Change to hydropower development in Bhutan and Nepal

Abstract

Abstract Both Bhutan and Nepal are rich in hydropower potential. Bhutan has surplus power for export, while Nepal suffers from a huge domestic power deficit. The reasons for this contrast have been discussed before, but from the policy and geopolitical perspectives without focusing at the project level. This study, therefore, comprehensively examines and compares Nepal s and Bhutan s hydropower projects, including the technical, physical, financial, institutional, social, and environmental aspects. The results indicate that compared to projects in Bhutan, projects in Nepal have systematically higher cost structures. This cost difference has been attributed to different developmental and operational approaches taken by the governments and their agencies, and dissimilar topographic and riparian conditions of their project sites. Bhutan s projects have a more optimal in design when considered from structural and cost perspectives, thus making them more cost-efficient and less risky. They are also intended for power exporting, which allows Bhutan access to attractive funding resources, including carbon finance. In contrast, Nepal s projects are planned primarily to make up for the shortfall in domestic electricity availability. To maximize output generation, Nepal s project facility structures are designed to emphasize greater water volumes in larger reservoir storages, which increases both the project costs and the social and environmental risks. As a result, Nepal s project implementation becomes more challenging and makes funding more difficult. Thus, Nepal s overall hydropower development slows down, being caught in a vicious circle.