This study assesses the development benefits of investments in decentralized micro-hydropower systems in remote mountain areas of Nepal (in the districts of Baglung and Kavre) in terms of reducing poverty and achieving the Millennium Development Goals (MDGs). Evaluation of the impacts of energy initiatives provides a basis for understanding the relative merits of policy options, and for prioritizing programmes. This is especially important with respect to decentralized/off-grid energy initiatives due to their (perceived) relatively high costs. Yet, to date, analysis of the impacts of decentralized/off-grid electrification initiatives has been scarce. This study aims to help fill that knowledge gap.