Bringing Power to Bhutan's Villages and Beyond

Article | 15 May 2014

An ADB-supported project in Bhutan has brought electricity to the country's poor and will earn revenues for the government from exporting electricity to India.

Approved: October 2008
Closed: April 2014
More than 9,000 rural poor households and facilities will gain access to electricity through extensions of the electrical grid
Reduced reliance on firewood and kerosene brings cleaner indoor air, benefiting women and children especially
Burning less wood means less carbon dioxide and other pollutants released into the atmosphere
Exporting clean energy to India replaces power generated by fossil fuels, reducing CO2 emissions by 500,000 tons a year

Rinchen Norbu, a resident of the small southwestern Bhutan village of Balaygang, remembers in the past trying to keep his three daughters healthy in a home full of soot and smoke.

"Before we had electricity, we used a kerosene lamp for light and charcoal for cooking," recalls the 39-year-old farmer. "That produced a lot of smoke."

In recent years, the situation has changed dramatically in his remote village. Electricity has been brought into the area, despite steep mountainsides and rugged terrain. Today, his children study with electric lighting and his wife prepares meals using an electric rice cooker and other appliances.

The small village also used to be barely accessible, especially during the rainy season when muddy roads were completely washed out. Rinchen and other farmers would battle the waterlogged roads for 2 days trying to bring their goods to the market in the capital city, Thimphu.

With an improved road into the village, they can now bring rice and vegetables they grow on their land to the market in only 7 hours, regardless of the weather conditions.

People in the village of Balaygang benefited from a rural electrification program that was part of the ADB-supported Green Power Development Project. The project's rural component connected more than 8,500 rural households to hydroelectricity, and 119 remote public facilities (schools, health clinics, and other community facilities) to solar electricity. Access roads to the project site, which also run through the village, were improved during plant construction.

Energy for export

In addition to rural electrification in Bhutan, the project built the 126-megawatt Dagachhu Hydropower Plant, which will begin operating in June 2014. The electricity generated will be exported to India through an existing cross-border grid.

The export of energy is one of the main drivers of Bhutan's $1.5 billion economy.

The project aims to sustain the country's economic growth by both promoting cross-border power trade and increasing domestic access to electricity.

Bhutan has an abundant supply of hydropower. It is the only country in South Asia with surplus energy available for export. The Government of Bhutan is developing the potential of its vast energy reserves while providing electricity to many remote areas.

Only 5% of Bhutan's potential hydropower output, estimated at 30,000 megawatts, is being used. After meeting domestic demand, about 70% of the 1,500 megawatts of hydropower being generated is exported to neighboring India.

The export of energy is one of the main drivers of Bhutan's $1.5 billion economy. The power to be exported to India from the Dagachhu plant over 25 years is expected to generate more than $250 million in taxes, dividends, and royalties. Hydropower export will be the largest source of income for the government to fund its public services and social programs. The revenues will also help keep the price of electricity low for poor rural users.

In 2013, 95% of the population was connected to electricity, compared with 60% in 2008 before the Green Power Development Project started.

The government aims to develop and export 10,000 megawatts of hydropower to India by 2020. Several more hydropower projects are in the pipeline.

Hydropower plants in Bhutan have been developed in partnership with Austria and India. The Dagachhu Hydropower Plant was developed by a joint venture between the Bhutan public utility, Druk Green Power, and an Indian private company, Tata Power.

Showcase project

"The hydropower plant is Bhutan's first public-private partnership in infrastructure," said Kaoru Ogino, a principal energy specialist in ADB, who noted that most projects of this type are undertaken by governments. "The project is a model for future private participation in the energy sector, particularly in hydropower."

ADB provided $119 million in loans to help build the Dagachhu Hydropower Plant. The run-of-river-type plant, which generates electricity through power created by rushing water, will have less environmental impact than traditional plants because the project did not build a major reservoir; there is also no need to relocate people.

While the project has protected the surrounding environment, it is also making an impact on a global scale. In February 2010, the Dagachhu plant was registered as the world's first cross-border project to receive carbon credits under the Clean Development Mechanism.

The environmental benefits of the project have received international recognition. On 25 July 2013, the Development Impact Honors Program of the United States Department of the Treasury awarded the project for its excellence. The honor is given to outstanding projects that "reflect the vital on-the-ground work that strengthen communities and regions around the world."

This article is an excerpt from a longer piece originally published in Together We Deliver, a publication highlighting successful ADB projects across Asia and the Pacific that demonstrated development impacts, best practice, and innovation.