Nepal has a huge hydropower potential. In fact, the perennial nature of Nepali rivers and the steep gradient of the country’s topography provide ideal conditions for the development of some of the world’s largest hydroelectric projects in Nepal. Current estimates are that Nepal has approximately 40,000 MW of economically feasible hydropower potential. However, the present situation is that Nepal has developed only approximately 600 MW of hydropower. Therefore, bulk of the economically feasible generation has not been realized yet. Besides, the multipurpose, secondary and tertiary benefits have not been realized from the development of its rivers.

Although bestowed with tremendous hydropower resources, only about 40% of Nepal’s population has access to electricity. Most of the power plants in Nepal are run-of-river type with energy available in excess of the in-country demand during the monsoon season and deficit during the dry season.

Nepal’s electricity generation is dominated by hydropower, though in the entire scenario of energy use of the country, the electricity is a tiny fraction, only 1% energy need is fulfilled by electricity. The bulk of the energy need is dominated by fuel wood (68%), agricultural waste (15%), animal dung (8%) and imported fossil fuel (8%). The other fact is that only about 40% of Nepal’s population has access to electricity. With this scenario and having immense potential of hydropower development, it is important for Nepal to increase its energy dependency on electricity with hydropower development. This contributes to deforestation, soil erosion and depletion, and increased flooding downstream in the Ganges plain. Shortage of wood also pushes farmers to burn animal dung, which is needed for agriculture. Not only this, the development of hydropower will help to achieve the millennium development goals with protecting environment, increasing literacy, improving health of children and women with better energy. Growing environmental degradation adds a sense of urgency.

The electricity demand in Nepal is increasing by about 7-9% per year. About 40 % of population in Nepal has access to electricity through the grid and off grid system. Nepal’s Tenth Five Year Plan (2002– 2007) aims to extend the electrification within country and export to India for mutual benefit. The new Hydropower Policy 2001 seeks to promote private sector investment in the sector of hydropower development and aims to expand the electrification within the country and export.

The hydropower system in Nepal is dominated by run-of-river Projects. There is only one seasonal storage project in the system. There is shortage of power during winter and spill during wet season. The load factor is quite low as the majority of the consumption is dominated by household use. This imbalance has clearly shown the need for storage projects, and hence, cooperation between the two neighboring countries is essential for the best use of the hydro resource for mutual benefit.

The system loss is one of the major issues to be addressed to improve the power system which accounts to be 25 % including technical and non-technical losses like pilferage.

The major hydropower plants with their capacity are listed in the table as follows:

Power Plants in Operation

S.N. Power Plant Capacity (MW) Annual Energy (GWh) Owned by Type
1 Trishuli 24 292 NEA ROR
2 Sunkoshi 10 66 NEA ROR
3 Gandak 15 53 NEA ROR
4 Kulekhani I 60 164 NEA STO
5 Devighat 14 13 NEA ROR
6 Kulekhani II 32 96 NEA STO
7 Marshyangdi 69 519 NEA PROR
8 Puwa 6 41 NEA ROR
9 Modi 15 87 NEA ROR
10 Kaligandaki 144 791 NEA PROR
11 Andhikhola 5 38 BPC ROR
12 Jhimruk 12 81 BPC ROR
13 Khimti 60 353 HPL ROR
14 Bhotekoshi 36 246 BKPC ROR
15 Indrawati 7.5 51 NHPC ROR
16 Syange .2 1.2 SHC ROR
17 Chilime 20 101 CHC PROR
18 Piluwa 3 18 AVHCO ROR
19 Sunkoshi 2.6 14.5 SHPC ROR
20 Chaku Khola 1.5   Alliance Power  
21 Small hydro 12.5 26 NEA ROR
22 Small hydro (Isolated) 6.4   NEA ROR
23 Microhydro 14.5      
  Total  =SUM(ABOVE) 568.7      


There are few hydro plants under construction by NEA and private developers as listed in the Table below:

Power Plants under construction

SN Power Plant Capacity (MW) Owned by Remarks
1 Middle Marshyangdi 70 NEA  
3 Gamgad 0.4 NEA  
4 Heldung 0.5 NEA  
6 Rairang 0.5 Rairang HPD  
7 Upper Modi 14 GITEC  
8 Khudi 3.5 KHL  
9 Mailung 5 MPC  

 Potential for Development

There are about six thousand big and small rivers in three major river basins namely Koshi, Gandaki and Karnali including some southern rivers, and two border rivers, Mechi and Mahakali in Nepal. The basin wise potential for power generation is in the table below:

Basin wise Hydropower potential

River Basin Capacity on small river courses Capacity on Major River Courses Gross Total (GW) Economic potential (GW)
Sapta Koshi 3.6 18.75 22.35 10.86
Sapta Gandaki 2.7 17.95 20.65 5.27
Karnali and Mahakali 3.5 32.68 36.18 25.1
Southern Rivers 1.04 3.07 4.11 .88
Total 10.84 72.45 83.29 42.14


There are many projects which have been identified for development. Some of those identified promising projects for development are in the following table:

Identified potential Hydropower Projects

S.N. Project Capacity (MW) Type Remarks
1 West Seti 750 Storage  
2 Arun III 402 PROR  
3 Budhi Gandaki 600 Storage  
4 Kali Gandaki II 660 Storage  
5 Lower Arun 308 PROR  
6 Upper Arun 335 PROR  
7 Karnali Chisapani 10800 Storage  
8 Upper Karnali 300 PROR  
9 Chamelia 30 ROR  
10 Pancheswor 6480 Storage  
11 Thulodhunga 25 ROR  
12 Tamor/ Mewa 100 PROR  
13 Dudh Koshi 300 Storage  
14 Budhi Ganga 20 ROR  
15 Rahughat Khola 27 ROR  
16 Likhu 4 51 PROR  
17 Kabeli A 30 ROR  
18 Upper Marshyangdi A 121 PROR  
19 Kulekhani III 45 Storage Cascade of Kulekhani- I and II
20 Andhikhola (Storage) 180 Storage  
21 Khimti II 27 ROR  
22 Upper Modi A 42 ROR  
23 Langtang Khola (Storage) 218 Storage  
24 Madi Ishaneswor (Storage) 86 Storage  
25 Upper Seti (Storage) 122 Storage  
26 Kankai (Storage) 60 Storage  
27 Upper Tamakoshi 250 PROR  

Nepal statistics


147,181 km²



Installed hydropower capacity: 

753 MW (2015)

Hydropower generation: 

3,635 GWh (2015)



Nepal is blessed with significant hydropower resources. Nepal’s theoretical hydropower potential has been estimated to be around 84,000 MW, of which 43,000 MW has been identified as economically viable. Currently, Nepal’s installed hydropower capacity is 753 MW.

Although Nepal suffers from regular energy shortages, the available hydropower resources could provide a large surplus if strategically developed with a view to foster regional energy trade.

Many of these projects were expected to come online in 2015, but were delayed due to the April–May earthquakes in the country. The delays were further exacerbated due to the border blockade and Madhesi movement, which is limiting much-needed fuel to complete construction works.

The projects expected to be completed are: Upper Marsyangdi (50 MW), Chameliya (32 MW), Upper Made (19 MW), Kulekhani III (14 MW), Hewa Khola (14 MW), Thapa Khola (11 MW) and the Pikhuwa Khola (2 MW).

Institutional aspects

The Ministry of Energy (MoE) and Department of Electricity Development (DoED), under MoE, oversee electricity development in Nepal. The Nepal Electricity Authority (NEA) is fully owned by the government and is responsible for the generation, transmission and distribution of electric power. NEA is the agency which purchases power from independent power producers (IPPs) and DoED issues licences for survey and generation on a first come, first served basis against a nominal fee. Recently, the government significantly hiked these fees for a survey licence.

DoED has issued about 13,289MW of survey licences for hydropower. However only a tiny fraction of those issued has been initiated for construction. The concession period is 30 years for export and 35 years for domestic consumption. A substantial number of Indian companies have secured a large numbers of survey licenses from DoED.

The government of Nepal (GoN) has established an investment board which looks after large infrastructure projects including hydropower schemes bigger than 500MW. Its main objective is to attract foreign direct investment (FDI) in the country. The government has also established a hydropower investment and development company to ease financial constraints for the IPPs. However, the company is mandated to cater for projects greater than 25MW.

The Power Purchase Agreement (PPA) rate up to 25MW is Nepalese Rupees NRs.4.80/per unit (5.52 US cents) in the wet season and NRs.8.40 (9.65 US cents) per unit in the dry season with simple annual price increase of 3% for five times. For greater than 25MW, rates are fixed by negotiations.

 The way forward

Once the country enters into a stable political system with firm and good governance and various barriers for hydropower development are removed; there will be a rapid surge of hydropower development in Nepal. Hence, the future for hydropower development in Nepal is promising.