Nepal Green Hydrogen Policy 2026: Where Pilot Projects Stand in Late August
Nepal's green hydrogen push has moved from studies to a closed pilot tender, with awards expected before Dashain. Fiscal incentives have been legislated but detailed rules are still awaited. The article outlines the March feasibility study, the tender process, existing administrative frameworks, and the three key developments to watch in late 2026.
Late August 2026 and the picture around green hydrogen in Nepal is clearer than it was six months ago, but still more outline than built infrastructure. The pilot tender process has run its course. What's missing is steel in the ground.
What the March feasibility study actually said
AEPC's feasibility study, released in March, confirmed what engineers have argued for years: Nepal's monsoon surplus could feed electrolyzers when reservoir levels are high, then stored hydrogen could balance dry‑season deficits or feed fertilizer plants in the Terai. The report mapped demand clusters along the East‑West Highway and flagged policy certainty as the main bottleneck. It didn't name developers, capacities, or technology choices — those were left for the tender process.
Pilot tender has closed; awards pending
The Ministry of Energy, Water Resources and Irrigation issued its call for proposals in June, before the fiscal year ended mid‑July. Several developers submitted bids for demonstration units ranging from a few hundred kilowatts to low single‑digit megawatts. Alkaline and PEM both appeared in proposals; solid‑oxide didn't. Evaluation is underway. No MoUs have been signed yet — awards are expected before Dashain.
Policy incentives enacted, details still emerging
The Finance Bill for the current fiscal year has passed parliament. It includes tax incentives and customs‑duty exemptions for green hydrogen producers, though the exact terms — such as the length of any tax holiday or the scope of equipment covered — have not been widely published in official gazettes yet. Investors are waiting for the implementing regulations before committing capital. Earlier coverage missed a provision on accelerated depreciation for balance‑of‑plant assets, but that too awaits the detailed rules.
Non‑fiscal groundwork laid earlier
Two administrative steps pre‑date the budget. The Ministry of Industry, Tourism and Supply set up a single‑window clearance desk for renewable projects in January, explicitly listing green hydrogen. And the 2016 National Renewable Energy Strategy, updated in 2017, already flagged hydrogen as a long‑term decarbonisation option. Neither is new, but both reduce the paperwork hurdle for projects that clear the pilot stage.
What to watch through the rest of 2026
Three things will decide whether the narrative turns into capacity. First, the pilot award announcements — expected by October — will show what scale and technology the government backs. Second, any co‑financing agreements with multilateral climate funds; several development banks have earmarked hydrogen windows but nothing signed for Nepal yet. Third, the first power‑purchase agreement for hydrogen‑linked generation. Without a guaranteed off‑taker, even a tax holiday only goes so far. Until those pieces land, Nepal's green hydrogen story stays promising on paper.
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