InDepth: Possibilities and pitfalls of hydroelectricity

Ask an average Nepali about the country’s main energy source and chances are they will instinctively answer “hydroelectricity”. But the truth is—despite its immense hydropower potential—Nepal’s primary source of energy is biomass like firewood and agricultural by-products. 

According to the Center for Energy Studies, Pulchowk Engineering Campus, Nepal meets 67 percent of its energy needs from biomass. Electricity—a large share of which comes from hydropower—only contributes five percent. 

Still, hydropower is seen as Nepal’s most reliable energy source. The country currently generates 2,200MW of it in the rainy season. In theory, it can produce 50,000 MW electricity by harnessing its water resources. Preparations are currently afoot to ramp up Nepal’s hydropower generating capacity to 10,000 MW over the next decade. 

In this context, this is perhaps the right time for a SWOT analysis of hydroelectricity in Nepal. 

Strengths 

When talking about strengths of hydroelectricity, it is vital to look at the advantages it brings at the grassroots level. Most of Nepal’s hydropower plants are based in rural areas, where these projects have brought road access, a precursor to any development. 

Shailesh Mishra, chief executive officer of Independent Power Producers’ Association, Nepal (IPPAN), says hydroelectricity projects can spur overall development of rural Nepal.    

“With road access brought by hydropower projects, many children in rural Nepal won’t have to walk for hours or use unsafe ropeways and bridges to go to  school. It will also improve people’s access to health facilities, transport service, and trade,” he says.  “Hydropower projects are essential to meeting Nepal’s energy needs in a sustainable manner, as well as for the country’s overall development.”  

Sushil Pokharel, managing director at Hydro Village Pvt Ltd, adds that developing more hydroelectric projects will also contribute to curbing brain drain by creating jobs inside the country.  

In June 2022, a total of 34,807 people left the country to work abroad, according to the Department of Foreign Employment. 

“More and  more Nepalis will fly out when there are no job opportunities here,” says Pokharel. 

He suggests establishing new hydropower plants and proper use of the existing ones to provide more jobs to Nepali youths.

Weaknesses 

Nepal’s difficult topography is one of the major obstacles that has set Nepal behind in hydroelectricity, says Mukesh Kafle, a former CEO of Nepal Electricity Authority (NEA). 

As the country is dotted with hills and mountains, most hydropower projects are run-of-the-river (ROR). Kafle says energy output fluctuates in ROR plants with a change in season. 

“Our electricity production of 2,200 MW drops by nearly a third during the dry season,” adds Kafle. Nepal has been importing electricity (around 800 MW) from India to tide over its dry-season demand. 

Apart from the country’s tricky geography, unstable politics is also a challenge in hydropower-development. 

Mishra, of IPPAN, says hydroelectricity development requires huge investment, which the government alone cannot muster. 

Pokharel, of Hydro Village Pvt. Ltd., adds that potential investors are unwilling to provide funds given Nepal’s unstable political climate. “Governments keep changing and so do policies. This discourages potential investors,” he says.  

Besides generating more hydroelectricity, he adds, Nepal also needs to build robust infrastructure by factoring in the growing number of consumers.   

“Our transformers won’t be able to handle the load if we do not urgently upgrade and add to our electricity infrastructure,” says Pokharel.

Opportunities 

Energy experts say there are plenty of opportunities that Nepal can create with a good plan of action and a sound policy.  

“Nepal has abundant water resources to generate hydroelectricity. This in itself is a major opportunity,” says Kafle, the former CEO of the electricity authority. 

The country already produces surplus energy during monsoon season, giving it the option of exporting the excess. Bangladesh’s Ministry of Power, Energy and Mineral Resources has proposed importing surplus electricity from Nepal, and vice-versa, during the lull season.

“The proposal for power trade between Nepal and Bangladesh is a good opportunity,” says Kafle.

Besides that, Mishra says inter-country energy trading can also be a robust diplomatic tool to buttress bilateral ties. 

Pokharel echoes Kafle: “Exporting surplus energy will definitely help Nepal’s economy. Having an income source through this trade would give the country economic security.”

Mishra adds that the geological feature of Nepal itself is also an opportunity if properly utilized. “To produce electricity, we need a sloppy terrain, with water flowing from a certain height,” he says. “In this case, Nepal is naturally gifted.” 

If pursued wisely, there is no reason the goal of sufficiency in electricity and export of excess cannot be realized. 

Possibilities will surely widen if Nepal took the right approach to exploiting and managing its hydropower potential, says energy experts. 

The Paris Agreement, UN’s legally binding international treaty on climate change, might play a major role in turning this potential into reality. 

As India has committed to stopping carbon emissions by 2070, it will be more and more dependent on hydroelectricity to make up for the shortfall. 

“Our surplus energy could be one of their electricity sources,” says Mishra. 

Mishra says specific hydro plants can be built for monsoon-time production, with the sole intent of exporting power to Indian markets. 

Kafle, meanwhile, adds that Nepal’s energy market could expand beyond India to other South Asian countries. “All we need is the right approach,” he says.

Threats 

As Nepal aims to become a hydroelectricity-rich country, there are also threats.  One of the biggest, say Kafle and Mishra, is the monopoly of the NEA. 

As there is no alternative body to monitor and regulate electricity consumption and distribution, Nepal will always have a monopolistic electricity market. 

“A monopolistic market is always a threat,” Mishra says. “This threat will remain until hydroelectricity generation, transmission, and distribution are delegated to separate agencies.” 

So there is a need for a clear policy, regulation and devolution of power in Nepal’s hydroelectricity sector. 

But just being invested in making a clear policy is not enough. Mishra says timing is as important. “What good are policies if we are unable to use them when we need them the most?” he asks. 

There is also a geopolitical hurdle to realizing Nepal’s hydroelectric dreams. 

A new Indian government policy bars the trade of electricity produced by Nepali power projects with Chinese investments. 

“This is definitely a threat for our economy as the majority of our power plants have Chinese investment,” says Kafle. 

This in turn has added to the uncertainty over projects like the China-funded 445-MW Upper Tamakoshi that recently came into operation.