Bhutan’s Energy Odyssey-From Hydropower to Diverse Energy Futures

Bhutan Today | Tshering Dorji | October 29, 2023

…Feasibility studies for four other small hydro projects consisting of 45MW Gamri-I, 26MW Druk Bindu-I and II, 20MW Begana, and 90MW Jomori are nearing completion after which construction will be immediately initiated

The annual electricity generation from the plants in operation in 2022 reached 10,752 million units (MU). Out of this, 3,295 MU was consumed domestically, while 7,819 MU was exported to India. Notably, the Mangdechhu hydropower plant alone contributed Nu. 12,542 million to the total gross revenue of Nu. 27,887 million generated in 2022. For the Mangdechhu hydropower plant, a principal loan repayment of Nu. 6,962 million and an interest payment of Nu. 5,033 million were made in 2022. In April 2023, during His Majesty The King’s visit to New Delhi, the export tariff of the Chhukha hydropower plant was revised from Nu. 2.55 to Nu. 3.00 per unit, with retrospective effect from January 1, 2021.

As of July 2023, the physical progress of the Punatsangchhu I and II projects stands at 87.74 percent and 95.42 percent, respectively. Additionally, the 118MW Nikachhu hydropower project is nearing completion and is set to be commissioned by the end of this year. The Punatsangchhu II project remains on track for commissioning in December 2024.

The Basochhu project is marking a significant milestone by directly selling power through the Indian power trading market at a rate of Rs. 10 per KWh, signifying its entry into the power market.

Prime Minister Dasho Dr. Lotay Tsherig announced during the 51st Meet the Press that three phase-I small hydro projects, with a total generation capacity of 104MW, are currently under construction. Financing instruments, such as raising capital through issuing renewable energy bonds, are being explored for these projects, which are expected to be commissioned by 2025. The Prime Minister mentioned that the three projects, which include the 90 MW Jomori under Samdrup Jongkhar, 54 MW Gamri I under Trashigang, and 26 MW Druk Bindu (I & II) under Samtse, have undergone public consultations, received approval, and had the tender process initiated. Additionally, the government has engaged in discussions with multilateral banks and explored new funding mechanisms for these projects.

Furthermore, feasibility studies for four other small hydro projects, including 45MW Gamri-I, 26MW Druk Bindu-I and II, 20MW Begana, and 90MW Jomori, are nearing completion, after which construction will commence. Discussions are ongoing with Indian financial institutions as financing sources to resume the construction of the 600MW Kholongchhu hydropower project.

The “Renewable Energy for Climate Resilience Project,” a utility-scale 17.38MW Sephu solar PV project with funding support of USD 18.26 million from the Asian Development Bank, is in progress. This project is expected to generate 25MU of energy annually and is anticipated to be commissioned in December 2024, marking a significant milestone towards energy diversification and enhanced energy security.

Looking ahead, Bhutan’s energy sector is developing a comprehensive strategy for the next decade, focusing on objectives, strategies, policy reforms, investments, and programs. This holistic approach aims to achieve diversification, efficiency, reliability, and socioeconomic growth, ensuring a resilient and sustainable energy future. The strategy includes various aspects, such as hydropower and non-hydro renewables, capacity enhancement, and job creation. It represents a robust framework that will shape Bhutan’s energy trajectory and contribute to the country’s GDP.

To achieve energy security, diversification of energy sources is a key strategy in Bhutan. This involves the construction of various hydropower facilities, ranging from large-scale projects like the 1,125MW Dorjilung to smaller initiatives like the 18MW Suchhu. Feasibility studies for energy storage projects, such as the 1,800MW GongriJerichhu pumped storage projects, are also prioritized.

Integrated energy solutions are being pursued to improve energy access, including projects like the 5MW agri-solar and 1MW rural energy supply, ensuring modern energy availability even in remote areas like Lunana. Bhutan is also developing a national hydrogen roadmap and strategy to attract investments and diversify energy resources, including exploring the implementation of a 5MW hydrogen project.

This comprehensive approach will be realized through various initiatives, including strengthening transmission and distribution networks, establishing a 400kV eastwest link, reinforcing power pooling stations, implementing smart grid technology, and facilitating cross-border power trade. Reforms in policies and regulations involve the formulation of energy acts, regulations, and guidelines, as well as the development of a national energy policy aimed at enhancing energy security, affordability, and efficiency.

In the short term, strategies for energy security include importing power from the Indian power markets. Significant investments are being made in renewable energy projects. This includes the development of utility-scale solar facilities, solar rooftops in public institutions, and promotion of prosumers, wind power projects, solar thermal projects, and bioenergy projects. Providing employment opportunities within the power sector, as well as jobs generated by power generation projects under construction, is a key priority. Hydropower continues to be a key driver of Bhutan’s economic growth. Bhutan’s abundant rivers offer a significant hydropower potential, allowing the country to harness renewable energy sources. Hydropower is clean, sustainable, and helps reduce dependence on fossil fuels, contributing to environmental conservation and mitigating climate change.