Hydropower generation and exports are key elements of Bhutan's economy and essential to clean energy development in South Asia. Here are 12 things to know about the hydropower sector.
- The Chhukka Hydropower Project, Bhutan's first mega power project, was commissioned in 1986. As the nation's major growth driver, hydropower now constitutes around 20% of Bhutan's economy.
Source: ADB. 2013. Bhutan Critical Development Constraints - Taxes and dividends, mainly from hydropower companies, constitute over 40% of national revenue, the largest source for Bhutan.
Source: ADB. 2013. Bhutan Critical Development Constraints - Bhutan, the only South Asian country with surplus energy available for export, has large reserves of untapped hydropower resources. Its potential hydropower output is estimated at 30,000 megawatts (MW), only about 5% of which has been developed.
Source: ADB. 2013. Energy Outlook for Asia and the Pacific - About 70% of the total 1,500 MW of hydropower currently installed is exported to India after meeting domestic consumption. Under an agreement with India, an additional 10,000 MW of hydropower will be developed and exported to India by 2020. Bhutan has committed to developing 10 hydropower projects through bilateral agreements with India by 2020. Three are already operating.
Source: ADB. 2013. Energy Outlook for Asia and the Pacific - The 126 MW Dagachhu Hydropower Plant - due to start operating in June 2014 - is Bhutan's first public-private partnership in infrastructure and provides a model for future private investments in the energy sector, particularly hydropower.
Source: ADB. 2013. Report and Recommendation of the President to the Board of Directors - Proposed loan for Additional Financing of Green Power Development Project for the Kingdom of Bhutan - ADB provided $119 million in loans to build the $240 million Dagachhu plant. ADB is working to develop a second public-private hydropower plant on the Nikachhu River.
Source: ADB. 2013. Report and Recommendation of the President to the Board of Directors - Proposed loan for Additional Financing of Green Power Development Project for the Kingdom of Bhutan - The Dagachhu plant will export around 500,000 megawatt hours of power annually to India through a 25-year sales agreement with India's Tata Power Trading Company, generating around Nu15 billion, or over $250 million, in income over the next 25 years for the government in the form of taxes, dividends, and energy royalties.
Source: ADB. 2013. Report and Recommendation of the President to the Board of Directors - Proposed loan for Additional Financing of Green Power Development Project for the Kingdom of Bhutan - In February 2010, the Dagachhu plant was registered as the world's first cross-border project to receive carbon credits under the Kyoto Protocol's Clean Development Mechanism.
Source: ADB. 2013. Report and Recommendation of the President to the Board of Directors - Proposed loan for Additional Financing of Green Power Development Project for the Kingdom of Bhutan - Trade in energy can help send energy from places that have access, such as Bhutan, to countries in need of energy like India, optimizing the region's energy resources.
Source: ADB. 2013. An Overview of Energy Cooperation in South Asia - Bhutan's primary energy demand is projected to rise to 1.70 million tons of oil equivalent (Mtoe) in 2035 from 1.41 Mtoe in 2010, growing at an average annual rate of 0.8%. This is significantly lower than the 5.6% GDP growth expected during the same period.
Source: ADB. 2013. Energy Outlook for Asia and the Pacific - The Government of Bhutan is working hard to achieve a target of providing electricity to all by the end of fiscal year 2013. The electrification rate was 95% in August 2013, compared with 36% in 2005.
Source: ADB. 2013. Energy Outlook for Asia and the Pacific - The overall $274.5 million Dagachhu project has also financed access to electricity for around 9,000 rural households and public facilities on an on-grid and off-grid basis using renewable energy. It has installed over 100 solar power systems generating energy for off-grid users including schools, health clinics, and other community facilities in isolated remote areas.
Source: ADB. 2013. Report and Recommendation of the President to the Board of Directors - Proposed loan for Additional Financing of Green Power Development Project for the Kingdom of Bhutan
