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Nepal Hydropower Association President Er. Arun Rajouria has said hydropower insurance should be developed not merely as a means of providing compensation after damage occurs, but as a comprehensive risk management system covering hydropower projects from construction to operation.

Speaking at the welcome session of the conference titled “Resilient Hydropower: Transforming Nepal’s Insurance Landscape” held in Kathmandu on Thursday, Rajouria said risks in the hydropower sector need to be addressed from the project conceptualization and design stages through construction, operation and rehabilitation.

He said Nepal’s geographical conditions expose hydropower projects to multiple risks, including floods, landslides, debris flows, earthquakes, glacial lake outburst floods, extreme rainfall and climate-related uncertainties. Recent incidents, he said, have confirmed that these risks are not merely theoretical concerns.

According to Rajouria, a hydropower project is not an isolated structure but a complex system comprising the watershed, river, dam, intake, tunnels, powerhouse, electrical and mechanical equipment, access roads, bridges, transmission infrastructure and surrounding communities. Therefore, he said, risk assessments should not be limited to individual structures but should be based on the system as a whole.

He said hydropower project risk assessments should integrate hydrological and meteorological data, geological and geotechnical studies, seismic risks, climate projections, flood and debris-flow modelling, glacial lake outburst risks, dam safety monitoring and emergency action plans, among other aspects.

Historical data alone cannot indicate future risks

Stating that climate change is altering the nature of risks in the Himalayan region, Rajouria said risk assessments for hydropower projects based solely on historical data are no longer sufficient.

Along with the question, “What happened in the past?”, he said risk assessments must also consider “What could happen in the future?” amid changing climatic and environmental conditions.

He said greater cooperation is needed between the hydropower and insurance sectors. According to him, an effective foundation for risk management in hydropower can be established only through collaboration among hydropower developers, insurance companies, the reinsurance market, banks and financial institutions, consultants, contractors, regulators and government agencies.

Rajouria said work is needed on areas including risk-based insurance premiums, project risk classification, standardized risk assessment methods, claims management, technical studies, data sharing and appropriate insurance coverage for emerging climate-related risks. He also cautioned that insurance premiums should not become an additional financial barrier for hydropower projects.

He said hydropower development should not be viewed solely in terms of megawatt generation. Hydropower is linked to national infrastructure, energy security, economic transformation, employment, disaster management and regional connectivity, he said, adding that damage to a project affects not only physical infrastructure but also power generation, revenue, public resources, investor confidence and employment.

“We need to develop a culture of understanding risks before they turn into losses, building resilience before it is put to the test, and arranging insurance before it is needed,” Rajouria said.

The conference is discussing hydropower insurance premiums, technical knowledge sharing, practical risks and challenges, and cooperation among stakeholders in the sector.

Jalasarokar