Last September, torrential rains tore through Nepal’s largest power plant, causing over $13m in damage. Six months later, the 456 MW Upper Tamakoshi Hydropower Project – once a symbol of national energy pride – is still not fully operational, while power shortages have returned across much of the country.
This is not an isolated failure. As floods, landslides and unpredictable rainfall become more frequent in the Himalayas, experts say Nepal’s clean energy transition – almost entirely dependent on hydropower – is dangerously exposed to the very climate risks it hopes to solve.
“Most people think about hydropower as the magic pill,” says Raju Pandit Chhetri, a climate finance expert and member of the Least Developed Countries Financial Group. “But relying on a single source is unsustainable in the face of increasing climate threats.”
Nepal has committed to reaching net-zero carbon emissions by 2045. But its energy strategy depends on a fragile foundation: the mountainous, disaster-prone country generates 90 per cent of its power from run-of-river hydroelectric projects, which rely on consistent rainfall and stable weather. These conditions are now disappearing.
In the past three years alone, climate-related disasters, like flash floods and glacial lake bursts, have caused billions in losses to Nepal’s hydropower sector. In some years, droughts have slashed power generation by up to 40 per cent compared to forecasts. And without alternatives like solar or wind, there’s no fallback.
“We need reservoir-based hydropower, pumped storage, and solar power to attain energy security,” says Madhu Bhetwal, secretary at the Water and Energy Commission Secretariat. “Reliance on a single source is risky.”
Nepal’s heavy dependence on hydropower isn’t accidental. Like many small nations, the Himalayan country has few fossil fuel reserves and limited flat land for solar. But what it has plenty of is rivers.
Decades of donor funding and cross-border electricity trade with neighbours, particularly India with which it shares many rivers, have made hydro the default clean energy choice for Nepal.
But this narrow approach is now cracking. Of Nepal’s 3,243 MW installed capacity, just 90 MW comes from small hydro or solar projects. Meanwhile, traditional biomass – mostly firewood and crop waste – still supplies 65 per cent of the country’s energy needs. Fossil fuels account for another 25-27 per cent, while other renewables barely register.
Even when electricity is produced, a lack of infrastructure means much of it goes to waste. In 2023, about 20 hydro projects lost more than $21m worth of electricity simply because there weren’t enough transmission lines to carry it.
During monsoon months, more than 100 MW of electricity is regularly dumped.
“The problem isn’t production,” says Ganesh Karki, president of the Independent Power Producers Association of Nepal. “It’s distribution.”
Critical high-voltage lines, like the Hetauda-Dhalkewar-Duhabi corridor, have been delayed for years due to land disputes and forest clearance issues.
The Dhalkewar-Pathlaiya upgrade has been stalled for over two years due to local opposition in Sarlahi.
“It takes five years just to get permission to cut trees,” says Nepal Electricity Authority official Chandan Kumar Ghosh. “Unless these short-term issues are resolved, our long-term climate goals are just slogans.”
Nepal’s Energy Development Roadmap estimates the country will need $75.7bn in infrastructure investments by 2035 just to keep pace with rising electricity demand. So far, less than a third has been mobilised.
Today, per capita electricity consumption in Nepal is just 400 kWh, among the lowest in South Asia. The government wants to raise that to 1,500 kWh by 2030 while reducing reliance on firewood and imported fuels. But the scale of transformation required is immense.
“Substituting imported biomass with locally produced renewable energy will not only reduce emissions but also make Nepal’s economy more resilient,” says Chhetri.
Nepal has signed power purchase agreements for over 10,000 MW of new projects, with a target of 25,000 MW installed capacity by 2035.
Yet if transmission lines and disaster resilience don’t keep pace, the country risks generating more stranded power.
Nepal’s energy dilemma is not unique. Around the world, low-income countries are being asked to lead clean energy transitions while facing the harshest climate impacts and thinnest financial margins. Like Ethiopia, Malawi or parts of the Philippines, Nepal has high renewable potential – but low grid reliability, underfunded institutions, and a growing infrastructure gap.
“To reduce pollution and improve health outcomes, we need to increase electricity use – especially clean electricity,” says climate analyst Manjeet Dhakal.
“That means upgrading home wiring, rural distribution, and building grid flexibility.”
The country’s plans are ambitious. By 2045, it hopes to phase out biomass and reach net-zero emissions. Indian-backed projects already account for over 3,600 MW of planned capacity. But achieving this future will require better coordination, climate-proof infrastructure, and diversified generation – including solar, wind, and reservoir-based hydropower.
“Private investors are ready,” says Karki. “But they need policy clarity and timely government action, especially around land and forest approvals for transmission lines.”
For now, Nepal is stuck in transition – producing more energy than ever, but unable to deliver it consistently or protect it from disaster. The window for course correction is still open, but it is narrowing.
Experts say a national rethink is needed: one that views energy not just as production, but as a system, from forest clearance policies and local consultations to resilience planning and clean cooking access.
“Climate change is no longer a future risk for Nepal’s energy system,” says Chhetri. “It’s already here.”
As the world looks to the Global South to deliver on climate targets, Nepal’s struggle is a reminder: no country can power a clean future without first fixing what’s broken.
