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The energy mix in Nepal is currently dominated by the traditional and inefficient use of biomass (66.54%) and fossil fuels (27.24%), and energy poverty remains extremely high. This paper reviews relevant literature to provide an overview of the current renewable energy status and energy mix in Nepal, and to discuss prospects for the country to achieve a sustainable energy transition. Nepal‐specific papers from peer‐reviewed sources and other agency and academic reports were included insofar as these discussed renewable energy and provided recommendations for policy‐making on sustainable energy and related development goals. Despite the rapidly falling cost of solar photovoltaic, the share of modern renewable energy in Nepal is currently less than 3%. On this basis, and given the country's sustainable energy goals, we conclude that favorable and aggressive policies and strategies are needed to support adoption of clean energy in Nepal, comprised of a high share of solar generation equipped with battery storage, and balanced with storage such as off‐river pumped hydropower technology. [ABSTRACT FROM AUTHOR]