The UKHP is located in the Southern Highlands of Sri Lanka and is part of the Nuwara Eliya administrative district. The project area covers some 540km2 of the upstream catchment of the Kotmale Oya, a tributary of the Mahaweli Ganga. The infrastructure for the project is confined to a much smaller area and is contained in a triangle with the A5 Kandy - Nuwara Eliya Road forming the eastern side, the A7 Hatton-Nuwara Eliya road the southern side and a line running north-south from the existing Kotmale power station to the Devon Oya completing the western side.

The topography of the project area is mountainous with a striking landscape of deep river valleys running beneath high cliffs and escarpments. The establishment of tea plantations began in the 1850s and today the plantations still cover almost the entire district. The higher slopes and the tops of the hills remain forested with most of the forested areas designated as reserves.

The project area is predominantly rural in character with the majority of the population living in small rural communities or on tea plantations. The dam site is located on the edge of the town of Talawakelle which has a population of around 3750. The only other town of any size is Pundal Oya which has a population of 2000