Asian Development Bank to Fund Bhutan’s First Utility-Scale Solar Project

Highlights :

  • The financing consists of an $8.26 million concessional loan and an ADB-administered $10 million grant from the Asian Development Fund.
  • Bhutan wants to move beyond hydropower sources of energy in the sight of climate change.

Bhutan may well be moving beyond hydropower as far as renewable energy development in the Himalayan country is concerned. In a key development, the Asian Development Bank (ADB) has approved a $18.26 million financing for the construction of the first utility-scale solar photovoltaic power plant in Bhutan.

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The official statement by ADB held that the solar project will be built in central-west Bhutan and have a minimum total capacity of 17.38-MWp and will generate 25 GWh of electricity every year. ADB held that the solar project will help diversify Bhutan’s energy mix, which is almost exclusively reliant on hydropower and makes the sector vulnerable to the impacts of climate change.

Christoph Meindl, ADB Energy Specialist for South Asia, said, “This project will be the country’s first major step toward diversifying power generation and increasing the resilience of its energy sector to future climate shocks. Increasing temperatures is projected to decrease glaciers and snow-covered areas, which will shift Bhutan’s hydrological system to a more rainfall-dominated pattern. This affects hydropower generation due to expected frequent droughts outside of the monsoon season and extreme high flows during the monsoon season.”

The Financing Scheme

ADB said that the financing consists of an $8.26 million concessional loan and an ADB-administered $10 million grant from the Asian Development Fund. The Government of Bhutan is contributing $990,000 to the project.

The upcoming solar project is supported by a technical assistance (TA) amounting $20,000 from ADB’s Technical Assistance Special Fund and $450,000 from the Republic of Korea e-Asia and Knowledge Partnership Fund. The TA will support learning opportunities on climate-resilient energy systems for higher secondary students in science, technology, engineering, and mathematics stream as well as the Department of Renewable Energy (DRE) under the Ministry of Economic Affairs. Women will constitute around 30%–40% of the beneficiaries of these learning programs.

In June, the Economic Affairs Minister of Bhutan, Lokhnath Sharma, said that Bhutan looks to add 300 MW of solar power in the coming years as the country clocks a mere 9 MW of renewable energy other than hydropower. Also, the Bhutan Renewable Energy Master Plan holds that the landlocked country could generate 12 GW of solar and 760 MW of wind power.

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