Hydropower in Nepal : From basic facility fulfillment to a significant trading revenue stream

Breaknlinks Photo
Breaknlinks Photo

When flowing water's mechanical energy is captured and turned into electricity, hydroelectric power, or hydropower. At hydropower plants, too long water stored from big sources flows through a pipe or penstock then pushes against and turns blades in a turbine to spin a generator to produce electricity. Despite Nepal being the "second richest country" globally after Brazil in hydropower potential (i.e., the flow of rivers and streams), this fact has never been proved. Nepal has the grace of high water resources potential, covering 395,000 ha (48%)area within 45000 km in length of 6000 rivers with 170 billion cubic m annual runoff and 45,610 MW economically possible hydroelectricity generation.

Hydropower is an environment-friendly energy source with no pollution emitting in the air or land, and the main fuel used in hydropower (water) can be reused again.

A brief history 

The history of hydropower development in Nepal began on May 22, 1911 (9 Jestha 1968 BS) by installing 500 kW electricity at Pharping named Chandra Jyoti by Prime Minister Chandra Shumsher to fulfill the Energy requirements of their own ruling Rana family. This project was inaugurated just after 29 years of the world’s first plant. Hydropower in Nepal was in operation before china operated hydropower production in (1912 AD). After 25 years of establishing the first hydropower, in 1936, Prime minister Dev Sumsher established the second hydropower at Sundarijal of (640 KW) energy capacity. Similarly, the Morang Hydropower Company, founded in 1939, constructed the 677 KW Sikarbas Hydropower Plant in Chiang Khola in 1942; however, it was destroyed by a landslide in the 1960s. Following the start of the development planning process, the development of hydropower was institutionalized. The primary Five-Year Plan (1956-61) is expected to promote hydropower production by 20 MW. But, the goal was not accomplished; Some progress was made during the Second Three- Year Plan (1962-65). The Nepal Electricity Corporation (NEC) was founded in 1962 and assigned to the transmission and distribution of electricity over the country. The duty of electricity generation was allocated to the Electricity Department. With the Panauti Hydro plant (2400 KW) in 1965 and the Trishuli Hydro plant (24000 KW) in 1967, the country's hydropower generating capacity was extended after a long gap since the installation of the Chiang Hydro plant. Then came several of these hydroelectric projects. In 1974, the Eastern Electricity Corporation was founded. The Small Hydropower Development Board was established in 1977. Institutional reform occurred again in 1985except when the Electricity Department, Nepal Electricity Corporation, and all development boards (except the Marshyangdi Hydropower Development Board) merged to form Nepal Electricity Authority (NEA). Since that time, the NEA has been in charge of electricity generation, transmission, and distribution. Water and Energy Commission and its Secretariat, created in 1976, the policymaking body formed in 1981, and the Department of Electricity Development are other public sector entities active in the hydropower industry. In recent years, the private sector has emerged as a significant role in hydropower development.


Due to Nepal's geography, nature has given a large head and a source of discharge, both of which are necessary for hydropower generation. There are 83000 MW of capacity available here; however, only 43000 MW is technically and economically feasible, and only around 1000MW has been generated so far; so, there is still a lot of work to do be done on hydropower. Almost all hydro projects are run-of-river, except for the Kulekhani (storage type). However, the government is currently concentrating on Peaking-type initiatives. The Upper Tamakoshi hydropower project is the largest active project (456MW). Nepal's internal production of electricity is not sufficient till now for internal usage. Hydropower development can assure energy security, food security, and health security, preserve the environment, minimize greenhouse gas emissions, and give recreational opportunities In developing countries like Nepal.


Financial investment, political instability, and the risk of natural disasters are the main challenges of hydropower development in Nepal. On the other hand, environmental and social consequences are linked to the growth of hydropower projects that are misrepresented, causing the process to be delayed, or in some cases, completely stopped. The various challenges of hydropower in Nepal are as follow.

Technical challenges

1. Fragile Geology
2. High Rate of Sedimentation
3.  Geopolitical Situation and Topographical Constraint (difficult terrain with dispersed settlement)
4.  Lack of Policy Interventions Regarding Hydropower Development
5. Transmission Problem of NEA

Financial Challenges

1. Major Constraints in Mobilizing Funding from Financial Intermediaries
2.   Lack of project finance instrument
3. Central Bank Guidelines Insensitive to Power Sector

Prospects of Hydropower In Nepal

According to the Nepal Electricity Authority (NEA), Nepal's current peak load electricity consumption is roughly 1,500 MW. In a business-as-usual scenario, this is predicted to rise to 2,379 MW by 2022 and 4,280 MW by 2030. This rise in the production of hydroelectricity will fulfill not only the demand of the country but also the excess electricity that can be exported and improve our trade loss for the country. For that, it is expected that government would help in administrative policies, and financial sectors of the country would amend the banking policies for hydropower and module hydropower as the major trade income source.

Despite Nepal's great hydropower potential, the country's poor economy and sluggish GDP growth rate, as well as environmental and social restrictions, good policy execution, and political stability, may help the country achieve its long-term development goals. So as a basic fundamental need and the major source of foreign trading income, hydropower production should be promoted in the claimed "second richest country in water resources "country like Nepal.

Publish : 2021-07-03 09:25:00

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