Energy Security Challenges in Nepal: An Econometric Analysis of Electricity Consumption and Production Dynamics

AbstractEnergy security is very important for Nepal’s sustainable development because of its relianceon traditional fuels and hydropower. This study examines Nepal’s energy production andconsumption and analyzes the factors influencing energy consumption. It analyses the impactof economic growth, electricity production, and population growth on total electricityconsumption, identifying key challenges and opportunities. Using secondary data fromgovernment sources, the study uses linear, log-linear, and exponential regression models toestimate the relationship between electricity consumption and variables such as real GDP,electricity production, and population. Correlation between energy consumption and realGDP, energy consumption and population growth are found to be positive. Regression resultsshow that economic growth and electricity production are key drivers of electricityconsumption whereas the effect of growth on population energy consumption is statisticallyinsignificant. The study suggests the need for robust energy infrastructure, energydiversification, and significant policies for economic growth. Strengthening Nepal’s economyand energy production capacity is essential for sustainable economic growth and energysecurity. Keywords: Econometric analysis, economic growth, electricity consumption, electricityproduction, energy security