaster devastated communities in Rasuwa, Nuwakot and surrounding districts, killing around 1,400 people with thousands more missing. It also knocked out roughly 430 MW of hydropower capacity – more than 10 per cent of Nepal’s installed generation – damaging plants including Trishuli and Chilime that had been earmarked for export.

Strong Monsoon Surplus Drives Export Earnings

Nepal generates the bulk of its electricity from run-of-river hydropower. During the monsoon, rivers swell and production routinely exceeds domestic demand. After meeting local needs, the NEA sells the surplus through two main channels: medium-term bilateral agreements with the Indian states of Haryana and Bihar, and competitive sales on the Indian Energy Exchange (IEX) day-ahead and real-time markets.

Nearly two-thirds of the electricity exported in Ashoj moved under bilateral contracts. The remainder fetched competitive prices on the exchange. Over the first three months of the current fiscal year 2026/27 (mid-July to mid-October), total export earnings reached Rs 16.1513 billion.

These numbers build on a strong previous fiscal year. In FY 2025/26, Nepal earned a record Rs 29.32 billion from exports to India and Bangladesh – a nearly 68 per cent jump from the prior year – while reducing imports from India and recording a net surplus of nearly Rs 19 billion in cross-border trade.

Bangladesh Supply Resumes Through Indian Grid

On 23 October, Nepal also resumed exporting 40 MW of electricity to Bangladesh via India’s transmission network. Supplies had been suspended after the August floods damaged the Trishuli and Chilime plants originally approved for the Bangladesh route. India’s Central Electricity Authority subsequently cleared alternative projects – Solu, Kabeli-1 and Lower Modi – allowing the seasonal arrangement to restart.

The five-year deal, signed in October 2024 between the NEA and the Bangladesh Power Development Board, covers daily deliveries from 15 June to 15 November each year. For Bangladesh, which faces rising demand and heavy reliance on fossil fuels, Nepali hydropower offers a cleaner, relatively low-cost option. For Nepal, the trilateral arrangement with India expands market access beyond its immediate neighbour.

From Chronic Shortages to Regional Exporter

Barely a decade ago, Nepal suffered chronic load-shedding, with power cuts lasting up to 18 hours a day in some areas. Installed capacity has since risen sharply – to more than 4,000 MW – and the country has shifted from net importer to net exporter during the wet season. Approved export capacity to India now stands at approximately 1,179 MW after a recent additional clearance of 31 MW.

This transformation reflects deliberate policy and infrastructure choices. Nepal first gained permission to sell modest volumes into India’s market in 2021. Access to the IEX has allowed competitive pricing rather than purely negotiated bilateral deals. A longer-term vision, including a power trade agreement aiming for up to 10,000 MW of exports to India over a decade, points to even larger ambitions. Nepal’s theoretical hydropower potential exceeds 80,000 MW, with roughly 40,000-43,000 MW considered technically and economically feasible.

Regional energy cooperation is advancing on multiple fronts. Discussions have even touched on possible future supplies to Sri Lanka via the proposed India-Sri Lanka interconnections, while Bangladesh has expressed interest in seasonal swaps – sending solar power northward in winter and receiving Nepali hydro in the monsoon.

Climate Risks Test Hydropower Ambitions

The August disaster highlighted the vulnerability of Nepal’s hydropower-centric strategy. Concentrated generation along river corridors exposed to glacial lake outburst floods, landslides and extreme rainfall carries systemic risk. Preliminary assessments put energy-sector damage in the hundreds of millions of dollars, with recovery costs for the wider disaster running into billions.

Yet the ability to maintain and even increase export earnings by substituting alternative plants demonstrates operational flexibility. Officials have emphasised that continued exports help absorb monsoon surplus while generating foreign exchange that supports reconstruction and further investment in generation and transmission.

Nepal’s experience offers a case study in the opportunities and hazards of Himalayan hydropower. Clean energy trade can strengthen energy security, reduce fossil-fuel dependence and generate revenue for a developing economy. At the same time, climate change is intensifying the very risks – glacial instability, extreme precipitation – that threaten the infrastructure on which those gains rest. Strengthening resilience through diversified generation, better early-warning systems, climate-proofed design and deeper regional grid integration will determine whether Nepal can sustain its role as a reliable supplier.

Scaling Trade and Building Resilience

Nepal’s daily exports to India and Bangladesh have at times exceeded 650 MW during peak monsoon periods. Transmission upgrades, including new cross-border lines, are under development to support higher volumes. Domestic consumption is also rising as industries and households gain more reliable supply, reducing the historical dependence on expensive dry-season imports from India.

The latest monthly figures, achieved against a backdrop of disaster recovery, reinforce confidence in the export model. They also underline the need for careful planning. As South Asia’s electricity demand continues to grow and countries pursue net-zero pathways, Nepal’s hydropower can play a meaningful complementary role – provided the physical and institutional infrastructure keeps pace with both opportunity and risk.

Image: Hippopx

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Tags: Nepal, India, electricity exports, hydropower, Bangladesh, energy trade, South Asia, monsoon surplus, NEA, cross-border power, climate resilience, regional cooperation,