Solar with battery storage presents a timely and strategic upgrade for Nepal's renewable energy sector. Despite abundant solar potential with over 300 sunny days a year and global solar radiation ranging from 3.6 to 6.2 kWh/m²/day solar energy contributes only 2.52% to Nepal's energy mix as of 2024. Nepal currently has 21 licensed solar projects totaling 106.74 MW, indicating slow but growing interest. Battery Energy Storage Systems (BESS), however, are still at an early stage in the country.
A few notable projects, such as the 250 MWp grid-connected solar systems in Kolhapur and Banganga, featuring 40 MW of BESS capacity under the Investment Board Nepal (IBN), mark initial progress. The Nepal Electricity Authority (NEA) is also undertaking a project to install solar PV with a BESS project in four different locations within Karnali Province: Mugu, Dolpa, Humla, and Jumla. Until recently, there was no dedicated tariff structure for solar-plus-storage in Nepal. The standard solar tariff was Rs. 5.94/kWh, which made battery-based projects financially unviable. However, the latest fiscal budget introduced a significant policy shift by matching the tariff for solar with BESS to that of reservoir-based projects. The current PPA rate for such reservoir-based projects is Rs. 12.40/kWh during the dry season and Rs. 7.10/kWh during the wet season. This new rate enhances the financial attractiveness of storage-integrated solar projects.
Battery storage is vital for balancing energy demand and supply. It stores surplus solar energy during the day and discharges during evening peak hours, improving grid stability by reducing fluctuations. BESS also supports network operations by managing grid congestion, reducing the need for infrastructure upgrades, and enhancing overall system reliability. Hydropower remains the backbone of Nepal's energy system, but it is vulnerable to natural disasters like floods, landslides, and earthquakes. During the monsoon, when such events are common, many hydropower damaged. In these circumstances, solar with a battery can serve as a reliable backup.
It can also provide continuous energy for critical services like hospitals and industries that currently depend on diesel generators. The economic losses from power outages are significant. According to Mitra Kumar Rai (2024), the average cost of an outage is Rs. 38.42 per kWh. In the Sunsari-Morang Industrial Corridor, approximately 500 industries suffer monthly losses exceeding Rs. 2 billion due to unreliable power supply. Frequent tripping causes daily losses of Rs. 70 million, and industries report up to 20% losses in raw materials and production. Solar with BESS could drastically reduce such disruptions and associated costs. Replacing diesel generators with clean energy options can also reduce operational costs, lower emissions, and support Nepal's energy transition.
Nepal exports surplus electricity to the grid at Rs. 7.39/kWh during the daytime and wet season, but imports power at a higher rate of Rs. 11.5/kWh during the dry season and peak hours. As winter precipitation declines and dry season power shortages increase, solar with BESS offers an opportunity to store low-cost electricity and use or export it during high-demand periods. This not only enhances energy security but also improves the country's economic position.
Global trends in battery pricing further support the shift. According to IRENA, battery costs fell by 89% between 2010 and 2023, from USD 2,511/kWh to USD 273/kWh. BloombergNEF estimates these costs will fall further to USD 113/kWh by 2025 and USD 80/kWh by 2030. In Nepal, a 2.5 MW/10 MWh BESS project would cost around NPR 410 million, including transportation and installation. The government has also introduced supportive measures like VAT exemption on solar PV modules and inverters, and batteries incur only 1% VAT.
Internationally, other countries are accelerating solar storage adoption through policy incentives. Malaysia provides bonus feed-in tariffs and a Green Electricity Tariff. In China, 20 provinces now require renewable projects to include 10–20% storage capacity for grid connection. Countries like India, Germany, and Thailand offer 30–40% higher tariffs for solar with BESS compared to regular ground-mounted solar.
Despite progress, Nepal still lacks technical guidelines for system performance, safety, and end-of-life battery management. Industrial net metering is limited to 500 kWp, and public awareness of solar with battery systems remains low. For Nepal to fully realize its solar potential, these policy and technical gaps must be addressed. With costs declining, technology improving, and energy demands rising, this is the ideal moment for Nepal to embrace solar with battery systems. Doing so will strengthen the grid, reduce losses, lower emissions, and pave the way toward a more secure and sustainable energy future.