EU launches €5 million South Asia Energy Connectivity project to boost regional power trade

KATHMANDU. The European Union (EU) on Wednesday launched a €5 million regional initiative aimed at strengthening cross-border electricity trade and energy connectivity across South Asia, a move expected to support Nepal’s ambition of becoming a regional clean energy exporter while enhancing energy security and renewable energy integration in the region.

The four-year Energy Connectivity in South Asia (ECSA) project was officially launched in Kathmandu under the EU’s Global Gateway investment strategy. Funded by the European Union and implemented by Expertise France, the initiative will work with Bangladesh, Bhutan, India, Nepal and Sri Lanka to promote regional electricity market integration, facilitate renewable energy investments and strengthen policy and regulatory cooperation.

The launch event, themed “Powering South Asia’s Energy Future: Advancing Cross-Border Electricity Trade, Investments and Energy Security,” brought together high-level government officials, development partners, energy regulators, investors, technical experts and private sector representatives from the five participating countries.

The project comes at a time when South Asia is witnessing rapid growth in renewable energy generation while electricity demand continues to rise across the region. The EU believes stronger regional cooperation can help countries optimize electricity resources, reduce costs and improve long-term energy resilience.

European Commissioner for International Partnerships Jozef Síkela said energy connectivity has become a critical component of economic growth and sustainable development.

“Energy connectivity powers our economies and daily lives. With the launch of this Global Gateway flagship, the European Union is investing in cheaper, cleaner and more reliable electricity that will strengthen resilience and unlock many opportunities for communities and businesses in South Asia,” Síkela said in a statement released during the project launch.

According to the European Commission, the project seeks to create a more integrated regional power market capable of delivering affordable, reliable and clean electricity while supporting job creation and economic growth throughout South Asia.

EU Ambassador to Nepal Véronique Lorenzo said Europe’s own experience in developing an integrated electricity market demonstrates the long-term benefits of regional energy cooperation.

She noted that interconnected electricity systems have enabled Europe to improve energy security, enhance system resilience and reduce costs through coordinated transmission planning and harmonized market rules.

“Europe’s experience in building an integrated electricity market has demonstrated that stronger energy connectivity creates more resilient, affordable and sustainable energy systems,” Ambassador Lorenzo said.

She added that the EU is committed to partnering with South Asian countries to unlock the enormous potential of regional cooperation in clean energy and electricity trade.

Nepal’s Minister for Energy, Water Resources and Irrigation Biraj Bhakta Shrestha, who attended the launch as chief guest, welcomed the initiative, saying South Asia possesses abundant renewable energy resources but requires stronger regional cooperation to fully utilize them.

He said enhanced cross-border electricity trade would help countries meet growing electricity demand while improving affordability, reliability and sustainability.

“South Asia possesses vast renewable energy resources and growing electricity demand. Enhanced cross-border electricity trade can help countries meet their development goals while improving energy reliability, affordability and sustainability,” the minister said.

For Nepal, the initiative aligns closely with the government’s long-term strategy of expanding hydropower exports to neighboring countries through regional transmission networks.

Nepal has significantly increased electricity exports to India over the past few years and is pursuing additional cross-border transmission infrastructure with both India and Bangladesh to facilitate larger volumes of renewable power trade.

The ECSA project is expected to complement these efforts by supporting regional policy dialogue, improving regulatory coordination and encouraging investment in transmission infrastructure.

The project will be implemented by Expertise France, the French public agency for international technical cooperation.

Its Director of Sustainable Development, Nicolas Chenet, said the initiative will serve as a platform for technical cooperation and knowledge exchange between European and South Asian stakeholders.

According to Chenet, the project aims to combine European experience with South Asian priorities to develop practical solutions for creating a more integrated regional electricity market.

He said the project would support stakeholder engagement, institutional cooperation and collaborative problem-solving among participating countries.

During the launch program, experts also presented lessons from Europe’s integrated electricity market, explaining how coordinated transmission planning, common regulatory frameworks, market coupling mechanisms and institutional cooperation have enabled efficient cross-border electricity trade across European countries.

Participants discussed how similar approaches could be adapted to South Asia while considering the region’s unique political, regulatory and infrastructure realities.

Two high-level panel discussions were held during the event.

The first focused on creating an enabling policy and regulatory environment for regional electricity trade and examined how the ECSA project could complement ongoing regional initiatives. Participants stressed the need for stronger regulatory cooperation, harmonized technical standards, improved institutional capacity and better coordination among governments and development partners.

The second panel explored investment opportunities arising from cross-border electricity trade, particularly in renewable energy generation, transmission infrastructure and modern power systems.

Speakers emphasized that predictable regulatory frameworks, bankable project pipelines and sustained regional cooperation would be essential for attracting both public and private investment into South Asia’s growing energy sector.

At the conclusion of the event, participants agreed that the project should prioritize strengthening regional policy dialogue, conducting evidence-based planning and technical studies, enhancing regulatory and institutional capacity, facilitating investment discussions and promoting knowledge exchange on renewable energy integration and cross-border electricity markets.

According to the project framework, the ECSA initiative will support participating countries through policy and regulatory expertise, technical studies, modelling tools, capacity-building programs, regional workshops, study tours and the identification of joint renewable energy and interconnection projects.

The initiative forms part of the EU’s broader Global Gateway strategy, under which the European Union plans to mobilize up to €400 billion in public and private investments worldwide between 2021 and 2027 to develop sustainable infrastructure in the energy, digital, transport, health and education sectors.

Energy experts say the new regional programme could provide an important platform for accelerating electricity market integration in South Asia at a time when countries are increasingly looking beyond national grids to improve energy security, reduce carbon emissions and maximize the use of renewable energy resources.

For Nepal, which has positioned hydropower exports as a key pillar of its economic strategy, stronger regional energy connectivity could significantly expand future export opportunities while supporting long-term investment in the country’s growing renewable energy sector.