Bhutan: Promoting Energy Security and Transition Project

Sovereign Project | 56163-001

The knowledge and support TA aims to help Bhutan diversify renewable sources and promote energy transition to more resilient energy systems with novel technologies, new business models, and concrete development arrangements. Bhutan's energy is dependent on mono-resource of hydropower, export revenues of which sustain the national economy and the government's revenues. This suggests that Bhutan is vulnerable to any impacts on hydropower resources due to climate change. To alleviate concerns about energy security and aftereffects, it will be necessary to push to diversify the energy resources. The TA will support development schemes of solar rooftop, floating solar, and green fuels such as green hydrogen and biofuels. The studies will focus on resources and technical assessments, financial feasibility, business modeling, and relevant regulation and policy formation.

Project Details

Project Name Promoting Energy Security and Transition Project
Project Number 56163-001
Country / Economy Bhutan
Project Status Proposed
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA: Promoting Energy Security and Transition Project
Technical Assistance Special Fund US$ 1.00 million
Strategic Agendas Inclusive economic growth
Drivers of Change Gender Equity and Mainstreaming
Governance and capacity development
Knowledge solutions
Private sector development
Sector / Subsector

Energy / Renewable energy generation - biomass and waste - Renewable energy generation - solar

Gender Equity and Mainstreaming Effective gender mainstreaming
Description The knowledge and support TA aims to help Bhutan diversify renewable sources and promote energy transition to more resilient energy systems with novel technologies, new business models, and concrete development arrangements. Bhutan's energy is dependent on mono-resource of hydropower, export revenues of which sustain the national economy and the government's revenues. This suggests that Bhutan is vulnerable to any impacts on hydropower resources due to climate change. To alleviate concerns about energy security and aftereffects, it will be necessary to push to diversify the energy resources. The TA will support development schemes of solar rooftop, floating solar, and green fuels such as green hydrogen and biofuels. The studies will focus on resources and technical assessments, financial feasibility, business modeling, and relevant regulation and policy formation.
Project Rationale and Linkage to Country/Regional Strategy In the concerns about climate and energy security and the trade and fiscal impacts, it is required to diversify energy sources of both power and fuels. Bhutan's Sustainable Hydropower Development Policy, 2021 stipulates to enhance energy security and develop value chains based on alternative clean energy. Renewable energy technologies such as solar and wind power have different generation profiles and patterns during the year and daytime, which can be complementary in a mix of power sources with hydropower. Thus, Bhutan's DGPC plans fast-track solar development up to 200 MW over next 3 years. For this purpose, ADB intends to finance Bhutan's first utility-scale solar power plant (17 megawatt-peak), and support subsequent ground-mounted solar power projects in several locations. Solar power will compensate for power deficits in the dry season and increase hydropower export in the wet season by using additional solar power for domestic consumption. Given this advantage, solar power generation can be diversified to floating solar and rooftop solar power types. Especially, Bhutan's floating solar power in the existing hydropower reservoir areas can bring multiple favorable conditions, including higher solar panel efficiency due to cooling effect on the water surface, no land acquisition requirement and conflict with fishing purposes, close access to grid systems within the premise of the hydropower stations, and complementary operations with hydropower's flexible generation. Rooftop solar can also be expanded in urban areas on the rooftops of buildings and houses for various applications such as electricity and water heating as well as cooking. Given the nascent stage of solar power development in Bhutan, this new business area can boost the private sector mobilization and create new job opportunities, particularly for women for operations and maintenance activities. Using abundant water resources and competitive hydropower generation costs, Bhutan considers developing green hydrogen, which will be able to be blended in transport and cooking fuels. Green hydrogen can also play as the hydropower batteries through fuel cell systems. Furthermore, biofuels can be produced from agricultural residues, dungs and growing municipal solid wastes. These green fuels can become domestic resources and reduce the country's fuel import dependency. The alternative domestic energy resources will help Bhutan promote energy transition and improve the energy security and trade valance.
Impact

Bhutan's diversification of clean energy sources for power generation and fuel production promoted

Outcome

Readiness for project development in alternative energy resources enhanced

Outputs

Floating solar development plans prepared

Rooftop solar business and financing models developed

Green fuel policies and regulations as well as pilot scheme formulated

Geographical Location Nation-wide
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Responsible ADB Officer Ogino, Kaoru
Responsible ADB Department South Asia Department
Responsible ADB Division Energy Division, SARD
Executing Agencies
Ministry of Economic Affairs
Timetable
Concept Clearance 20 Sep 2022
Fact Finding 05 Sep 2022 to 07 Sep 2022
MRM -
Approval -
Last Review Mission -
Last PDS Update 21 Sep 2022

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