In a significant move towards sustainable energy development, the European Investment Bank (EIB) has announced a €150 million loan agreement aimed at bolstering renewable energy initiatives in Bhutan. The funding will primarily support the establishment of solar and hydropower installations in remote areas of the country, with the goal of reducing Bhutan’s dependency on energy imports, particularly during dry seasons, and promoting a more diverse electricity portfolio.
This landmark investment marks the EIB’s inaugural support agreement for Bhutan, facilitating a 30-year loan to enhance renewable energy generation within the nation. The allocated funds will facilitate the construction of small to mid-sized run-of-river hydropower plants and solar projects, strategically positioned to cater to communities in remote regions.
The implementation of these new projects will be overseen by Bhutan’s Druk Green Power Corporation, with an estimated combined capacity of approximately 310 MW. During the initial operational phase, these facilities are projected to generate around 670 GWh of clean energy annually.
Highlighting the significance of this initiative, EIB President Nadia Calviño emphasized the broader socio-economic benefits associated with providing sustainable energy access, particularly to underserved regions.
“Bringing green, reliable and affordable energy to communities around the world, especially in more remote regions, has huge benefits not just in environmental terms, but also by improving access to health, education and economic activity,” said EIB President Nadia Calviño.
Bhutan, renowned for its commitment to environmental conservation and sustainability, is recognized as one of only three net carbon-negative countries globally, largely due to its substantial hydropower capacity and extensive forest cover. However, the nation remains vulnerable to the adverse impacts of climate change, necessitating proactive measures to strengthen its renewable energy sector.
Welcoming the partnership with the EIB, Bhutanese Finance Minister Lyonpo Lekey Dorji underscored its significance in supporting Bhutan’s renewable energy goals while aligning with broader regional and global efforts to mitigate climate change.
“As Bhutan strives to maintain its carbon-negative status amidst rising global challenges, this partnership not only strengthens Bhutan’s renewable energy sector, but also contributes to the broader regional and global effort in combating climate change,” said Bhutanese Finance Minister Lyonpo Lekey Dorji.
This collaboration comes on the heels of Bhutan’s recent endeavors in the renewable energy sector, including the launch of a tender for its inaugural solar park in August 2022. As per data from the International Renewable Energy Agency (IRENA), Bhutan had 1 MW of installed solar capacity by the end of last year, marking a significant step towards enhancing its renewable energy infrastructure.