Energy production from small rivers and rivulets having a capacity of up to 500 KW is called micro-hydropower in Nepal. Schemes ranging from 1 KW to 5 KW are classified as Pico hydropower. Similarly, 6 KW to 500 KW schemes are called Micro hydropower. Nepal’s hydropower potential is estimated to be about 83,000 MW, of which about 43,000 MW is assumed to be economically feasible. However, these figures relate mainly to large-scale hydropower development. Study reports show that 63 out of 75 districts have the potential for hydropower generation. Due to various reasons, the government’s focus on hydropower development in Nepal has been on the development of large hydropower only. The focus on micro-hydropower came only at a later stage with starting of a subsidy on electrical parts by the government and through the Agricultural Development Bank-Nepal (ADB/N) in the late eighties.

DCRDC has been working in Baglung, Parbat, Myagdi, and Kaski district for the promotion of micro hydropower.
The objective of Microhydro The development objectives of the Energy Sector Assistance Programme in Phase II, which is common to all components, is The living conditions of the rural population improved through enhanced access and affordability to rural energy solutions that are efficient, environment-friendly, and that address social justice. The Component has the following two immediate objectives:

1. Enhanced sectoral framework for policy formulation, strategy development, planning, program implementation, and harmonization of on- and off-grid rural electrification at the national and local levels.
2. Increased and sustainable access to and use of electricity in rural areas.