Missing pieces of the hydropower jigsaw

Hydroelectricity supply will soon catch up with demand, and focus is shifting to reservoirs to store energy and regulate water

Seen from a vantage point high above the Seti River near Damauli, excavators and tipper trucks look like tiny insects clawing away at a cliff. Occasionally there is the sound of dynamite blasting at the rock face.

This is the Tanahu Hydropower Project, and it is an indication of how stagnant Nepal’s energy planning has been that this is only the second reservoir scheme after the Kulekhani Dam was commissioned in 1982.   

The workers have nearly completed drilling a tunnel to divert the Seti’s turbid sediment-laden water so construction of the 140m high concrete dam can begin. When completed, the reservoir will be 7.25 sq km in area and store nearly 300 million m³ of monsoon runoff. And unlike Kulekhani, the Seti is a snow-fed river originating in the glacier below Annapurna 4. 

Tanahu Hydropower
Tanahu reservoir
The 3D modelling of the Dam in Tanahu. Photo: TANAHU HYDROPOWER LIMITED

A 420m head on the Seti will take water through 7.25m wide tunnels and penstock pipes to an underground powerhouse to give the scheme an installed capacity of 140MW and an annual energy generation of 587.7GWh. While this capacity is less than other projects like Tama Kosi, the stored water can be drained at peak hours and during the dry season to augment electricity supply and keep the water flowing downstream.

Also called Upper Seti, this project funded by the Japan International Cooperation Agency (JICA), Asian Development Bank (ADB), European Investment Bank (EIB) and Nepal Electricity Authority (NEA) is designed for at least six hours of peak operation during the driest months of the year.

“Most of Nepal’s hydropower projects are run-of-the-river projects which means we can’t store water for winter months when domestic demand is highest,” says engineer Raja Bhai Shilpakar, Tanahu's project manager. “We must shift our focus to reservoir projects now to ensure Nepal’s energy security and to reduce power import.”

Indeed, while Nepal has an installed capacity of around 2,800MW in the monsoon, and sold electricity worth Rs15 billion to India this summer, NEA is still importing power from Indian thermal plants to meet 30% of the winter demand. 

Tanahu Hydropower
GREEN ENERGY: Dam site of the under-construction Tanahu Hydropower Project with a 25km long reservoir which will be completed in May 2026. The concrete dam will be 140m in height and hold 295 million m³ of monsoon runoff. Photo: TANAHU HYDROPOWER LIMITED

Winter generation is low because the rivers are running low and this situation has been made worse by prolonged post-monsoon droughts. Last year, NEA said power supply fell by 20% of the winter average because there was no precipitation and melting of snow. 

In its new proposed draft, the National Planning Commission (NPC) has set a power generation target of 11,769MW in the next five years. The private sector, which generates nearly 80% of current electricity supply, is not so optimistic given the bureaucratic and financing hurdles.  

But even then, there will still be a supply shortfall unless more reservoir projects are built to even out the annual generation profile. Besides Tanahu, reservoir projects are planned on the Budi Gandaki, Tamor and Upper Arun, but those will not be ready for another ten years. Dams are also much more costly to build, and will need government involvement. 

Apart from local demands for compensation for submerged land, there are also concerns about the greater ecological impact of reservoir projects. Studies have shown that rampant dam construction leads to a decline in aquatic life, and livelihoods of people downstream. 

The other challenge is increasing risk of climate change-induced disasters like cloudbursts and Glacial Lake Outburst Floods that can wipe out expensive dams like the Chungthang Dam disaster in Sikkim in October.

Hydropoer and dams in Nepal
This underground powerhouse (centre) will give installed capacity of 140MW and an annual energy generation of 587.7GWh. Photos: SONIA AWALE

Nepal’s own Kulekhani was supposed to have a lifespan of 100 years but a cloudburst in the catchment area in 1993 deposited so much debris into the lake that the cascade power plants that generate 106MW of electricity from it will now function only for another 30 years. 

Shilpakar who was also involved in the Kulekhani project says lessons have been learnt, and Tanahu will have a flushing gate to drain sediment from the reservoir. It is considered too far downstream to be at risk from glacial lake bursts.  The dam is also built to withstand earthquakes of much higher intensity than the 2015 event. 

“Tanahu is a concrete gravity dam with a much larger catchment than Kulekhani,” he explains. “But rainfall patterns have changed drastically. So we have added two flushing gates, increasing the dam’s lifespan to 120 years.”

Despite the downside, most experts agree that reservoirs are crucial for flood control and dry season irrigation downstream, especially as water supply becomes scarcer with the climate crisis. Reservoirs also have other benefits like fisheries, inland navigation and tourism, as seen in Kulekhani.

“In many ways, reservoirs are not just clean energy projects but also climate adaptive initiatives,” says Pushkar Manandhar of the ADB. “Storage hydropower serves as a buffer to cope with erratic rainfall and act as a shock absorber. They store water to augment lean season flow of rivers.”

But water is a geopolitical hot potato in the region with India’s increased involvement in building river schemes in Nepal, including Pancheswar Dam on the border Mahakali River, Arun III, West Seti reservoir, and other projects. Experts say India’s real interest is in water supply, and would not mind if it gets regulated water for free from reservoirs like Tanahu in Nepal. 

Hydropoer and dams in Nepal NT 1
Tanahu hydropower dam site.

But India is playing hardball by refusing to buy electricity from projects it deems to have Chinese investment or involvement. In Tanahu, meanwhile, engineers are running out of explosives because of a ban on export of dynamite by India. 

Says Shilpakar: “No contractor is getting an explosive permit from India and we cannot get any from the Chinese either, we need the government-to-government deals otherwise the project could be delayed.”

Tanahu also includes the construction of a 220kV double circuit Damauli-Bharatpur transmission line and is looking at a completion date of May 2026. There are also plans for a 126MW Lower Seti cascade project with a dam at Saranghat, and a powerhouse at Mugling to generate 520GWh.

Experts say that along with new reservoir projects, Nepal now needs to pay attention to transmission and distribution to streamline supply so that domestic consumption increases.  

“We didn’t develop all aspects of hydro schemes in parallel,” says ADB’s Manandhar. “We focused mostly on generation and now there is a real bottleneck in transmission and distribution.”

Kathmandu is a load centre, but transmission lines do not have the capacity to bring the electricity from power plants in central and eastern Nepal. 

“We have to build substations to future-proof supply, but there are issues with right of way and land acquisition,” Manandhar adds. 

Which is why NEA is working at speed to upgrade its substation in Siuchatar, with a state-of-the-art Distribution System Control and Data Centre so that power supply to localities in the Valley can be monitored and controlled more efficiently. 

Distribution substations
Distribution System Control and Data Centre in Siuchatar.
Transmission lines

“If there is a fault in distribution, we will be able to see it from here, we won’t need locals to call us anymore,” says electrical engineer Dhirendra Bajgain. “At the same time, we will be able to quickly restore the fault, in minutes instead of hours by just isolating that area.”

But elsewhere, like in the Dana substation near Kushma of Parbat district, authorities are dealing with a different kind of power spill. Pritam Raj Bista of the Parbat Distribution Centre says that while there is 100% electrification, the total number of consumers is decreasing due to depopulation. 

In contrast, nearly 170km south in Dhakdahi near Butwal, demand is peaking with local industries complaining about not getting dedicated feeder lines on time. Even when Nepal did away with power rationing, the area was still facing power cuts until Dhakdahi substation was set up a few years ago. The new substation shared the power load with the Butwal substation and the area has been getting improved voltage and power quality. 

At the recently inaugurated Kushma-New Butwal 220kV substation to evacuate power from the Kali Gandaki Transmission Corridor, the NEA’s Kulman Ghising said his main priority now was to invest in transmission and distribution infrastructure.

“Butwal is critical because it is at the intersection of the Kali Gandaki corridor in central Nepal and the East-West transmission artery,” Ghising said. “It is a pooling hub for power transmission and distribution westwards and for export to India.”

Transmission lines
Transmission lines at the recently inaugurated Kushma-New Butwal 220kV substation which will evaculate power from the Kali Gandaki Transmission Corridor.

Indeed, these transmission lines will dovetail with the Millennium Challenge Compact (MCC)-supported lines from Hetauda via Damauli. The challenge now, Ghising says, is local compensation demands to transmission lines which have delayed them. 

“Our field staff spend 90% of their time dealing with local opposition, social and environmental regulations,” he added.

Transmission lines under the MCC project are likely to face even stronger opposition because of political opposition to the US-funded initiative, and local belief that the project has lots of money. 

If Nepal is to save its economy and meet net-zero targets by 2045, increasing domestic demand should be the priority, and for this, reservoir projects, transmission lines and distribution infrastructure are key. 

Transmission lines

Nepal could export more electricity but India is buying less than 700MW from Nepal because of Chinese involvement in projects. It is therefore in Nepal’s own strategic interest to increase domestic demand as much as possible. 

Even if Nepal could sell all its present electricity generation, it would amount to a mere Rs20 billion against an annual trade deficit with India at a staggering Rs840 billion.  

Instead, if we reduce just 10% of our petroleum bill by electrifying industries, household use and transport, Nepal can save at least Rs30 billion a year. Improving public health and ecology will be a bonus. 

“If we sell electricity, we just get cash benefits but if we were to make the maximum use of our power within the country, there will be cascade impacts,” says engineer Raja Bhai Shilpakar. “We can revolutionise our industries and manufacturing, create jobs and prevent young talented people from migrating.”  

Sonia Awale


Sonia Awale is Executive Editor of Nepali Times where she also serves as the health, science and environment correspondent. She has extensively covered the climate crisis, disaster preparedness, development and public health -- looking at their political and economic interlinkages. Sonia is a graduate of public health, and has a master’s degree in journalism from the University of Hong Kong.