Data Centers in Nepal

A few months ago, a development consultant working in Nepal, enthusiastic and well-meaning, walked me through why Nepal was perfectly positioned for green compute. Hydroelectric surplus, cool mountain temperatures, geography wedged between the two largest digital economies on earth. He was right about all of it. He was wrong about what it adds up to.

The pitch, stripped down: let foreign companies build data centres here, power them with Nepali hydro, collect the foreign investment, and call it green. It sounds like a win but personally I don’t think it is.

The “green” in green compute refers almost exclusively to the electricity source. Everything else gets left out of the accounting. Data centres are enormous water consumers. Large hyperscale facilities can consume up to ten million litres of water per day for cooling. [1] Nepal faces serious seasonal water stress, and the rivers that feed the hydro system are the same rivers farming communities have depended on for centuries. Nobody is talking about the water trade-off.

There is also embodied carbon: the concrete, the steel, the containers of servers arriving by truck and plane and needing replacement every three to five years, [2] and the e-waste that results. Nepal has no recycling infrastructure for hardware at scale. It will accumulate somewhere. Probably not somewhere the investors will see. There are many great things about Nepal but recycling infrastructure is not one of them.

The electricity argument falls apart quickly under scrutiny. Nepal’s power surplus is real but, in my experience, seasonal. Dry-season shortfalls still hit domestic users and industries. Power committed to a foreign-owned facility cannot simultaneously go to India at premium grid rates, to factories trying to build a manufacturing base, or to rural households in Karnali still running on kerosene. Nepal spent much of the past few decades with rolling blackouts so severe that Kathmandu lost power for sixteen hours a day. Batti gayo (the light went out) was a near-constant refrain; I remember using the Batti ayo application to let me know when it would return. Routing the surplus that finally ended that era into foreign server farms would be a particular kind of backwards.

The jobs pitch is the one that sounds most compelling and falls apart fastest. A typical large data centre employs only a few dozen permanent staff, mostly in maintenance and security. [3] The technical roles go to specialists, often foreigners. The capital investment is real but most of it flows back out immediately as hardware purchases from manufacturers in Asia and the US, plus ongoing software licensing costs. Tax incentives offered to attract these facilities erode whatever revenue was projected. Nepal provides the land, the power, the political goodwill, the grid infrastructure. The margin flows elsewhere.

Ireland said yes to all of this, and a decade of it is instructive.

Ireland’s calculation was not entirely wrong. The same 12.5% corporate tax rate that filled the country with data centres also brought European headquarters: Google, Meta, a generation of tech multinationals setting up their EU operations in Dublin. That reshaped the Irish economy in ways that mattered. The data centres themselves were a different story.

Ireland became Europe’s data centre hub through the 2010s, drawn by the cool Atlantic climate, EU market access, and that corporate tax rate. By 2023, data centres consumed 21% of Ireland’s entire electricity supply, up from around 5% in 2015. [4] EirGrid, the national grid operator, projects data centres consuming close to a third of the country’s electricity by the mid-2030s. [5] Ireland’s own renewable energy target, 70% by 2030, is now in direct competition with the appetite of foreign-owned server farms. In 2022, EirGrid stopped issuing new grid connections to data centres in Dublin. [6] The infrastructure simply could not keep up. As of May 2026, Ireland has the highest household electricity prices in the European Union, with consumers paying nearly 40% above the EU average. [7] Households pay over 40 cent per kilowatt-hour, costing the average home roughly €480 more annually than the EU average.

Water became a problem too. Microsoft’s facility at Grange Castle drew scrutiny serious enough that, when the UN Special Rapporteur on the right to a healthy environment visited Ireland, Microsoft refused her access to the site. [8]

The jobs return is not a secret. Ireland’s entire data centre sector employs a few thousand people directly. For a sector that consumes a fifth of the country’s electricity, has required billions in grid investment, and occupies large footprints of land that could have been used for housing, that is a thin result.

Ireland had advantages Nepal does not have. EU membership. A stable legal system. English as a first language. Decades of experience negotiating with large technology companies. And the tax policy that brought the data centres also brought the offices: Google Dublin and Meta Dublin, tens of thousands of engineers, a knowledge economy built alongside the server farms. Nepal would get the racks without the desks. Even with everything Ireland had going for it, the data centres alone delivered strained infrastructure, a grid running short of capacity, and direct employment that would not fill a football stadium. Nepal would be negotiating from a weaker position, for a worse version of the same deal.

I have spent over a decade watching Nepal’s actual technology sector develop from inside the country. IT service exports are estimated to have reached $1 billion in 2025, more than doubling in three years. [9] Engineers who studied at MIT and Carnegie Mellon are coming back with capital and networks. Nepal is building something real, and it is built around Nepali engineers as founders and owners, not as cheap labour in someone else’s supply chain. Green compute fits none of that. Nepal is being offered the role of utility provider. Somebody else captures the value.

Whose law governs data stored in Nepal but owned by a company incorporated elsewhere? What happens when a foreign government applies legal pressure? These questions rarely get serious attention before the deal is signed. Nepal sits between India and China, two nations that do not treat digital infrastructure in their neighbourhood as a neutral matter. Hosting American-owned compute on China’s border, or Chinese-owned compute within range of Indian strategic concern, is not a business decision that stays a business decision for long. Once facilities are built and entrenched, the negotiating position deteriorates. Foreign expertise maintains them. Foreign-made parts keep them running. The dependency is structural.

The counterargument is always: but isn’t green compute in Nepal better than the same compute running on coal somewhere else? This accepts a false choice. The question is not where the coal alternative goes. The question is what Nepal does with its energy surplus during the narrow window it has to set terms. Direct electricity export at premium rates. Domestic manufacturing. Investment in Nepali-owned infrastructure that serves Nepali users first. These options build something that lasts. A data centre that leaves takes almost everything with it.

Rumours of further investment interest are circulating as I write this. The first facility to get approved will be called a pilot. The second will be called momentum. By the third, it will be called policy. Nepal has a short window to decide what kind of economy it is building before that window closes, and the consultant will have moved on to the next perfectly positioned country.

References

  1. Data Centres and Water Consumption - Environmental and Energy Study Institute

  2. Navigating Hardware Refresh Cycles in the Data Center - Horizon Technology

  3. How Many Jobs Do Data Centers Create? It Depends - Data Center Knowledge

  4. Data Centres Metered Electricity Consumption 2023 - Central Statistics Office Ireland

  5. Data centres to account for almost one-third of Ireland’s electricity demand by 2034 - The Journal, March 2025

  6. Data centres get to grips with EirGrid’s Dublin pause - RTÉ News, January 2022

  7. Irish electricity prices almost 40% higher than EU average - The Irish Times, May 2026

  8. Microsoft denies the UN Special Rapporteur access to their data centre facility in Dublin - Friends of the Earth Ireland

  9. Nepal’s IT exports near $1 billion. Can the momentum be sustained? - Kathmandu Post, February 2026

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