Nepal, July 1 -- Not many people paid attention when, on a humid June morning, 40MW of electricity began making its way from the rivers in central Nepal to the grids of northern Bangladesh. There was no grand summit, but make no mistake: this unassuming cross-border trade could be the opening act of something far more ambitious, possibly even transformational.

The idea is simple on paper. Nepal, long known for its snow-fed rivers and hydro potential, now finds itself in a position to export power. Bangladesh, in need of diversifying its energy sources and weaning off an overdependence on fossil fuels, has emerged as a willing buyer. India, which sits geographically between them, agreed to let the current pass through its territory.

The ...