From the streets of Kathmandu to Nepal's rapidly expanding highway network, the change is easy to spot. Electric vehicles, once rare, now move steadily through traffic. Charging stations have appeared in hotel parking lots, commercial complexes, and along national highways. Nepal now ranks second only to Norway in the share of new electric vehicle sales, and recent reporting indicates that electric vehicles accounted for 76 percent of passenger vehicle sales last year. For policymakers such as Warish Dharel, the shift signals more than a transport trend.
For a nation that endured daily power cuts less than a decade ago, the transformation feels abrupt. But it also raises a deeper question: can Nepal finally convert its vast hydropower potential into sustained economic growth?
Nepal's rivers descending from the Himalayas have long been described as the country's most underutilised asset. Estimates from Nepal's Department of Electricity Development and multiple international assessments place total theoretical hydropower potential at roughly 80,000 megawatts, with around 40,000 to 45,000 megawatts considered economically feasible. Installed capacity, however, remains only a fraction of that.
The paradox has shaped Nepal's economic story. For years, chronic load shedding constrained businesses and households alike. Manufacturing stagnated, investors hesitated, and tourism operators relied on diesel generators.
The turnaround began in earnest under the leadership of Kulman Ghising as Managing Director of the Nepal Electricity Authority, whose tenure became closely associated with the end of prolonged load shedding. Through tighter grid management, power purchase agreements, and improved transmission coordination, household blackouts were largely eliminated, marking a turning point in public confidence in the power sector.
Warish Dharel, a travel and hospitality entrepreneur and candidate for the House of Representatives from Kathmandu Constituency 6 representing the Ujyaalo Nepal Party, experienced those constraints firsthand, first as a student during the era of blackouts, later as a business operator after returning from the United Kingdom.
"The challenge isn't personal," he says. "It's structural. Nepal has the resource base. The question is policy clarity and execution."
By structural, Dharel means the problem runs deeper than past electricity shortages. Years of unreliable power, he argues, discouraged industrial investment, weakened competitiveness and slowed productivity growth. When firms cannot operate predictably, they hesitate to expand, modernise or diversify. "If energy is uncertain, everything else becomes uncertain," he says, pointing to the knock-on effects for manufacturing, exports and job creation.
In his view, those constraints shaped the broader trajectory of Nepal's economy. Rather than being driven by sustained domestic investment and productivity gains, growth over the past two decades has relied heavily on remittance-fuelled consumption. At its peak, remittances accounted for 27.6 percent of GDP one of the highest shares globally. While these inflows have reduced poverty and supported household spending, Dharel argues they also entrenched a consumption-led growth pattern rather than investment-led transformation. "Remittances helped families survive and improve their living standards," he says, "but they did not build the industrial base we need." Income earned abroad, he suggests, filled short-term gaps but did not substitute for structural upgrading at home.
Public infrastructure delivery has also often been slow. Reviews and independent studies document delays in large capital projects, particularly in transport and energy. Transmission bottlenecks and regulatory uncertainty have complicated hydropower development, even as cross-border electricity trade with India has expanded.
Momentum, however, is shifting. Large projects such as Arun III and Upper Karnali each in the 900 MW range have advanced under cross-border investment frameworks. Nepal Electricity Authority data shows improved generation capacity and expanded grid connectivity. Electricity exports to India during wet seasons have become a regular feature of the energy calendar.
According to World Bank modelling, hydropower projects identified through 2030 could require roughly US$26.5 billion in generation, transmission and distribution investment underscoring the scale of capital mobilisation required. Such investment would materially reshape Nepal's macroeconomic landscape.
Against that backdrop, the Ujyaalo Nepal Party has placed energy security and hydropower expansion at the centre of its economic agenda. It proposes expanding generation capacity, narrowing the gap between rising electricity demand and supply reliability, strengthening transmission infrastructure, and positioning Nepal as a long-term net exporter of renewable energy within South Asia.
But capital alone does not guarantee transformation. Productivity growth has historically been modest. Analysts from multilateral institutions and independent research bodies note that investment must be paired with governance reform, competitive markets, and regulatory stability to deliver sustained gains.
Dharel argues that governance reform, while commendable and ongoing under Nepal's federal structure, must now be matched by delivery.
"Good governance is essential," he says. "But it has to translate into functioning infrastructure, clear licensing systems, predictable tariffs, and execution."
For Dharel, the rapid rise of electric vehicles underscores the urgency. Nepal's EV adoption has surged, supported by favourable import duties and relatively low electricity tariffs compared to petrol and diesel. Cleaner urban air and reduced fuel imports are visible benefits.
But, he argues, electrified transport deepens reliance on a stable grid. If domestic hydropower generation does not scale in tandem, the economic gains will narrow.
He also highlights the vulnerability exposed during past border disruptions, when Nepal faced severe fuel shortages. Greater reliance on domestically generated renewable electricity, particularly hydropower, would reduce exposure to external supply shocks and lower dependence on imported fossil fuels. It would also ease pressure on the country's balance of payments.
Regionally, Dharel sees further opportunity. India's expanding industrial and digital ambitions, including high-profile AI and technology summits signalling large-scale data infrastructure investment, are accelerating energy demand across the region. Data centres and advanced computing facilities are energy intensive. A stable and integrated cross-border power market, he argues, could position Nepal as a renewable energy partner in South Asia's evolving technology ecosystem.
That opportunity depends on transmission integration, regulatory harmonisation, and environmental safeguards. Hydropower projects in Himalayan terrain face legitimate concerns, including seismic risk, ecological sensitivity, resettlement challenges, and climate variability affecting river flows. Sustainable planning remains critical.
For Nepal, the stakes are unusually high. Without accelerated investment and productivity reforms, long-term growth may remain insufficient to meet middle-income aspirations within the next decade. With coherent execution, hydropower could support manufacturing, tourism, electrified transport, and regional energy trade simultaneously.
Travelling across his constituency in an electric vehicle, Dharel sees symbolism in the shift. A country once associated with darkness now debates surplus electricity exports. The question now is whether Nepal can convert that natural force into durable economic transformation.
Whether that momentum becomes lasting structural change will depend less on geology and more on governance and on whether leaders across parties can convert potential into policy, and policy into power for all Nepalis.
