||The project outputs include (i) operation of a 118 MW run-of-the-river Nikachhu hydropower plant and its associated transmission lines, and (ii) enhanced institutional capacity of DGPC in financial, social, and environmental terms. The project will generate power of 903,490 MWh on the average annually. Power generated is expected to be exported outside Bhutan. Given that clean and renewable power export will be counted as carbon saving, the resulting reduction of greenhouse gases equivalent to CO2 emissions is estimated as around 1,000,000 tons every year assuming on the Indian grid system benchmark.
|Project Rationale and Linkage to Country/Regional Strategy
In 2008, ADB approved financing the Green Power Development Project for Bhutan to mainly promote the Dagachhu hydropower development (114 MW) for power export to India, through a public private partnership (PPP). As a post Dagachhu, the Government of Bhutan officially requested ADB to prepare the Nikachhu hydropower development on 6 September 2010. The Project is a medium size run-of-the-river type which will have smaller environmental and social impacts than reservoir types. It is located on the Nikachhu River in Trongsa of the central Bhutan.
Bhutan is the only South Asian country with a surplus of power for export. While there is seasonal demand and supply gaps particularly in dry winters, the country's annual generation capacity (around 1,500 MW) is significantly greater than its domestic demand; Bhutan is a net power exporter. Of total power generated, around 80% is exported to India as of 2010. Power exports account for more than 40% of national revenue and 25% of gross domestic product (GDP) in Bhutan. Hydropower infrastructure development also contributes another 25% of GDP through the construction sector. The revenue from power exports are the primary source for the government's socioeconomic development for health, education, agriculture and rural development. The hydropower development thus forms the backbone of Bhutan's economy and social lives.
Bhutan's potential hydropower is 23,760 MW, 6% of which has been exploited to meet domestic consumption and the reminder is for export. On the other hand, neighboring countries including India and Bangladesh are experiencing a large power supply deficit and their power sources are dominated by fossil fuel-based thermal generation plants with greenhouse gas emission. Clean energy development for power export from Bhutan will increase energy supply stability, improve energy efficiency, and foster climate change mitigation on the sub-regional level. The development of a transmission interconnection between Bangladesh and India is expected to expand the subregional network potential. Given the fact that Bhutan has recently faced with shortage of power during the winter periods due to fast growing domestic demand and reduction of river water flows in the dry seasons, Bhutan also has economic incentives to import power from the neighboring countries during the lean seasons through the cross-border network. To establish the complementary relationship of power supply among the three countries and to diversify potential buyers and sellers are expected to step forward to a regional power trading market in a competitive environment and strengthen energy security with each other. Trilateral energy trade in the sub-region will eventually contribute to economic growth through deeper regional integration.