Nepal is embarking on a bold energy transition, focusing on its potential for green hydrogen production amid growing global interest. The country, blessed with abundant water resources and relatively untapped hydropower capabilities estimated at 80 GW, is at the cusp of what could be termed the next step in its renewable energy evolution. The recent inauguration of Nepal's first hydrogen refueling station by Prime Minister K.P. Sharma Oli, along with the launch of the nation's first hydrogen-powered vehicle, marks these developments as significant milestones for the nation.
Green hydrogen, often cited as a key player for the future of clean energy, has created considerable buzz across various media platforms and conferences within Nepal. This newfound enthusiasm is not entirely new, as the concept of hydrogen fuels has been discussed for decades. Notably, experts suggest Nepal could produce green hydrogen at remarkably low costs, anticipated to be between $1 and $2 per kilogram, thanks to innovative initiatives led by Kathmandu University's Green Hydrogen Lab.
Nevertheless, the costs associated with hydrogen production comprise only about 15 percent of the total expenditure. The real hurdles lie beyond production; distribution, storage, and the necessary refueling infrastructure represent considerable financial and logistical challenges for the nation. Is Nepal prepared to invest fully in this ambitious venture?
The excitement surrounding green hydrogen is underscored by forecasts from major global organizations, which indicate foreseeable production cost reductions may drop even more steeply. The International Renewable Energy Agency (IRENA) predicts costs could reach $2 per kilogram by 2050, with some estimates even down to $1 by 2030. While these prospects sound promising, the feasibility of making hydrogen accessible remains to be seen.
For Nepal, the current discussion around green hydrogen must also involve strategic consideration of energy needs. A prevalent notion is the need to focus not only on new hydrogen technology but on leveraging existing strengths, such as the country’s extensive hydropower resources. Much like how solar or wind energy can be utilized effectively, the same can be said for the direct electrification pathways available to Nepal. This could help streamline the already modest energy demands of the nation.
When evaluating the transition to electric transportation versus investing extensively in hydrogen fuel infrastructure, the analysis points to electric vehicles (EVs) as the more immediate and realistic solution. Nepal has seen explosive growth and public interest in EVs, with over 3,487 units imported within the first four months of the fiscal year 2024-25 alone.
Data suggests operating EVs is nearly 4.7 times cheaper than petrol vehicles and 3.6 times more economical than diesel equivalents. Not only do EVs align seamlessly with Nepal’s existing electricity grid, but they also eliminate the hurdles presented by the hydrogen fuel infrastructure, which would require significant and costly changes to the vehicle fleet.
Nepal must strategically decide where to allocate its limited resources to pursue. The temptation to invest simultaneously across different energy technologies could compromise the effort made to adopt the most promising and practical solutions available. Electric vehicles have already surged to the forefront.
The conversation around green hydrogen becomes even more complex when viewed through the lens of export opportunities, requiring construction of extensive infrastructure for distribution and logistical planning. Strategically, relying solely on major markets, such as India, could present additional challenges. India, poised to establish itself as a global green hydrogen hub, may lead to competition and lower attractiveness for imports from Nepal.
A substantial consideration for advancement also lies with green ammonia—a promising avenue for Nepal, particularly due to the estimated annual fertilizer demand of between 700,000 and 800,000 metric tons. Current scientific assessments by organizations like the Global Green Growth Institute continue to explore and assess the country's potential.
While ambitious projections are enticing, it is imperative for Nepal to also ground its strategies on realistic assessments of economic viability and resource allocation. The integration of lessons from international initiatives focused on developing advanced biofuels and hydrogen can be beneficial, yet the immediate priority must remain with electrifying its energy sector effectively.
At this juncture, Nepal's foremost duty should be to sustain and empower itself, ensuring future plans align not only with ambition but with economic realities. The excitement surrounding green hydrogen should not overshadow the pressing need to develop and expand existing hydropower capacities, ensuring solutions are complementary to one another.