Introduction

The global energy sector is undergoing significant transformation, driven by the urgent need for sustainable development and climate resilience through clean and renewable energy adoption.1 This shift holds particular importance in South Asia, where rising energy demands, environmental risks, and geopolitical complexities converge. India’s Neighbourhood First Policy (NFP), introduced in 2014, positions renewable energy cooperation as a strategic tool to address two critical regional priorities: ‘energy security’ and ‘geopolitical stability’.2

South Asia faces a dual challenge: its energy demand is projected to triple by 2040, yet over 200 million people lack reliable electricity access.3 Fossil fuels dominate the energy mix (80%), exposing economies to price volatility and environmental harm, while climate change intensifies threats like glacial melt and extreme weather.4 Renewable energy offers a viable solution, with India leading regional efforts through its goal of 500 GW renewable capacity by 2030.5 The NFP facilitates cross-border collaborations, such as hydropower projects with Bhutan and Nepal, solar initiatives under the International Solar Alliance (ISA), and regional grid proposals, aiming to reduce fossil fuel dependence while fostering trust.6

Energy security – ensuring stable, affordable energy supplies – is critical for South Asia’s economic recovery post-pandemic. Regional renewable cooperation under the NFP could mitigate risks linked to imported fossil fuels, which drain foreign reserves and increase vulnerability to global market shocks.7 For instance, India’s electricity exports to Bangladesh now meet 10% of its neighbour’s demand, demonstrating how energy interdependence can build diplomatic goodwill.8 Such partnerships align with climate goals, as seen in joint ventures like Sri Lanka’s hybrid wind-solar projects with Indian firms, which reduce emissions while addressing energy poverty.9

However, challenges persist. Geopolitical tensions, particularly between India and Pakistan, hinder region-wide frameworks,10 while financing gaps limit smaller nations’ renewable transitions.11 Transboundary water disputes, such as those involving hydropower projects, require equitable governance to prevent conflicts.12 Additionally, China’s Belt and Road Initiative (BRI) offers alternative infrastructure investments, potentially overshadowing India’s NFP unless countered by sustainable, inclusive models.13

This paper explores the prospects of renewable energy cooperation under India’s Neighbourhood First policy, with a focus on its implications for regional energy security and geopolitical stability. It examines existing policy frameworks, key bilateral and multilateral initiatives, technological and infrastructural challenges, and the broader geopolitical dynamics influencing regional energy collaboration. By analysing both the opportunities and constraints, the paper aims to assess how renewable energy cooperation can serve as a cornerstone of sustainable regional development and peaceful co-existence in South Asia.

Conceptual Framework

This study is situated at the intersection of international relations, energy policy, and regional cooperation, with a specific focus on renewable energy cooperation under India’s Neighbourhood First Policy. The conceptual framework integrates three principal concepts – energy security, regional stability, and renewable energy diplomacy – to understand the strategic utility and implications of cross-border energy cooperation in South Asia.

The framework is operationalised through three core pillars: energy security (ensuring reliable and sustainable energy access), regional stability (mitigating conflicts via shared interests), and renewable energy diplomacy (leveraging renewable energy collaboration as a tool for strategic engagement). These pillars elucidate how cross-border renewable energy initiatives – such as joint solar, hydro, or wind projects – address India’s domestic energy demands while fostering collective stability and economic interdependence in South Asia. By analysing policy alignment, institutional mechanisms, and geopolitical incentives, the framework demonstrates how renewable energy cooperation under the NFP can synergistically advance national energy objectives and regional cooperation, transforming resource-sharing into a foundation for trust-building and sustainable development.

Energy security is conceptualised as continuous and reliable availability of energy at a reasonable and affordable price. It includes the ability to maintain stable energy supply systems (supply-side resilience) and the efficient and sustainable use of energy by consumers (demand-side sustainability). In the context of India’s energy policy, this includes diversification of energy sources, enhancement of grid connectivity, and fostering long-term strategic partnerships with neighbouring states. The framework views renewable energy cooperation not just as an economic activity, but also as a strategic approach to strengthen the country’s energy security. It helps make the energy system more stable and reduces reliance on unstable and unpredictable fossil fuel markets.

Regional stability is conceptualised as cooperative political relations, reduced inter-state tensions, and strengthened economic interdependence among South Asian countries. Within this context, energy cooperation is conceptualised as a confidence-building measure capable of promoting deeper regional integration. The framework suggests that the development of shared energy infrastructure, cross-border investments, and the alignment of regulatory frameworks can foster mutual trust, institutional coordination, and policy harmonisation across the region.

India’s Neighbourhood First Policy, which emphasises prioritising diplomatic and economic engagement with neighbouring countries, is positioned in this framework as a foreign policy instrument that fosters bilateral and multilateral partnerships in renewable energy. Through this policy lens, renewable energy initiatives – such as cross-border solar power trade, regional energy grids, and joint research platforms – are interpreted as mechanisms to enhance India’s regional leadership and to promote a cooperative security environment.

Renewable Energy Cooperation under the Neighbourhood First Policy for Energy Security and Regional Stability

Bilateral Cooperation

India–Bhutan Cooperation

Bhutan possesses significant hydropower potential, estimated at approximately 23,000 MW, of which around 2,326 MW had been developed by 2024 primarily through joint ventures with India. Hydropower is a vital sector in Bhutan’s economy, contributing about 20% to its GDP and accounting for nearly 63% of its total exports.30 It also serves as a reliable source of clean electricity for India, particularly during peak demand periods. Key projects developed under this cooperation include the Chukha (336 MW), Kurichhu (60 MW), Tala (1,020 MW), and Mangdechhu (720 MW) hydropower plants,31 which supply power to India’s eastern and northern regions. Currently, both governments are progressing with additional large-scale projects such as Punatsangchhu-I (1,200 MW), Punatsangchhu-II (1,020 MW), and Kholongchhu (600 MW), which are under various stages of construction.32 A joint vision statement released in 2024 reaffirmed the commitment to deepening this partnership by exploring new areas such as solar energy and green hydrogen, while also ensuring continued Indian investment and access to the Indian energy market for Bhutanese power.33

This energy collaboration reflects the core principles of India’s Neighbourhood First policy, which emphasises close regional cooperation and development. Bhutan benefits economically through increased investment, technological support, and energy export revenues. For India, the partnership ensures access to affordable, renewable electricity that supports its energy security and climate objectives. Strategically, this collaboration reinforces regional stability and aligns Bhutan more closely with India, particularly in the context of growing Chinese engagement in the region. Thus, India–Bhutan hydropower cooperation enhances bilateral relations and contributes to sustainable development in the Himalayan region.34

India–Nepal Cooperation

India and Nepal have significantly expanded their cooperation in the hydropower sector, aiming to utilise Nepal’s vast river-based energy potential, estimated at approximately 42,000 MW. A major milestone in this partnership was the signing of a long-term power trade agreement in January 2024, which permits Nepal to export up to 10,000 MW of electricity to India over the next decade.35 One of the most prominent projects under this framework is the 900 MW Arun-3 hydropower plant, currently being developed by India’s Sutlej Jal Vidyut Nigam (SJVN). During a high-level visit in April 2025, India’s Power Minister inaugurated key electromechanical works at Arun-3 and oversaw the signing of a memorandum of understanding (MoU) between India’s POWERGRID Corporation and Nepal Electricity Authority (NEA). This MoU aims to establish joint venture companies for two cross-border 400 kV transmission lines: Inaruwa–New Purnea and Dododhara–Bareilly,36 which are expected to enhance grid connectivity and energy stability.

India–Bangladesh Cooperation

India–Bangladesh energy cooperation has broadened into renewables alongside conventional power. In 2024, Bangladesh signed a MoU to import 1,000 MW of renewable energy – primarily from solar and wind sources – from India by 2025, to achieve its target of 10% clean power.37 Indian firms are participating in Bangladesh’s solar market; for example, India’s Amara Raja won a $130 million contract to build a 100 MW solar plant there.38 Existing projects underscore the energy partnership: Tripura has supplied ~160 MW to Bangladesh since 2015, and in 2023 India commissioned the first cross-border petroleum pipeline to Bangladesh.39 The Bangladesh–India Friendship Power Plant (the 1,320 MW Maitree coal project) was also completed in joint partnership.40

These initiatives are explicit facets of Neighbourhood First. Bangladesh “occupies a central place” in India’s neighbourhood policy, and India has used development aid to bolster energy and connectivity. Economically, Bangladesh gains reliable power supply and technology know-how (reducing its fuel imports and stabilising industry), while India secures a market for its power exports and strengthens ties with a large neighbour. Politically, energy cooperation reinforces trust: India recently resolved long-standing border issues and continues to support Bangladesh’s infrastructure and economy, enhancing bilateral relations. Therefore, renewable energy trade and power infrastructure projects not only help Bangladesh meet its rising demand sustainably, but also advance mutual economic benefits and regional stability under India’s Neighbourhood First policy.

India–Sri Lanka Cooperation

India–Sri Lanka renewable cooperation has gained significant momentum in recent years, in alignment with the evolving energy priorities of both countries. A significant milestone is the development of the Sampur Solar Power Plant in eastern Sri Lanka, with Phase I (50 MW) formally inaugurated in April 2025 as a joint initiative between India’s National Thermal Power Corporation (NTPC) and the Ceylon Electricity Board (CEB).41 The project (using advanced N-type TOPCon panels) is designed in two phases to eventually supply 150 MW, and will reduce carbon emissions by ~200,000 tons annually. India also inaugurated a programme to install solar panels on 5,000 religious sites across Sri Lanka during the same visit.42 Meanwhile, new wind farms are in the pipeline: Sri Lanka has provisionally approved India’s Adani Green to develop two large onshore wind parks (Mannar and Pooneryn).43 Critically, in 2025, the leadership reached a landmark agreement to develop an undersea high-voltage direct current (HVDC) transmission link between Madurai and Mannar.44 This initiative aims to enable bidirectional power exchange and strategically position Sri Lanka as a regional energy hub, capable of exporting surplus renewable energy to India and beyond.

These projects are tightly aligned with Neighbourhood First. Sri Lanka holds a special place in India’s neighbourhood vision. Cooperative energy ventures bring mutual economic gains: Sri Lanka gets large-scale clean energy investments, job creation, and reduced fuel imports, while India deepens market ties and secures critical Indian Ocean influence. Politically, robust energy ties help stabilise Sri Lanka (especially post-economic crisis) and counterbalance other powers’ presence on the island – for example, India’s outreach, including funding and transitioning certain loans to grants, has kept Sri Lanka reliant on Indian support. Overall, renewable energy collaboration (solar, wind, grid interconnection) is not only a “win-win” economic deal, but also strengthens strategic ties and regional stability under the Neighbourhood First policy.

India–Maldives Cooperation

While the Maldives has limited hydro resources, India and the Maldives have recently explored renewable and grid integration projects to enhance energy security. Notably, in 2022 India proposed establishing a transmission link under the One Sun, One World, One Grid (OSOWOG) initiative.45 A draft MoU would commission Indian technical teams to plan an undersea cable to carry renewable power to the Maldives. Domestically, the Maldives is aggressively boosting solar: in February 2025 the government invited bids for a 150 MW solar PV park with battery storage near Malé. This is significant given the nation’s ~600 MW total capacity (only ~6% from solar now) and its goal of 33% renewable generation by 2028.46 India has also provided development grants for Maldivian infrastructure and capacity-building in renewable energy.

Under Neighbourhood First, India regards the Maldives as a critical partner in the Indian Ocean. The Maldives’ strategic location makes its stability paramount. Energy cooperation helps the Maldives reduce costly fuel imports and improve climate resilience, while India secures strategic influence and strengthens diplomatic goodwill with a vital maritime neighbour. In short, renewable energy projects and planning (grid links, solar parks) strengthen the Maldives’ economy and align it with India’s SAGAR vision, reinforcing regional stability and sustainable development.

Multilateral Energy Cooperation Initiatives

SAARC Energy Cooperation

South Asia’s regional forum, the South Asian Association for Regional Cooperation (SAARC), has established formal structured mechanisms for energy collaboration in the region. In 2006, it established the SAARC Energy Centre in Islamabad, charged with the mandate to initiate, coordinate, and support joint regional energy activities. In 2014, all eight SAARC members signed a Framework Agreement for Energy Cooperation (Electricity) in Kathmandu. The agreement’s preamble emphasises “optimal utilization of regional electricity resources, enhanced grid security,” and the development of “renewable energy sources including hydropower.”47

BIMSTEC Energy Cooperation

The Bay of Bengal Initiative (BIMSTEC) – comprising Bangladesh, Bhutan, India, Myanmar, Nepal, Sri Lanka and Thailand – has increasingly prioritised energy. Its first Energy Ministers’ Conference in 2005 (New Delhi) agreed to establish the BIMSTEC Energy Centre (BEC) in India.50 The BEC is responsible for sharing knowledge, managing energy data, conducting feasibility studies, and supporting capacity-building activities. Most importantly, it works to support the development of power grid connections and the use of hydropower and other renewable energy sources across the region.

BBIN Framework

The BBIN sub-regional initiative (Bangladesh–Bhutan–India–Nepal) highlights cross-border power cooperation in Eastern South Asia. All four countries face complementary energy profiles: Nepal and Bhutan have vast hydropower potential, while Bangladesh and India have large demand and are diversifying beyond fossil fuels. Bhutan and Nepal together possess an estimated hydropower potential of approximately 113,000 MW, with an additional 58,000 MW available in Northeast India. If fully harnessed, this combined capacity could position the sub-region as the leading supplier of hydropower in South Asia.52 This approach has the potential to enhance energy security, with projections indicating that India could avoid 35 GW of coal-fired power plants between 2015 and 2040, while also reducing power-sector CO₂ emissions by 6.5% through integrated electricity trade.

International Solar Alliance (ISA)

The International Solar Alliance (ISA) is a global group, created by India and France in 2015, focused on expanding the use of solar energy. It is officially an “action-oriented” and member-led organisation, with the goal of increasing solar technology deployment to improve energy access and security. ISA now has over 100 member countries worldwide. In South Asia, Bangladesh, Bhutan, India, the Maldives, Nepal, and Sri Lanka have all signed ISA’s Framework Agreement, with Nepal becoming the sixth South Asian country to do so in June 2024.55 This wide regional participation shows a strong shared commitment to developing solar energy.

Challenges and Constraints

Renewable energy cooperation in South Asia, under India’s Neighbourhood First Policy, faces various challenges and limitations that reduce its effectiveness in improving energy security and regional stability. The absence of strong political trust and mutual understanding among the countries in the region is a significant obstacle. Past conflicts and strained relations – particularly between India and some neighbours like Pakistan and Nepal – often make it difficult to carry out joint energy projects successfully.

Infrastructure and technological disparities pose another significant hurdle. Many neighbouring countries lack the advanced infrastructure and grid connectivity required to facilitate cross-border renewable energy trade. Additionally, regulatory and policy misalignments between India and its neighbours complicate joint projects. Differences in tariff structures, energy policies, and investment norms act as barriers to integrated energy markets.

Geopolitical influences, such as China’s increasing involvement in South Asia through projects like the Belt and Road Initiative (BRI), create additional challenges for India’s efforts. Some neighbouring countries may be reluctant to cooperate on energy only with India, as they try to maintain a balance in their strategic relationships with both India and China.

Financial constraints and investment risks in less developed areas discourage both private and public sector involvement. The renewable energy sector needs large initial investments, and the political and economic uncertainty in some South Asian countries makes investors more cautious about funding such projects.

Environmental and social concerns, such as problems with acquiring land, relocating affected communities, and opposition from local populations to large renewable energy projects, make implementation more difficult. In addition, many countries in the region lack strong institutions and technical expertise needed to handle complex cross-border energy projects and to implement and monitor international agreements effectively.

Conclusion

Promoting renewable energy cooperation through India’s Neighbourhood First Policy offers a strong opportunity to improve energy security and support lasting peace and development in South Asia. As countries in the region face rising energy needs, environmental risks, and complex political situations, renewable energy stands out as both a cleaner energy source and a way to bring countries closer together. This study highlights that working together on renewable energy projects – such as cross-border electricity sharing and joint development of solar and wind power – can bring shared advantages to India and its neighbouring countries, including Nepal, Bhutan, Bangladesh, and Sri Lanka.

India has an important role to play in this effort, thanks to its experience in renewable energy, strong institutions, and focus on sustainable growth. By linking its renewable energy goals with its Neighbourhood First Policy, India can build stronger economic and political connections in the region, help balance regional power differences, and support common goals for green development. Still, to make this work, countries must work closely together on policies, connect their infrastructure, align rules and regulations, and show strong political commitment. In summary, renewable energy cooperation within India’s Neighbourhood First Policy has great potential to strengthen energy security and promote peace in the region. To fully benefit from this, all involved parties need to focus on fair, open, and forward-looking partnerships that go beyond narrow national interests and aim for shared strength and sustainable progress. More studies and innovative policies will be needed to address the remaining challenges and to make the most of renewable energy cooperation in South Asia.

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