Nepal has been studying hydrogen fuel since 2008. After nearly 17 years of research, the government has begun work on producing green hydrogen fuel. A memorandum of understanding has been signed with South Korean company G-Philos to establish a green hydrogen plant and fuel cell facility in Nepal.
The Investment Board Nepal (IBN) is preparing a detailed project report (DPR) to explore producing hydrogen fuel using around 20 megawatts of electricity. According to IBN spokesperson Pradyumna Prasad Upadhyay, the proposed project is estimated to cost about Rs 6 billion. Initially, only a small-scale production will be attempted, with plans to expand depending on the feasibility study.
The agreement was signed on Thursday by IBN CEO Sushil Gyawali and G-Philos CEO Ga Woo Park. As per the agreement, the company will prepare the DPR within 10 months of receiving a survey permit from the board.
G-Philos had submitted its proposal on April 15 for the establishment, development, and operation of a green hydrogen and fuel cell plant in a public-private partnership model. The 63rd meeting of the IBN decided to grant the survey permit.
Biraj Singh Thapa, a researcher and associate professor at Kathmandu University, welcomed the agreement, noting that KU has been conducting green hydrogen research and even demonstrated a hydrogen-powered car. He highlighted that the Hydrogen Policy 2023, along with tax exemptions on machinery and equipment and a five-year income tax holiday announced in the current budget, has drawn foreign interest in Nepal’s hydrogen sector.
According to the policy, machinery and equipment imported for green hydrogen production are exempt from all taxes and duties. This, Thapa added, is expected to attract both foreign and domestic investors. The 20 MW feasibility study will also assess whether the fuel can be used domestically or exported, and identify a potential plant location.
Kathmandu University established a Green Hydrogen Lab in 2020 to research the use of hydrogen in fertilizer factories, iron ore processing, and as a coal substitute in cement industries. Hydrogen has long been considered a potential renewable energy source, and its production could help Nepal meet its commitment to achieving net-zero carbon emissions.
Several institutions have studied Nepal’s hydrogen potential. Tribhuvan University and Western Michigan University jointly concluded that hydrogen could be produced using hydropower, reducing petroleum imports. The Asian Development Bank carried out a similar study in 2020, while the Water and Energy Commission Secretariat assessed possibilities in 2021. A study in 2022 further explored hydrogen-based fertilizer production.
Globally, countries including India, China, and the United States have already developed hydrogen roadmaps and policies. Nepal’s Hydrogen Policy 2023 also recognizes significant potential for hydrogen and related products from hydropower.
Hydrogen is produced by splitting water into hydrogen and oxygen using electricity. Roughly one kilogram of hydrogen can be extracted from nine kilograms of water, requiring about 50 kilowatt hours of electricity. With abundant water resources and surplus electricity, Nepal is well positioned to produce hydrogen.
Hydrogen can be stored as a liquid, gas, solid, or metal hydride, making it suitable for domestic use or export. Studies suggest that hydrogen could replace at least two percent of Nepal’s diesel imports. Given the size of the domestic diesel market—worth around Rs 71bn—green hydrogen could play an important role in diversifying Nepal’s energy mix and enhancing energy security over the next decade.
