Nepal although small as a nation, has a potential for hydro power generation of as much as 83,000 megawatts. Of this, about one-half is commercially viable, making Nepal the second largest hydro power potential next only to Brazil.
Electricity accounts for 2 per cent of the energy mix. Hydro power contributes 88% of the grid supply, mostly from run-of-the-river projects. So the catch is that these projects produce little in the dry season when demand is high, and generates most in the rain months and after when demand is low.
The power crisis is serious in Nepal. In 2008-09 peak demand of 800 megawatts outstripped installed capacity of 670 megawatt. Worse, the electricity authority is reeling under massive losses which only threaten to get worse.