Kul Man Ghising (left), Managing Director, Nepal Electricity Authority, and Arun Bhakta Shrestha, Regional Programme Manager, River Basins and Cryosphere, ICIMOD, discuss sustainable hydropower development and challenges in Nepal at the May 2022 stakeholder consultation. (Photo: Jitendra Bajracharya/ICIMOD)

Nepal’s hydropower sector generates 99.8% of the country’s electricity. Nepal’s steep topography and many rivers can produce 42,000 MWh of power, but less than 5% of that capacity is currently used (state-owned: 1,033 MWh, privately owned: 912 MWh). In fact, for the fiscal year 2021/2022, Nepal exported a total of 493.61 GWh per the Nepal Electricity Authority.

The hydropower sector faces several difficulties, including project siting and design; environmental impact considerations; risks related to climate change, investment, and markets; and social issues such as displacement of communities and benefit-sharing agreements. Other challenges exist as well, including lack of effective implementation of policies and guidelines, and a weak institutional setup for monitoring the compliance of the guidelines. Additionally, there is limited capacity to conduct climate risk assessments, which are essential considering how vulnerable hydropower generation is to climate change.

During a consultation workshop organised by ICIMOD, representatives from government agencies, private developers, academics, engineers, and researchers identified and discussed these very gaps. Participants recommended preparing climate resilience guidelines for Nepal with institutional arrangements for resilient hydropower development, with the government, regulatory bodies, and the central bank working together to implement these guidelines. They also recommended regular awareness programmes on environmental issues, climate change impacts, and capacity building of community members and construction workers to mitigate risk and impacts from natural hazards at project sites.

The newly formulated National Water Resources Policy 2077 which recommends using an Integrated River Basin Management strategy for comprehensive multi-sector use of water resources – encourages consideration of different demands on water for domestic needs, agriculture, and hydropower. Participants also highlighted the importance of watershed management for the sustainability of hydropower projects.

Participants identified changes in hydrology and the volume of water available through the year as key issues facing the sector, as having more or less water than expected at different stages of the year adversely affects power output. Hydropower is a resource-intensive industry which could take (at the very least) a 20-year period for projects to recover investment. Hydropower projects can also have deep impacts on surrounding ecosystems and communities. Therefore, all financial, environmental, and climate risks must be properly addressed. Nepal Rastra Bank, which now mandates that financial institutions evaluate environmental, social, and climatic risks before investing in hydropower projects, is setting the right context for sustainable, environment-friendly, and financially sound hydropower development in Nepal.

The consultation workshop ended with participants agreeing on the need to develop a framework for sustainable hydropower development in Nepal. ICIMOD will focus on environmental sustainability and institutional arrangements for implementation.

Nisha Wagle

Chimi Seldon

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