The Bhutanese Leading the way.
The country is accelerating efforts to expand its renewable energy sector, with multiple hydropower and solar projects in various stages of development.
The government recently secured a concessional loan from the Japan International Cooperation Agency (JICA) to finance two small hydropower projects—the 90 MW Jomori and 26 MW Druk Bindu plants. There are echoes of hope to secure further financing from JICA for larger projects, such as the 1,125 MW Dorjilung hydropower project. Discussions with international lenders, including the World Bank, International Finance Corporation (IFC), Asian Development Bank (ADB), European Investment Bank, Kuwait Fund, and the OPEC Fund, are also ongoing.
As the country works toward adding 15,000 MW of hydropower and 5,000 MW of solar energy by 2040, international financial institutions and private investors are showing increased interest in supporting these projects.
India remains Bhutan’s largest partner in hydropower development, providing both funding and market access for surplus energy. Bhutan has previously secured financing from Indian banks, including the State Bank of India, EXIM Bank of India, and the Power Finance Corporation. In addition to government-to-government partnerships, Bhutan is opening its energy sector to private investment. Foreign direct investment (FDI) of up to 49 percent is now allowed in hydropower projects, while solar energy projects are fully open to private investment.
Several projects have already begun construction or are in advanced stages of discussion. The 600 MW Khorlochhu hydropower project is being developed under a strategic partnership with Tata Power, while other small hydropower projects include the 18 MW Suchhu in Haa, the 32 MW Yungichhu in Lhuentse, and the 54 MW Burgangchhu in Zhemgang.
A second phase of small hydropower development includes the 90 MW Jomori in Samdrup Jongkhar, the 54 MW Gamri in Trashigang, the 26 MW Druk Bindu in Samtse, and the recently approved 25 MW Begana project. In solar energy, a 120 MW project is planned in Jamjee, Thimphu, along with a 35 MW rooftop solar initiative financed by ADB. Bhutan has not assigned specific projects to lenders, as financial institutions take time to assess project viability, environmental impact, and funding commitments from other partners. However, there is growing confidence among investors, as Bhutan continues to strengthen its regulatory framework for renewable energy development.
To maintain a minimum 51 percent ownership in all projects, Bhutan needs to raise about Nu. 300 billion in equity funding. Currently, the Druk Green Power Corporation (DGPC) is managing equity contributions through its cash flow, but this approach is not seen as sustainable in the long term. To diversify its funding sources, Bhutan is exploring options such as stock market listings, which could attract investments from institutional and private investors.
