Hydropower has been the cornerstone of Nepal’s power industry for over a century. Currently accounting for more than 94% of total generation, it’s technical and economic potential of 43,000MW is described as “a global hydropower hub for investment opportunities”.
However, due to the country’s steep terrain, fragile geological structure, and intense monsoon rainfall, the hydropower sector faces numerous challenges – at the heart of which is the erosion of sediment. As researchers from Kathmandu University recently wrote: “In Nepal, sediment in rivers is a real headache for hydropower turbines, chewing up runners and slashing efficiency far worse than other countries.” And, they add, these inherent operational problems affect the performance of the Nepalese hydropower industry.
Reactive culture
Historically, according to Tandukar et al, hydro turbine repair and maintenance in Nepal is one of late evolution, characterised by chronic difficulties and a small but evident transition toward local capability development. Early maintenance culture is described as being “reactive” with the example of the Pharping Hydropower Plant which, despite its historical significance and official recognition as a heritage site in 2011, has suffered extreme negligence and degradation over the years.
Indeed the research team claims most of Nepal’s ageing hydro plants, such as Phewa, Gandaki, Devighat, Trishuli, Seti, Panauti, Chatara, Puwakhola, and Tinau, operated on a “run-to-break” philosophy – underlining a basic historical practice in which maintenance was usually delayed until breakdown occurred.
“These power plants utilised rudimentary analogue equipment, relying on operators to record data manually. Though this reactive approach appeared cost-saving in the beginning, it is too frequently equated to catastrophic failures, extended downtimes, and increased expenses related to lost revenue and complicated repairs,” Tandukar et al explain in their study published in Earth and Environmental Science.
Insufficient technical skills, weak policy and a lack of institutional support for O&M meant that, without guidelines and proper monitoring, operators lacked the incentive and means to maintain good practices. Despite early innovation, this policy vacuum led to poor working practices, reducing plant life and efficiency, and retarding the development of the industry for generations, the authors claim.
Strategically planned
Tandukar et al looked at what’s needed to enhance repair and maintenance services within the hydropower sector. They say the transition to predictive rather than reactive maintenance, along with the localisation of repair capability, is not a technical but an economic necessity for Nepal’s energy security and sustainability.
The researchers’ quantitative analysis shows an optimistic trend in Nepal’s hydropower sector where several actions, including improved O&M practices, are paying dividends. The country is slowly moving towards self-reliance which is being interpreted as a sign of maturity in the technical sphere. Locally available expertise is also helping to cut down costly foreign experts, speed up repair and boost efficiency for maintenance. However, although the country has made impressive strides in developing its immense hydropower potential, it still suffers from labour, infrastructure, and technical constraints in relation to repair and maintenance. Indeed, simply spending more on O&M, the authors warn, does not necessarily translate into peak performance.
“Unless O&M is strategically planned, regularly carried out, and fuelled by good data analysis, then the expenditure can become inefficient, reactive, or misplaced. This highlights that the trend in O&M capacity needs to prioritise not just increasing investment, but optimising O&M spending through better planning, development of skilled manpower, and the adoption of condition-based approaches to ensure that every resource expended contributes effectively to improved plant performance and longevity,” the authors state.
Future efforts in hydropower O&M
Nepal’s hydropower sector still faces hurdles in building a skilled workforce, especially in rural areas, and such a lack of skilled workers at plant sites undermines efficiency. Targeted vocational training and decentralised support are urgently needed because, despite progress in local expertise and manufacturing, a shortage of trained technicians for O&M tasks leads to poor daily upkeep, delayed repairs, and more downtime.
Tandukar et al say that in order to prolong the operational life of Nepalese hydropower plants and improve their overall performance, future efforts must be geared towards:
• Standardising O&M practices across the entire fleet of hydropower stations in such a way that the gains realised in some areas are widely
shared and well implemented.
• Advancing maintenance strategies to address the increasing complexity of turbine technologies and evolving regulatory requirements.
• Targeting investments in workforce training and infrastructure development to enhance repair and maintenance capacities.
Costly business
O&M costs are an important consideration for the financial viability of hydropower schemes and, if not carefully planned and managed, can become a substantial burden. However, despite their importance, as researchers from the University of Huddersfield in the UK claim, there remains a notable lack of consensus on how O&M costs should be estimated. Although they admit it is challenging to create strategies applicable to all hydro power schemes – because every site is distinct in size, age, location, equipment, and configuration, amongst other factors – the researchers go on to say existing guidelines lack consensus on estimating costs, particularly for small-scale projects which may be more sensitive to O&M fluctuations.
Indeed estimates suggest O&M costs typically range between 1-4 % of the initial investment, with large-scale hydropower projects generally falling between 2 % and 2.5%. While estimates for smaller-scale schemes can be as high as 6 % or 4 % of the total cost. Such a lack of standardised guidance creates uncertainty for developers and investors, particularly in smaller-scale projects where O&M costs can drastically fluctuate and represent a disproportionately high share of total expenditures, affecting the financial performance and overall success of a scheme. To address this gap, in their research published in Sustainable Energy Technologies and Assessments, Alexandre et al investigated how different O&M cost estimation approaches affect key financial indicators – such as Net Present Value, Internal Rate of Return, and Levelised Cost of Electricity – under varying cost assumptions in small hydro plants.
The research focused on four existing community-led micro-hydropower schemes located in Northern England (anonymously labelled as 1-4). They were commissioned between 2008 and 2012 and all employ Archimedean screw turbines. Nominal capacities of the turbines used in these schemes range from 45kW to 63kW and the sites are situated in rivers with varying flow rates ranging from 2-4.8m3/sec. Over their expected operational lifetimes of 20-40 years, these schemes are projected to generate between 120MWh and 199MWh of electricity annually.
Financial viability
Alexandre et al say their research shows that higher O&M costs reduce financial viability in a scheme-specific manner. For example:
• Scheme 1 becomes unprofitable when O&M costs exceed 3%, dropping its Internal Rate of Return to 1.8%.
• Scheme 2 remains viable up to 4% but fails to meet the minimum 3.5% Internal Rate of Return required for economic feasibility.
• Schemes 3 and 4 are more resilient, maintaining profitability up to 5% of O&M costs, with scheme 4 achieving an Internal Rate of Return of 10%.
Emphasising that hydropower performance is sensitive to capital costs, generation, and O&M costs, the authors say Scheme 4 achieved the best balance among these factors. Overall they add that their research provides a structured comparative analysis of O&M cost impacts, offering empirical insights into the thresholds at which these costs compromise financial viability.
Takeaways from this study include:
• Advancing hydropower economics by showing that financial viability is scheme-specific and best analysed through a threshold-based framework.
• Highlighting the need for revised O&M guidelines, tailored support for small-scale projects, and informed investment strategies that explicitly account for scheme-specific O&M costs in long-term planning.
Future research, the authors add, can be centred around the use of more comprehensive datasets that include detailed technical information. Additionally, expanding the analysis to involve a broader range of hydropower schemes in terms of region, size, energy output, etc would help validate and expand the findings of this study.
It would also be valuable to conduct similar analyses under the assumption that all schemes have identical lifespans and the same annual revenues, as this could provide more standardised insights into the financial impacts of O&M costs across projects with varying characteristics.
O&M contracts
In other news, Voith subsidiary Green Highland has secured a contract to operate and maintain Kinlochleven hydropower station, one of the UK’s oldest plants.
Alex Reading, Managing Director at Green Highland, said it was an honour to be trusted with the agreement that will see Green Highland assume full responsibility for daily operations and long-term maintenance.
The agreement brings together Voith Hydro’s international resources and scale with the local, specialist expertise of Green Highland, which will enable a comprehensive and tailored approach to managing the unique requirements of this historic site.
Commissioned in 1909, Kinlochleven initially generated power for a major aluminium smelter. Today, it is a cornerstone of the UK’s renewable energy infrastructure and supplies reliable power to the national grid. Located in the Scottish Highlands, the hydropower plant features three 10MW Francis turbines, a dam, pipelines and the Blackwater Reservoir. Equitix acquired the Kinlochleven hydropower plant in 2019.
Meanwhile in The Philippines, Voith recently completed proactive annual preventive maintenance, under a long-term service agreement, which covers Lake Mainit’s hydropower plant in Jabonga Town. Commissioned in 2023, the plant includes three vertical Francis turbines that produce a total of 24.9MW of energy. The preventive maintenance schedule was programmed to be seven days, covering main inlet valve (MIV) repairs, electrical testing and annual inspection of the components supplied by Voith.
Voith says the integration of its digital tools and services have helped to identify hidden issues and mitigate potential risks before they emerge. During a digital health assessment, a variation in the actuation time of the main inlet valve of Unit 1 was detected and it was advised that the MIV should be checked. This became a critical task during the preventive maintenance schedule and the U-1 MIV seals were replaced and the misalignment issue addressed, preventing unexpected shutdowns and maintaining safety standards.
This demonstrates how effective O&M benefit can lead to enhanced equipment reliability and reduced risk of unforeseen outages, ensuring continuous power generation.
“The precision of Voith’s digital diagnostics identified a hidden issue,” says Angelo A. Panganiban, Plant Manager at Lake Mainit hydropower plant. “Their proactive approach and seamless execution during maintenance not only prevented a potential shutdown but also guaranteed the long-term reliability of our facility.”
O&M strategy
Recent research by Marie Stenelo and Lisa Hedlund, from Chalmers University of Technology in Sweden, looks at a newly developed O&M strategy implemented at a large Nordic power utility with hydropower generation at the core of its business. To maintain confidentiality, the company was kept anonymous and referred to as NordKraft.
In late 2020, NordKraft entered into a joint venture with another utility to explore synergies in areas such as Nordic hydropower and trading optimisation, and there was great potential for knowledge exchange and operational alignment. However, with the outbreak of the war in Ukraine leading to major shifts in the European energy market, the two companies were put into in a challenging position and the short-lived partnership was dissolved.
Nonetheless this collaboration offered several learnings and knowledge exchange opportunities, highlighting notable differences between the two organisations’ sourcing models. Indeed, whereas NordKraft relied primarily on outsourced contractors, the other company maintained a hybrid model with mainly inhouse teams. This got NordKraft thinking, leading it to initiate a strategic project to evaluate its own approach to O&M.
The company wanted to develop a comprehensive O&M strategy to define future maintenance operations and provide the foundation for decision-making regarding operating models, improvement initiatives, and sourcing models. The strategy would guide the company in aligning its maintenance practices with long-term performance goals.
Insourced maintenance
As Stenelo and Hedlund explain, to support this work, the organisation established an internal project team to analyse the current and future state of maintenance operations. The team conducted interviews and workshops with maintenance personnel, managers, and other key stakeholders throughout the organisation. These discussions helped identify operational challenges, organisational needs, and opportunities for improvement.
The team also performed a market analysis to understand external trends and practices. By combining insights from internal engagement and external analysis, the project team formulated a vision for the future. The outcome of the project was a strategic document that serves as the foundation of the O&M strategy and is intended to guide future decisions on maintenance operations.
Based on the analysis and stakeholder input, it was concluded that an insourced maintenance model would better support the company’s strategic objectives. As a result, a large number of maintenance employees from external partners were brought in-house and fully integrated into the hydro generation business unit during July 2023.
Not only a response to emerging needs, development of the O&M strategy was also a key driver behind the insourcing decision. It was based on a structured assessment of the organisation’s current state, long-term goals, and future requirements for maintenance operations.
As such, the strategy provided a clear foundation for shaping the new operating model and guiding the broader organisational transition.
To support long-term implementation of the O&M strategy, Stenelo and Hedlund recommend:
• Strengthening performance dialogues.
• Enabling strategic reflection.
• Clarifying leadership expectations.
• Improving cross-divisional coordination
The purpose of their study was to examine how the O&M strategy has been translated into practice, and how its core values have been internalised across the maintenance organisation, supporting the company’s transition toward value-driven maintenance and strengthening internal capabilities.
References
Trend Analysis of Repair and Maintenance Capacity in Context of Nepalese Hydropower Sachin G. Tandukar, Pasang Ghising Tamang, Prithivi Gurung, Sailesh Chitrakar,Ram Lama and Bhola Thapa. Current Research in Hydropower Technologies IOP Conf. Series: Earth and Environmental Science1533 (2025) 012019 IOP Publishing doi:10.1088/1755-1315/1533/1/012019
Effects of operation and maintenance costs on the financial sustainability of micro hydropower schemes Joelson Alexandre, Lilies Kathumbi, Gina Javanbakht, John M. Allport. Sustainable Energy Technologies and Assessments 83 (2025) 104651 https://doi.org/10.1016/j.seta.2025.104651
Bringing an Operational Strategy into Practice A Case Study on Strategy Implementation in a Maintenance Organization in the Hydropower Sector. Master’s thesis in Quality and Operations Management Marie Stenelo Lisa Hedlund. Chalmers University Of Technology Gothenburg, Sweden 2025 www.chalmers.se
