The Bhutanese Leading the way.
At the Invest Bhutan Summit, the Druk Holding and Investments (DHI) submitted a proposal for the development of a 25 MW–100 MW grid-scale Battery Energy Storage System (BESS), aimed at strengthening grid stability and meeting Bhutan’s growing electricity demand. The project proposes storing electricity generated from renewable energy sources during solar hours or periods of low demand, and supplying power back to the grid during peak demand hours.
The project is positioned within a context of rising electricity consumption driven by industrial development and urbanization. It also reflects strong government and policy support, underpinned by a stable governance environment, which has been highlighted as a key enabler for large-scale energy infrastructure investments.
The total project investment has been estimated at approximately Nu 6,780 million, equivalent to USD 75 million. The financial projections for the project indicate an internal rate of return at 20 percent. These projections are presented as part of the project’s investment case, reflecting anticipated revenue stability and growth potential.
The investment structure allows flexibility depending on investor appetite, with participation levels that can go up to 100 percent. This capital outlay reflects the scale and importance of establishing grid-scale storage capacity to support renewable energy integration and ensure reliable electricity supply.
The proposed BESS will provide grid-scale energy storage services, supply peak power to the national grid, and support the integration of renewable energy into the electricity system. These functions are intended to enhance overall grid efficiency while addressing fluctuations in supply and demand.
From a market perspective, Bhutan’s electricity demand is increasing by 8 to 10 percent annually, with current demand unable to be fully met during the winter months. The project also highlights export potential, noting that surplus electricity can be exported to India through long-term power purchase agreements. This dual domestic and export market positioning strengthens the project’s commercial outlook.
Key risks associated with the project include financial and technical challenges. However, mitigation measures have been identified through the structuring of strong power purchase agreements with domestic off-takers or with India, aimed at ensuring predictable and stable revenue streams.
The project is presented as investable due to several factors, including stable revenue prospects supported by strong domestic demand and export potential through PPAs, high policy support for renewable energy projects, and the emerging nature of BESS as a sector in Bhutan with significant expansion potential. The proposal also highlights first-mover advantages, including access to prime locations, grid interconnection rights, and government support, positioning the project as a strategic addition to Bhutan’s evolving energy infrastructure.
