In this study, we assessed the accomplishments and shortcomings of an exhaustive collection of energy policies of Nepal over four decades, using a five‐dimensional energy security framework (availability, affordability, technology, sustainability and governance) for sustainable development. We adopted a mixed‐method approach involving thorough review of 70 policy documents (1984–2022), systematic review of 86 peer‐reviewed journal articles on Nepal's energy policy, and consultations with 11 experts. Our evaluation shows that while there is a progressive trend, Nepal's energy policies face challenges of political instability, governance issues, siloed development practices, lagging research and development, inefficient energy demand management, and heavy reliance on international support. Additionally, we offer four tailored recommendations for the related stakeholders: supply‐side management, demand‐side management, multi‐sector collaboration, and political stability and good governance. The insights and recommendations we provide have significant regional implications, particularly in the context of potential cross‐border clean electricity sharing in South Asia.