Energy sector in Nepal is rich in potential, both for large-scale and innovative small-scale projects. The government has set forward a target to increase per capita electricity consumption from 110 to 1500 Kwh within the next 10 years. Currently, the nation’s major focus lies in the hydropower sector. It has also planned to produce 5000 MW within next 5 years and 15000 MW within the next 10 years out of the economically feasible 43,000 MW capacity through public and private investment in small, medium and large hydroelectricity projects. This presents lucrative investment opportunities in the hydropower projects both for domestic consumption and for export. The IBN has granted an electricity generation license to an Indian developer, SJVN Arun-3 Power Development Company, to generate power from the Arun-3 Hydropower Project of 900 MW capacity and construction has already begun. Project Development Agreement (PDA) has also been signed for Upper Karnali Hydropower Project of 900 MW capacity. These represent the commitment of the Government to attracting foreign investment in the energy sector. The government also encourages solar, wind, geo-thermal and other alternative sources of energy. With an average global solar radiation ranging from 3.6 – 6.2kWh/m2 per day, an average insolation intensity of about 4.7 kWh/m2 per day, and sunshine on an average of 300 days in a year, there is great potential for harnessing solar energy in Nepal. A report by the Alternative Energy Promotion Centre (AEPC) estimated that Nepal has a potential capacity of 2,100 MW for grid integrated Photovoltaic (PV) power. The same report estimated Nepal’s gross wind power potential to be 3,000 MW. On the basis of wind data collected since 1967, Kagbeni, Thini, Tangbey, Bhorleni and Chisapani (Sindhuli) have been found to be feasible wind farm locations, each having a wind power density above 300W/m2 (watts per square meter). Moreover, geothermal springs in various parts of Nepal have been identified as potential geothermal energy sites. Nepal’s clean and alternative sources of energy have the potential to meet some ambitious targets set by South Asia to replace its reliance on fossil fuels with renewable sources of energy.