Hydropower development is beginning to take off in Nepal. Improvements in investment policies, as well as the growing prospect of electricity trade with India and South Asia more broadly, have helped to attract increased investments. However, at present, electricity generated from hydropower meets only 1% of Nepal’s total energy needs.

Translating potential into reality is the key challenge. While the development of the hydropower sector is to be welcomed, policies on hydropower development exist in isolation, disconnected from broader, national economic and social development agendas.

This briefing reviews some of the key challenges and discusses policy options for increasing the impact of hydropower on economic development.