The dams of Jammu & Kashmir have been constructed with the main purpose of power generation. Apart from generating power to the hilly terrain, the dams of the valley also add to its tourist attraction. The main dams of the state are the Salal Project and Baglihar Dam. The Salal Project mainly deals with the power generation function in Jammu and Kashmir and the Power Station has a capacity of around 690MW of electricity and annually it generates around 3101 million units. The Power Project has been constructed on the Chenab River in the Udhampur district of Jammu and Kashmir. The dam is supervised by the NHPC (National Hydroelectric Power Corporation). Not only is the dam site supervised as a power project but also it draws lot of tourists towards it throughout the year. The power project has been serving the states of Jammu and Kashmir, Uttar Pradesh, Punjab, Haryana, Himachal Pradesh, Delhi, Rajasthan and Chandigarh since its construction. It has six power generating units altogether and the capacity of each of this units is 115 MW.

The Bagilhar Dam or the Bagilhar Power Project on the other hand has also been constructed on the Chenab River but in the southern Doda district of the state. The construction of the project had begun in the year 1999 and the first phase of its construction was completed in 2000 after its construction plan was commissioned in 1992. Around 1 billion US dollars was the estimated cost for the power project. This power project has a capacity of around 450 MW and was dedicated to the nation by Man Mohan Singh, the prime minister of India on 10th of October, 2008.

The power projects of Jammu & Kashmir serve not only the valley but the neighbouring states as well. The inflow of tourists to these dam areas is an important area of business for the state of Jammu and Kashmir.