The final draft of the 21st Century Economic Roadmap emphasizes the need for the government to be clear about the primary role of hydropower sector.
The report states that the government should be clear whether it is better for the country to export raw hydropower to India or to use it for local industries to value-add and export finished goods.
The report, which was drafted by the national taskforce on the 21st Century Economic Roadmap, stated that studies have shown that the economic returns to the nation as a whole is higher from the ‘value-added’ approach.
Given its impact on economic growth and the projected target of achieving a gross domestic product (GDP) of USD 10 billion (B) by 2030, the taskforce report accords the highest priority in the 21st century economy.
The taskforce recommends that the 21st century economy should focus on strengthening the nexus between hydropower and manufacturing as nearly 500 megawatt (MW) of additional firm power will become available in the medium term.
“Further harnessing of hydropower should be driven by manufacturing aspirations,” the report stated.
The taskforce also highlights the need to expand the hydropower market to Bangladesh. “The key challenge in implementing Sunkosh, Kuri Gongri and Dorjilung is to finalise a workable Inter-governmental (IG) model for the projects with India or a tri-lateral IG model for export to Bangladesh via India.”
However, given the uncertainties of realizing these mega projects in the anticipated time, the taskforce recommends that the government implements some small and medium-sized projects to capitalize on the experiences of the sector and the availability of financing for such projects.
Given the issues related to cross-border trading (CBT) regulations and export tariff pricing, the report alerts that the country may not be able to obtain the same Power Purchase Agreement (PPA) with India with flexibility that allows export of ‘surplus’ power.
To ensuring a conducive ecosystem to drive industrialization, the taskforce recommends pursuing large and mega hydro projects on an IG model. “The government should achieve clarity on export of power vis-a-vis supply to domestic industries.”
The draft report has been completed a year after the national taskforce was formed.
The taskforce suggests that Bhutan needs to explore renewable energy technologies such as solar PV (photovoltaic) wind, bio-energy and small hydropower to diversify the energy mix and meet the rising energy demand.
“This could help diversify Bhutan’s energy base and also mitigate against the possible impacts of climate change,” the report stated. “In addition to large scale initiatives, the government should demonstrate the adoption of alternative energy and efficient design in buildings to influence household choices.”
Bhutan currently has a total installed hydropower capacity of 2,326MW. The hydropower sector accounted for 12.69 percent of the GDP in 2019.
With the completion of four ongoing projects totalling 2,938MW, the country will have 5,264MW of installed capacity and 909.35MW of firm power by 2025 (or additional 499.35MW).