Selling hydropower to Silicon Valley in the name of data centers may not bring real benefits to Nepal
A few months ago, a well-intentioned development consultant working in Nepal explained to me why Nepal is a perfect fit for green computing (environmentally friendly data centers). His argument was that the country is ideal because of its abundant hydropower, cool mountainous climate, and its location between two of the world’s largest digital economies. He was right in a way. But he failed to understand what all of this would ultimately lead to.
To put it simply, the proposal is to let a foreign company build a data center here, run it on Nepal’s own hydropower, attract foreign investment, and call it green. It sounds like a win, but personally, I don’t think it’s a win.
In green computing, the word ‘green’ refers almost entirely to the source of electricity. Everything else is left out of the equation. Data centers, in particular, are heavy users of water. Large hyperscale infrastructure can consume up to 10 million liters of water per day for cooling.
Nepal is facing a severe seasonal water crisis, and the rivers that feed the hydroelectric system are the same ones that farming communities have depended on for centuries. No one is talking about this water trade-off. That is, no one is talking about how much water is lost to agriculture and locals when water is used to run data centers, or what Nepal has to lose.
In addition, there is another big problem of embedded carbon (the hidden carbon emitted during the manufacture and transportation of goods). The cement and rods used to build buildings, and the large server machines transported by trucks and ships, are also contributing to pollution. These servers break down every three to five years and have to be replaced.
This leads to a huge amount of electronic waste. There is no effective system in Nepal to recycle and reuse such old machines or hardware. So this electronic waste will eventually end up in some corner of the country, where those foreign investors probably won't even notice. There are many other things that are good in Nepal, but our waste management or recycling system is not good.
If we look deeper into the issue of electricity, this argument also proves to be weak. It is true that Nepal produces more electricity. However, in my experience, this is only during the rainy season. Even today, when the water level in the rivers decreases during the dry season in winter, households and industries have to face electricity shortages.
If Nepal provides electricity to these data centers of foreign companies, that electricity cannot be sold to India at a good price. Similarly, domestic industries that are trying to produce something in the country do not get that electricity either. Nor can that electricity be delivered to the remote homes of Karnali, which are still burning kerosene.
What Nepal should not forget is that this country has spent the past few decades in extreme load shedding. The situation was so miserable that even in Kathmandu, the electricity was out for 16/17 hours a day. At that time, the phrase ‘lights gone out’ was always on people’s lips. I remember, I used to use the ‘lights come’ app myself to know when the electricity would come back. After such a long struggle, ending that dark era and letting the electricity that was barely collected run for our own country and not for our own country is like ‘walking in the opposite direction’.
The argument that these data centers ‘create jobs’ sounds the most tempting. But when you dig deeper, this is also the thing that proves to be the most hollow. In a large data center, barely a few dozen people get permanent jobs, and that too in security guards and general maintenance work. The main technical work that pays well is done by specialists, who are often foreigners.
It is true that they bring in big investments. But that money immediately goes abroad. Because that money could be used to buy server machines from America or other Asian countries and pay for software licenses. The government gives various tax breaks to bring such companies to Nepal, which also results in the loss of revenue that the country is supposed to get.
In the end, what happens is that Nepal gives its land, electricity, political support, and even the transmission line or infrastructure. However, all the profits from this go abroad.
My country, Ireland, said ‘yes’ to all these things (offshore data centers and tax breaks). And the situation there over the last 10 years has taught us a valuable lesson. Ireland’s calculations were not entirely wrong. Companies there were only charged 12.5 percent corporate tax (minimum tax). This not only filled the country with data centers, but also large technology companies like Google and Meta opened their European headquarters in the capital, Dublin. This really benefited the Irish economy. However, the story of the data centers is different.
In the 2010s, Ireland became a data center hub in Europe, thanks to its cool Atlantic climate, access to the European market, and low taxes. In 2015, data centers consumed only about 5 percent of the country's total electricity, but by 2023, they were consuming 21 percent. According to AirGrid, the country's national electricity transmission system operator, data centers will consume about a third of the country's electricity by the mid-2030s. .
On the one hand, Ireland has set its own goal of producing 70 percent renewable energy by 2030. But on the other hand, this goal has been undermined by the fact that foreign servers are consuming electricity. The electricity infrastructure there could not cope with this pressure. Due to which, in 2022, the Electricity Authority completely banned the connection of new data centers in the capital Dublin.
The biggest hit has been to the general public. According to the latest statistics (May 2026), the people of Ireland are buying electricity at the most expensive price in the European Union. Citizens there are paying almost 40 percent more than the average price in Europe. Having to pay more than 40 cents per unit, an average household is facing an additional financial burden of about 480 euros (about 82 thousand rupees) per year on its electricity bill alone.
The issue of water has also become another big problem there. Microsoft's data center at Grange Castle (for drawing too much water) has been the subject of so much controversy and scrutiny that when the UN's special representative visited Ireland to assess the state of the clean environment, Microsoft refused to let him enter its data center.
The number of jobs it has provided is no longer a mystery. Even if all the data centers across Ireland were combined, only a few thousand people would be directly employed there. This is an area that alone generates 20 percent (one-fifth) of the country's electricity. Billions have been invested in building transmission lines to deliver electricity to it. These data centers occupy so much land; many homes could be built there for the general public. In comparison, these jobs are a very small and disappointing return.
Ireland had many such facilities that Nepal does not have. Ireland is a member state of the European Union (EU), it has a reliable legal system. On top of that, the first language is English. In addition, the country has decades of experience in making deals with big tech companies. Its tax-free policies have not only brought data centers, but also large offices for companies like Google and Meta. Where tens of thousands of engineers found jobs and a ‘knowledge-based economy’ developed along with server machines.
But that may not be the case in Nepal. Nepal will only get server racks. But people will not get desks to work. Despite such favorable conditions, data centers in Ireland have crippled public infrastructure, caused electricity shortages and provided jobs to only a few people who could not fill a football stadium in the name of employment. In such a situation, Nepal will have to make deals on even weaker ground, the results of which are sure to be worse than Ireland’s.
I have been closely monitoring the actual development of the technology sector here, living in Nepal for more than a decade. As expected, Nepal’s IT services exports will reach $1 billion by 2025, which is more than double in the last three years.
Nepali engineers who studied at world-renowned universities like MIT and Carnegie Mellon in the US are returning home with investments and international networks. Nepal is really building a strong foundation now. This development is not happening by becoming ‘cheap workers’ in the supply chain of foreigners, but by Nepali engineers themselves becoming founders and owners of companies.
However, this so-called ‘green compute’ (foreign data center) plan is nowhere in line with the real progress of the country. It is trying to make Nepal a mere shepherd who provides water and electricity. Where local resources are used, but the real profit is taken by someone else.
Whose law applies to the data of a company kept in Nepal but registered abroad? What if a foreign government exerts legal pressure tomorrow? Such questions are never discussed seriously before an agreement is signed.
Nepal is between two large countries like India and China. Both these countries do not take digital infrastructure (data centers, etc.) built in their neighborhoods for granted. The decision to bring a US company to the Chinese border (Nepal) and set up a data center, or to allow a Chinese company to open a data center at a distance that India considers a security threat, cannot be dismissed for long as ‘it’s just a business decision’. This could quickly become a matter of geopolitical tension.
Once large data center buildings are built here and machines are connected, Nepal’s negotiating position becomes even weaker. Because those machines have to be repaired by foreign experts, and the spare parts needed to keep them running have to be imported from abroad. Thus, Nepal is forced to rely on foreigners structurally.
One argument is always heard in support of this. That is, isn’t it better to run a data center using hydropower in Nepal than to run a data center burning coal (and polluting it) in some other country? However, this is just an illusion created by showing a false alternative. The main question here is not what to use instead of coal. The main question is how Nepal uses the excess electricity it has and how to make good use of this short opportunity to benefit on its own terms.
Sell electricity directly to foreign countries at a good price, open industries in the country and invest in our own infrastructure in a way that benefits Nepalis first. These are the options that bring sustainable development to the country. However, a foreign data center is something that, if it were to arise from here tomorrow, would affect almost all of us. The money will be taken with it.
As I write this article, there is talk of more investment coming in. The first project approved will be called a pilot project. When the second project comes, it will be called momentum. And, when it reaches the third project, it will be given the form of policy.
Nepal has very little time left to decide what kind of economy it wants to build. Nepal must make a clear decision before this opportunity is lost. Otherwise, foreign consultants will move on to another country with favorable conditions.
(The author Jonathan Clark has been living in Nepal since 2015. This article is a translation of his blog. He published a blog titled ‘Who Actually Benefits When Nepal Sells Hydro to Silicon Valley’ on his website on 7 May 2026. He created a software called ‘ConX’ in 2015 and sold it to the American company ‘Houzz’ in 2021. Jonathan currently works as the ‘Director of Engineering’ in the same company. He mostly lives in Lalitpur.)
