Full Breakdown
Nepal’s Hydropower Projects Crippled by Floods Amid Climate-Risk Concerns
9/5/2026, 8:01:29 AM
Flood Damage to Upper Trishuli Hydropower Projects
Last week’s flash floods devastated the Upper Trishuli-1 (UT-1) hydropower plant, a flagship foreign-direct-investment project valued at about $647 million. The plant was “all but destroyed,” and the nearby Upper Trishuli 3A facility, financed by China’s Export-Import Bank, also suffered severe damage. The floods swept through the Trishuli River basin, which has experienced repeated extreme events in recent years.
Funding and International Backers
UT-1 was backed by the Asian Development Bank (ADB) and the International Finance Corporation (IFC), while UT-3A’s financing came from China’s Export-Import Bank. These institutions have continued to support large-scale hydropower development in Nepal despite the basin’s known volatility.
Official Responses and Financial Impact
Dhakal of the Nepal Electricity Authority acknowledges that even if climate-risk assessments were performed, the plant designs may not have incorporated those findings, noting a need to improve construction and operation standards. Uttam Bhlon Lama of the Independent Power Producers’ Association of Nepal reports that insurers have paid roughly $40 million for flood-related damage to more than 20 privately owned plants over the past three years, and that rising insurance premiums are making the cost of doing business “unfeasible.”
Data and Context
The Trishuli basin’s instability was evident in a September 2024 cloudburst that triggered flash floods in Rasuwa, Nuwakot and Dhading, and a July 2025 glacial-lake burst in Tibet’s Gyirong county that killed at least 11 people and halted trade along the Nepal-China corridor. The border crossing remained closed for nearly six months, reopening on January 1 this year. These events underscore the growing tension between ambitious hydropower expansion and the escalating climate-related hazards confronting Nepal.
