Hydropower investments exceed Nu 200 billion

YK Poudel

Bhutan has surpassed Nu 200 billion in hydropower investments, signaling a major stride towards its energy security goals and ambitious plans for economic transformation, Prime Minister Tshering Tobgay announced yesterday.

The country has successfully installed over 3,000 megawatts (MW) of hydropower capacity and is strategically forging global partnerships to expand its renewable energy portfolio and attract vital foreign capital.

As of May 2025, Bhutan’s hydropower sector is actively discussing over Nu 200 billion in new investments, marking substantial progress toward its national goal of attracting Nu 500 billion in foreign direct investment by 2029.

“Bhutan has achieved milestones in hydropower development, marked by the commissioning of the 1,020 MW Punatsangchhu-II Hydroelectric Project in May 2025,” Lyonchhen said, presenting the State of the Nation report in the National Assembly. “This achievement has increased the nation’s total installed capacity to over 3,000 MW.”

The National Energy Policy has been initiated as a foundational framework to ensure energy security and to drive sustainable economic growth.

According to the report, the Punatsangchhu-II had generated Nu 820 million in revenue during the lean months, with projected earnings of approximately Nu 2.3 billion between March and May 2025.

Meanwhile, Lyonchhen confirmed that construction has resumed on the 600 MW Khorlochu Hydropower Project in Trashiyangtse, and dam construction for Punatsangchhu-I is expected to start shortly.

To accelerate the growth of renewable energy, Bhutan has established strategic Memoranda of Understanding (MoUs) with major international energy corporations, including Tata Power, Adani Group, GMR Group, PTC India Limited, B.Grimm, and Reliance Power Limited. These partnerships, according to the report, aim to develop over 11,000 MW of renewable energy capacity.

Furthermore, to diversify Bhutan’s energy mix and strengthen energy security, plans are underway to scale wind power capacity from 0.6 MW to 23 MW, and solar capacity from 2.1 megawatt-peak (MWp) to approximately 1,000 MWp within the 13th Plan period.

For the upcoming fiscal year 2025–26, Nu 830.68 million has been allocated for key energy initiatives. This includes Nu 337.28 million for the development of a 500 KW hydropower project at Lunana and Nu 70.1 million for the commissioning of 200 units of 3 KWp grid-tied solar PV (prosumers) at Zhemgang.

In addition, Nu 10.4 million is planned for feasibility studies of potential solar projects, and Nu 70.1 million for the off-grid solarisation of Wachey and Eusuna in Lunana, and Shingphel in Trashiyangtse.

Domestically, the 18 MW Suchhu Hydropower Project, entirely conceptualised, constructed, and financed by Bhutanese expertise, became operational in May 2025. The Yungichhu and Burgangchhu projects are also nearing completion.

Currently, 31 hydropower and solar initiatives are in the project pipeline, totaling 8,236 MW, with an estimated investment requirement of Nu 927.09 billion as mobilisation efforts continue.

The long-term energy plan envisions achieving 20,000 MW of installed capacity by 2040, an ambitious target aiming to realise by actively securing foreign investments from strategic partners and multilateral development banks such as the World Bank, Asian Development Bank, International Finance Corporation, European Investment Bank, and Japan International Co-operation Agency.

Moreover, additional financing is also being pursued from bilateral partners and financial institutions such as the Kuwait Fund, the Organisation of the Petroleum Exporting Countries Fund, the State Bank of India, and the Power Finance Corporation of India.