Between India and China, can Nepal balance geopolitical stakes with energy security?

Nepal, sandwiched between Asian giants India and China, is in a high-stakes battle for energy security. Now, a temporary freeze on a $500-million United States grant to Nepal has heightened the geopolitical stakes.

The grant, provided through the Millennium Challenge Corporation, a US government agency, was to boost Nepal’s electricity transmission capacity for power trade with India.

US President Donald Trump’s executive order on January 21 titled “Reevaluating and Realigning United States Foreign Aid” suspended the funding for 90 days. With no clarity on whether the freeze will be lifted, Nepal’s energy development plans have been left uncertain.

The small Himalayan country’s vast hydropower potential is often entangled in maneuvering between its two powerful neighbours. But the deeper challenge is in Nepal securing its own energy future.

Energy crisis despite vast potential

Nepal’s estimated hydropower potential is nearly 83,000 megawatts, of which around 42,000 MW can be produced economically, according to the National Bureau of Asian research. Yet, the country faces an unprecedented energy crisis – a study estimates that one-fourth of the population is still outside the reach of energy sources.

Its current installed electricity generation capacity is nearly 3,157 MW, which is insufficient to meet the rising domestic demand and ensure year-long power. Ninety percent of this electricity comes from hydropower plants, making Nepal’s energy situation vulnerable...

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