The basic premise for the development of water resources in the country is the availability of accurate and reliable information about the resources. Nepal is rich in water resources but, lacks the reliable information about the hydro potential. The first estimation of the theoretical hydro potential was done about 5 decades ago with limited data and analysis tools. Since then very few studies have been done in this field. Therefore, the first part of this study estimates the theoretical run-of-river hydropower potential of Nepal. A GIS-based spatial tool and SWAT (Soil and Water Assessment Tool) hydrological model have been used to estimate hydro potential. The estimated total theoretical run-of-river hydro potential of Nepal is 119,185 MW at 30% flow exceedance and 103,341 MW at annual mean flow. Although large numbers of hydropower plants are currently under-construction, it is unlikely that the growing electricity demand in the country can be met from these power plants at the current rate of development. Therefore, the second part of this study deals with the power generation and expansion planning of Nepal for the period 2015-2030. The modeling tool, LEAP (Long-range Energy Alternative Planning), has been used for this purpose. The major problems associated with the development of transmission lines in Nepal are discussed. The critical issue to be addressed by the government and politicians to end the power crisis in the country is the development of transmission lines besides developing the new power plants. Therefore, the first priority has to be given towards the completion of under-construction transmission lines in the major power corridors where hydro projects are being developed and new hydro projects are being planned to build. This will not only connect the hydro projects currently under-construction in the national grid of the country, but also, attracts new investment in the hydro power sector which will help develop power capacity to meet the future electricity demand. The reduction of transmission and distribution losses plays a significant role in the supply side management. The required power plant capacity decreases significantly when the system loss is reduced. The study shows that electricity mix has to be used in the power supply planning to meet the future electricity demand. The current trend of run-of-river based hydropower development has to be changed and the priority has to be given in the development of storage type hydropower. Other renewable energy sources such as solar and wind, have to be used in the power generation. Furthermore, the result shows that the current rate of power capacity development will not be enough even to meet the base case electricity demand. The timely development of transmission lines, construction of new power plants with a suitable electricity mix and reduction of power losses in the system are the key points to meet the future electricity demand and end the power crisis in the country.