Urbanization is a common characteristic of a developing country. Whilst urbanization is an indicator of
development, it demands high utilization of resources. The urbanization rate of Nepal is one of the highest in South
Asia and among developing countries as well. Kathmandu Valley is the chief center of the urban transition in Nepal.
This study is conducted to understand the current energy consumption pattern of residential sector of Kathmandu
valley. A primary survey was conducted though household questionnaire survey within the three districts of valley,
with division of valley into two regions viz. urban and peri-urban area. Residential energy system has been
developed using MAED and MARKAL. A set of residential alternatives have been assumed considering both
conventional and renewable resources. The energy model has been evaluated using least cost optimization method
using ANSWER MARKAL for various scenarios. Various indicators have been derived to evaluate each scenario.
According to evaluation results, the current pattern of energy demand would put huge pressure not only in energy
requirement but also national economy. An effective policy is the imperative requirement in current situation. The
policy should be driven by strategies for utilization of indigenous renewable resources instead of importing
petroleum products. The effective outcome of a properly planned strategy would be reduction in energy demand,
emissions as well as national economy along with opportunity of utmost utilization of energy resource potential and
employment opportunities.