Nepal's hydropower gamble crumbles as climate-driven floods destroy 10% of capacity

Nepal's electricity system, almost entirely dependent on hydropower, suffered a catastrophic blow last Wednesday when floods destroyed twelve hydropower plants in the Trishuli River basin and erased more than 10% of the nation's total power generation capacity. More than 1,300 people were killed in the deluge, which swept through villages near the Nepal-Tibet border, and thousands remain missing. Hundreds of hydropower workers, engineers, and residents are believed trapped inside mud-filled tunnels beneath the damaged facilities. Operators have not yet determined whether any of these plants can be restored to operation.

Nepal's reliance on hydropower has been both its greatest asset and now its most acute vulnerability. Nearly all of the country's electricity comes from hydropower—approximately 100%—and this abundance has turned into a significant export business, generating close to $200 million annually in revenue from electricity sales to India and Bangladesh. The nation's mountainous terrain and fast-flowing rivers made this energy strategy seem natural and inevitable. By 2018, after years of infrastructure expansion and efforts to reduce corruption, Nepal had transformed its electricity access dramatically: two-thirds of the population lacked power in 2010, with connected households enduring blackouts of up to 16 hours daily. Within eight years, most Nepalis enjoyed uninterrupted 24-hour supply. Today, 225 hydropower plants operate across the country with more than 3,900 megawatts of installed capacity, theoretically capable of powering roughly three million households at once. Hundreds more facilities are under construction or planned.

But the glaciers and mountains that made this prosperity possible are themselves changing. The high-altitude regions of the Himalayas are warming 50% faster than the global average, and preliminary investigations into last week's disaster point to a collapsed glacier and its bedrock as the trigger for the flash flood. While scientists caution against drawing firm conclusions about climate change's direct role, Nepal's Disaster Risk Reduction and Management Authority has documented that more than nine in ten disaster events recorded between 2018 and 2024 were climate-related. The Trishuli River basin, where the worst damage occurred, has shown its volatility repeatedly: flash floods struck in September 2024 after an unprecedented cloudburst, killing people and destroying infrastructure. Then in July 2025, a glacial lake burst in Tibet's Gyirong county and swept down into Nepal, killing at least 11 people, damaging critical infrastructure, and shutting the Nepal-China border crossing for nearly six months. That crossing had only reopened on January 1st of this year.

The state-owned Nepal Electricity Authority, which owns six of the twelve damaged plants, has assured households that power supply remains adequate for now. But its spokesman Rajan Dhakal acknowledged that with climate-related disasters accelerating in frequency, "the time has come for a rethink of our hydropower policy." Most hydropower plants in Nepal are built high in the mountains to capture fast-flowing currents, and they require little to no water storage infrastructure. This design choice, economical and efficient in stable conditions, leaves them exposed to the kind of sudden, violent flooding that last week's disaster demonstrated. Dhakal suggested that a policy rethink might involve reservoir-based plants situated at lower elevations, which could store and release water as needed—though such facilities would carry significant economic and environmental costs.

Nepal's former Energy Minister Kulman Ghising called the flood a "once-in-a-century" event and argued that it holds lessons for how plants should be designed and where they should be sited. He told environmental outlets that Nepal needs to build plants with greater resilience to floods and must adopt early-warning systems and robust emergency evacuation procedures. Yet some experts question whether Nepal has constructed its entire energy future on too narrow a foundation. Kushal Gurung, a renewable energy expert who founded WindPower Nepal, argued that "we should not be putting all our eggs in one basket in these dangerous times" and called for serious investment in solar and wind power alongside a revision of energy policy that currently favors hydropower overwhelmingly. Vivek Shastry, a researcher at Columbia University's Center on Global Energy Policy, framed renewable diversification as a resilience strategy that could prevent single-point failures in the electricity system. A German aid agency report suggests that Nepal's technical potential for solar energy production is roughly ten times larger than its hydropower potential.

Yet diversification faces real constraints. Puspa Sharma, a senior research fellow at the National University of Singapore's Institute of South Asian Studies, acknowledged that while wind and solar capacity exists, hydropower genuinely does give Nepal a competitive advantage compared to its South Asian neighbors that few other energy sources could match. The tension is real: Nepal needs to reduce its vulnerability to climate shocks, but hydropower remains its most valuable asset.

Meanwhile, the financial consequences are mounting. Private operators have already felt the impact: insurers have paid out approximately $40 million for flood damage to more than 20 privately owned plants over the past three years, according to the Independent Power Producers' Association of Nepal. Insurance premiums are rising sharply, making the cost of doing business increasingly unfeasible for smaller operators. The Upper Trishuli-1 project, one of Nepal's largest foreign direct investment ventures valued at roughly $647 million and backed by the Asian Development Bank and the International Finance Corporation, has been nearly destroyed. The Upper Trishuli 3A, funded by China's Export-Import Bank, has also suffered severe damage. Himanshu Thakkar, coordinator of the South Asia Network on Dams, Rivers & People, argues that international lenders were "acutely aware of the extreme danger" to which they were exposing thousands of workers, residents, and infrastructure, yet "did not take any preventive steps, did not demand stringent checks and balances, nor were they prepared for a calamity they knew could occur." Dhakal from the Nepal Electricity Authority conceded that even where climate risk assessments were conducted properly, "the designing of the plants may not have been done accordingly."

Manjeet Dhakal, a member of Nepal's climate delegation at the UN Climate Change Conference, framed the disaster as evidence that climate risks transcend borders and cannot be managed by any single nation alone. He called for governments and international organizations to share data, assess impacts jointly, and develop early-warning systems together. His argument carries particular weight given Nepal's minimal contribution to global greenhouse gas emissions—the nation's hydropower industry itself was an attempt to reduce already minimal emissions. "We cannot, and should not, be made to respond to these risks alone," he said.