On August 26, 2026, a mass of rock and ice broke unfastened excessive above Langtang Lirung, bedrock and glacier collapsing collectively, and got here crashing down the mountainside. What adopted was a harmful surge of ice, rock, and particles flowing downstream, inflicting in depth lack of life, displacement and harm alongside the Bhotekoshi-Trishuli-Narayani river hall. Almost a month later, 1000’s of persons are nonetheless lacking, their households are nonetheless ready for solutions. However the flood didn’t solely take lives, it additionally demolished vital infrastructure that retains Nepal’s financial system operating.
A Direct Hit to the Spine
The flood broken or disconnected 13 operational hydropower vegetation, amongst them Rasuwagadhi, Chilime, Trishuli 3A, and Devighat. Greater than 430 megawatts vanished from the nationwide grid in a single day. The harm went past generators to headworks, dams, powerhouses, substations, switchyards, transmission strains, but in addition the roads and bridges wanted to succeed in and restore it. Nevertheless, that single quantity understates the harm. These vegetation characterize over a tenth of Nepal’s whole put in producing capability, in a rustic that attracts greater than 95% of its electrical energy from hydropower. Subsequently, this isn’t a sector on the margins of the Nepali financial system, it’s the spine. The federal government now estimates it is going to price greater than NPR 151.45 billion (USD 997.13 million) simply to rebuild the hydropower infrastructure.
The Value Nepal Received’t Get Again
That price ticket is just half the story. The larger loss is what Nepal gained’t earn. Since 2021 AD(2077/78 BS), Nepal has gone from an occasional energy importer to a real electrical energy exporter, first sending surplus energy to India and, extra just lately, to Bangladesh as effectively. That shift has been paying off: within the fiscal 12 months 2025/26 AD (FY 2082/83 BS), Nepal earned a file NPR 29.32 billion (USD 191.2 million) from electrical energy exports alone, its finest 12 months but as a internet energy vendor. Earlier than the floods, Nepal was sending roughly 1,000 megawatts of energy throughout its borders throughout the monsoon season, when its rivers ran excessive. For the reason that catastrophe, that determine has reportedly fallen to round 650 megawatts, and Nepal’s personal electrical energy authority says exports to Bangladesh have successfully stopped. The nation’s finest export 12 months on file has collided, virtually instantly, with its worst infrastructure catastrophe.
The Cushion Nepal Can not Afford to Lose
For a growing financial system, that misplaced income issues greater than the quantity on paper suggests, as a result of what’s actually at stake is international forex. Earnings from a international purchaser permits Nepal to pay for imported gasoline, equipment, and medication with out draining its reserves or leaning additional on international debt. They cushion the trade charge and reassure lenders. Electrical energy exports had quietly grow to be one in all Nepal’s extra dependable sources of that cushion. This isn’t incidental however relatively a authorities technique. Nepal Electrical energy Authority officers have stated rising exports will strengthen international trade earnings, and the federal government’s personal export roadmap targets 15,000 megawatts by 2035 explicitly to slim the commerce deficit with India. That plan is now in danger, and shedding even a couple of hundred megawatts of it, proper when the nation wants capital to rebuild, tightens the identical belt from two instructions without delay.
An Untapped Various
The floods are a reminder that no nation ought to put all its eggs in a single basket. When greater than 95% of a nation’s electrical energy flows from one supply, one dangerous month can undo years of positive factors. Diversifying vitality is a hedge, not a nicety. Nepal has barely touched its different renewable choices. Solar energy presently makes up solely round 3% of the nation’s put in electrical energy capability, regardless of Nepal sitting on estimated photo voltaic potential ten occasions bigger than its complete hydropower capability. Wind vitality is actually untapped. Much more neglected: researchers at Tribhuvan College’s Analysis Centre for Utilized Science and Know-how have recognized 30 pure scorching springs scattered alongside river valleys such because the Kaligandaki, Trishuli, and Bhotekoshi basins, Tatopani and Myagdi amongst them, that might help direct-heat agriculture and small binary-cycle geothermal energy vegetation. Nevertheless, as of now none of those alternate options is being pursued at scale in Nepal. That failure to diversify is not only a missed alternative however relatively a symptom of one thing deeper.
A Downside Larger Than Power
Progress economists have discovered that what predicts a rustic’s future prosperity is not only what it sells in the present day, however how a lot amassed know-how sits behind it. A rustic that has constructed specialised expertise and capabilities has extra instructions to develop into; whereas a rustic that sells the identical slim set of products and companies will see its development stagnate. Harvard’s Progress Lab captures this with its Financial Complexity Index (ECI), which measures that depth of know-how throughout every thing a rustic exports, and has proven ECI to be a robust predictor of long-term development.
By that measure, Nepal’s hydropower exports look much less like a win and extra like a missed alternative to construct one thing extra sturdy. Promoting electrical energy overseas has helped the steadiness sheet, nevertheless it features extra like exporting a uncooked commodity than constructing a knowledge-intensive trade: as soon as a dam is constructed, transferring the ability it generates throughout a border takes little specialised ability. The numbers bear this out. Nepal’s ECI rating is -0.12 (2024), rating it 88th out of 145 tracked economies, beneath the worldwide common of roughly zero, on a scale that runs from Japan’s +1.7 on the high to Chad’s -3.5 on the backside. Its export basket displays the identical story: in 2024, 75% got here from companies, with agriculture (7.7%) and textiles (5.7%) trailing far behind, a slim set of products and companies that different nations can produce simply as simply. Nepal ranks behind India and Sri Lanka regionally, although nonetheless forward of Pakistan and Bangladesh, a reminder that low complexity, not simply low revenue, is the deeper drawback the nation faces.
Collectively, these two footage present the true threat: Nepal will depend on one geographically concentrated useful resource for a significant share of its international earnings whereas sitting in a low-complexity place globally. Diversifying vitality sources would do greater than shield in opposition to the following flood. It might additionally push Nepal towards the type of assorted, higher-complexity financial system that compounds development over time.
Rebuilding Proper
The floods that broken 430 megawatts of hydropower had been a warning: Nepal can’t hold betting its future on a single river system. The lesson will not be that hydropower was a mistake; Nepal’s rivers stay a real benefit. Nevertheless, the extra vital lesson is that no single sector ought to carry that a lot weight alone, the identical cause a family spreads its financial savings relatively than betting every thing on one asset. Photo voltaic, wind, and geothermal can provide Nepal a couple of basket to fall again on. Nepal must diversify its vitality infrastructure and transfer the nation towards vitality safety and resilience earlier than the following flood makes the selection for Nepal.
Sunita Shahi is presently an intern on the Nepal Financial Discussion board. She just lately accomplished her Grasp’s in Worldwide Growth, specializing in governance and inequality, at IE College. She is thinking about analyzing improvement challenges throughout growing nations, with a give attention to how governance constructions form inequality outcomes. Her earlier work features a position within the technique division at Ogilvy Dubai, the place she collected main knowledge and developed suggestions based mostly on her findings.
