KATHMANDU, Nepal—This Himalayan nation is betting that a new energy gold rush borne of its thousands of rivers and craggy peaks will establish it as a major Asian electricity source.

While India, Pakistan and China have all developed massive hydropower plants along the Himalayan mountains, Nepal’s civil war and political instability scared off investment for decades.

Now, thanks to an inclusive peace process that allowed the country’s main rebel leader to be elected prime minister twice, the focus is shifting to Nepal. Hydropower projects worth billions of dollars are in progress, with geologists and investors scouring the landscape for more.

Government surveys show Nepal’s abundant water resources can feasibly yield hydropower equal to more than 40% of U.S. output, a 40-fold increase from today. Officials project almost a third more hydropower capacity will come online this year. More than 100 projects under construction—over 40 since last year—and others in development will yield at least a tenfold increase in the next decade to 10 gigawatts of power, they say.

“There’s such an energy shortage that any project you build will find a market,” said Allard Nooy, CEO of InfraCo Asia, a development body funded by the U.K., Swiss and Australian governments that is financing one hydro project and seeking to develop two more.

Still, power companies don’t face an easy ride.

Among the hurdles are natural ones: earthquakes, landslides and inland tsunamis from glacial lakes as warmer temperatures prompt ice melt. Two years ago a series of massive quakes killed 9,000 people and shattered the country.

Opposition from environmental groups is another difficulty, especially for a new generation of dam projects. In the past, the World Bank and Japan’s Asian Development Bank have withdrawn support for projects amid opposition from environmental groups that say large dams can damage natural habitats like wetlands, threaten migratory fish stocks, and displace traditional farming communities.

Opening the Floodgates

Nepal plans to unlock the hydropower potential of the Himalayan mountains to sell electricity to neighbors like India and Bangladesh.

Capacity

650 megawatts

Operating

Under construction

21 megawatts

The risks are also political. Instability has led to 21 leaders in the past 20 years. A decade-long civil war killed more than 16,000 people and ravaged the economy.

But since the war ended in 2006, armed rebels have mainly swapped violence for politics. On Sunday, the poor nation of 30 million people held peaceful local elections, the first in decades, a vital step toward building a more stable democracy.

The greater stability has boosted momentum for rising investment in the Himalayas—a region dominated by Nepal, India and Bhutan that is considered the final development frontier in South Asia. Hydro energy projects are the biggest focus.

“The only resource we have, like the Arabian countries have oil, is water,” said Chhabi Gaire, project manager at the Rasuwagadhi Hydroelectric Project, a 111-megawatt plant under construction near China’s border.

Funding for projects is increasingly coming from Nepalese working abroad, says the Nepal Electricity Authority. Their remittances reached $6.7 billion in 2015, according to the World Bank, more than even Thai and South Korean workers abroad sent to their own countries.

Meanwhile, India’s cabinet approved $850 million in February to build a plant on Nepal’s Arun River that would export most of its energy to India. A month earlier, the Chinese-state owned China Three Gorges Company agreed to a joint venture with Nepal’s government to build a $1.6 billion hydropower plant on Nepal’s Seti River, also mainly for electricity export to India.