Development of hydropower in Nepal

Hydropower is the main source of electricity in Nepal; its development started in 1911 and has grown fastest after private sector entry and especially after 2016. Nepal's theoretical potential is about 83,000 MW, with about 42,000 MW economically feasible.

Historical phases

1. Early period (1911–1950): Pharping (500 kW, 1911) was the first plant, followed by Sundarijal (640 kW, 1936).
2. Aid-based period (1950–1990): Panauti, Trishuli, Sunkoshi, Gandak, Kulekhani I (60 MW, the only big storage plant) built with foreign aid. Nepal Electricity Authority (NEA) formed in 1985.
3. Opening to private sector (1992–2015): Hydropower Development Policy (1992) and Electricity Act (1992) allowed IPPs. Khimti (60 MW) and Bhotekoshi (45 MW) were the first big IPP plants. Kali Gandaki A (144 MW) and Middle Marsyangdi (70 MW) built by NEA. Supply could not meet demand, so load shedding reached up to 18 hours/day (2008–2016).
4. Rapid growth (2016–present): Load shedding ended in 2016/17. Upper Tamakoshi (456 MW, 2021), Kulekhani III, Rasuwagadhi, Solu Dudhkoshi and many IPP projects added. Capacity rose above 3,000 MW. Export to India began in 2021.

Present status

• About 95% of grid capacity is hydro; most plants are run-of-river or peaking ROR, so there is a wet-season surplus and dry-season deficit.
• IPPs own more than half of installed capacity.
• Micro-hydro (through AEPC) supplies many remote villages.

Institutions and policies

NEA, Department of Electricity Development (DoED), Investment Board Nepal (IBN), Electricity Regulatory Commission (ERC), Hydropower Development Policy 2001, Energy Development Roadmap (target about 28,500 MW by 2035).

Challenges

• Few storage plants; seasonal mismatch.
• Delays in transmission lines and land acquisition.
• High sediment load damaging turbines; GLOF and landslide risks.
• Financing, PPA and market issues; local disputes.

Way forward

Storage and pumped-storage projects, 400 kV transmission and cross-border lines, power trade with India and Bangladesh, and higher domestic consumption (EVs, cooking, industries).