Potential for Hydropower in Bhutan

According to the Department of Energy, Royal Government of Bhutan, the hydropower potential of Bhutan is estimated at 30,000 MW of which Bhutan only generates about 1,500 MW (5%). Bhutan is a small landlocked country with China in the North and India in the South, having an area of 38,394 km2. Bhutan roughly measures about140 km from North to South and about 275 km from East to West. Bhutan by virtue of being in the slopes of the Eastern Himalayas has mountainous terrains. Altitude varying from 7500 meters in the North to as low as 100 meters in the South, makes Bhutan ideal for Hydropower generation. The Himalayan Glaciers (area of 4,159 Km2 accounts for 10.75% of Bhutan land cover) are a constant source of water, feeding the rivers of Bhutan. In addition, Bhutan receives a fair amount of annual rainfall varying from 400 mm in the high Himalayas (severe alpine region) in the North, 1000 mm in the inner Himalayas with cool temperate climate, and up to 5000 mm in the sub-tropical southern region. Bhutan with its strong Environment Policies has succeeded in maintaining the forest coverage at 72%, which has ensured that the Water Catchments have been preserved.  

Land use/ Land cover assessment of Bhutan

Source: Department of Forest, Ministry of Agriculture, RBoB

The Department of Energy, Royal Government of Bhutan has identified and assessed locations where hydropower projects up-to 23,495 MW (estimated mean annual energy production capacity about 99,200 GWh) to be technically feasible. Existing hydropower plants and those under construction make up 1.8% and 4.5% respectively, whereas the balance 93.7% are made up of the identified hydropower projects. The details are tabulated and tabulated and graphically represented below: (based on identified and assessed to be technically feasible)

Technical Assessed Hydropower Potential of Bhutan

CategoryExisting HydropowerHydropower Under ConstructionHydropower Potential Identified       Total
Hydropower Capacity 426 1,060 22,00923,495 MW
1.8% 4.5% 93.70%100 %
Energy 2,358 4,951 91,84999,159 GWh

Given the geographical location on the Himalayas, with varying altitude from the North to South, with good vegetation cover, constant flow of water and good climatic conditions, Bhutan is suitable for ‘Run-of-the-River’ type of Hydropower schemes. These schemes have been found to be techno-economically least-cost and are environmental friendly. 

Hydropower and Electricity

For Bhutan, the modernization process was initiated in the early 1960’s. Bhutan was moving from the medieval past into the modern world. Electricity by a 256 kW diesel generator was introduced to Bhutan in 1966 in Phentsholing, a town on the border with India. This new era in which modernization tremendously improved the living standards of the Bhutanese people had come to pass, with prospects of economic development. 

In 1967, the first mini-hydropower plant of 360 kW capacity which supplied electricity to the Capital was installed at Khasatrapchu (which was about 25 km away). During the next 8 years, many other mini-hydropower plants were constructed in major towns to provide electricity for lighting purposes. 

The first major hydropower project was started in Bhutan in 1974 in which the Chukha hydro project of 336 MW was to be constructed. This project which was halfway between the Capital Thimphu and the Phuentsholing, closest town to the Indian border was initiated under a bilateral agreement with India, in which Bhutan would be able to meet all its internal power demands and at the same time export all surplus electricity to India. The 60% of the finances were by means of grant from the Indian Government. The remaining portion was ‘soft loan’ in which Bhutan would repay for the loan, over a period of time from the revenue generate by sale of hydropower. This project was commissioned in 1986. 

During the period from 1975 to 1990, in total 12 off-grid micro and mini hydropower plants with capacity up to 1500 kW were constructed. In 1996 and 2001, another two off-grid plant were constructed.

During the period from 1997 to 2002 which was the 8th Plan (5 year plan), the Kuruchu hydropower project with a capacity of 60 MW and Basochu hydropower project of 24 MW was commissioned. During this period, the construction of the Tala hydropower project was also started. This hydropower project with a capacity of 1020 was the largest project ever done in Bhutan. The construction started in 1997 and was commissioned in 2006. 

By the end of the year 2006 (within a span of four decades), the electricity generating capacity from hydropower had gone up to 1,500 MW, which was 5% of the total estimated hydro potential. 

Figure: Power Infrastructure as of June 2003

 Source: Department of Energy, RGoB

Electricity Demand 

The demand for electricity in 1995-1996 was 70 MW (345 MU). The demand for electricity in Bhutan by the year 2002-2003 rose by 11% above 1995-1996 to 105 MW (664 MU), out of which about 99.5% of this demand was met from hydropower. At the end of the 8th Five year plan (1997 to 2002), 40% of the country’s population had access to electricity with about 45,743 consumers. The per capita consumption of electricity was 949 kWh per annum (2003 data). Given that Bhutan was already generating about 420 MW (2002), with 336 MW from Chukkha hydropower, 60 MW from Kuruchu hydropower and 24 MW from Basochu hydropower, Bhutan still had an excess of over 300 MW for export to India in 2003.

Bhutan, domestic consumption of energy is dominated by traditional biomass fuel (66%) and imported fossil fuels (diesel, petrol, LPG, coal, kerosene etc.). Given that Bhutan does not have any domestic petroleum resources, a substantial percentage of the government revenue is spent on import of petroleum products. As per the Department of Energy report in 2005, Bhutan imports about 70,047 metric tons of oil equivalent (toe) at a cost of USD 47 million per annum. Increase demands, coupled with the increase in cost of oil prices in the global market are of great concern to the Bhutanese economy, as the increase results in the cost of all development activities. Further, fossil fuels are polluting which are contributing to Green House Gases and Climate change. Therefore, use of fossil fuel is not sustainable for Bhutan.    

In 2005, a population and housing census was conducted by the Ministry of Home and Cultural Affairs. At that time, they had also conducted surveys on other issues such as consumption of fuels. This revealed that the major source of cooking fuel was electricity at 30.6%, LPG at 25.5%, firewood at 37.2% and with 6.7% from other sources. At the same time, the source of lighting was electricity at 57%, kerosene at 36.5%, and with 6.4% from other sources. 

By 2005-2006, Bhutan’s peak power demand had gone up to 120 MW with the total energy demand of 622 million kWh. This is well within the projected domestic electricity demand of 152 MW in 2005, by the Bhutan Electricity Authority. 

Projected Electricity Demand of Bhutan

Demand (MU)664932116914731718196724102533
Peak Demand (MW)105152190240280320393413

Source: Bhutan Electricity Authority, Department of Energy, RGoB

Role of Hydropower in the socio-economic development of Bhutan


With Hydropower generating 45% of the National Revenue at the end of the 8th Five year plan to 60% at the end of the 9th Five year plan, it is without doubt that hydropower is the backbone of the Bhutanese Economy.

Five Year Plan (FYP)% of National RevenueNu. in Million(Australian $ 1 = Nu. 37.55) {exchange date 25-9-2008}
8FYP (1998-02)45.0%7819.84
9FYP (2002-03)35.3%1702.53
9FYP (2003-04)37.8%1935.14
9FYP (2004-05)31.9%1952.56
9FYP (2005-06)31.7%2214.26
9FYP (2006-07)45.4%4603.57
9FYP (2007-08)~60%5000.00

Bhutan has realized that the potential of its hydropower resources is the key to achieving economic self reliance. With Bhutan expected to develop another 10,000 MW of hydropower for export to India by 2020, Bhutan is set to become a power giant in the region, well on its way to achieving economic self reliance. 

The role of Hydropower in the socio-economic development of Bhutan:

  • Generating revenue from the export of electricity to India which are needed to finance social projects and achieve economic self reliance
  • Ensuring that adequate reliable and affordable electricity is available for domestic consumption and for the emerging industrial sector

Socio-Economic Development

However, despite the abundance of power supply only 40% of the total Bhutanese population (30% of the rural people) had access to electricity December of 2002 and 57% by December 2007 at 44,167 households. 

Vision 2020 policy document of the Royal Government of Bhutan’s aim was to provide 100% electricity for all by latest 2020 (expected completion by 2017). This was further implemented by the Rural Electrification Master Plan. The Rural Electrification was a challenging given that the population few inhabitants were scattered over mountainous terrains. Based on the study carried out by the Royal Government of Bhutan, 88% of the rural households would be connected to the grid and 12% through off-grid options.

The socio-economic impact study of the Rural Electrification project revealed that electricity has improved the quality of lives of rural community. Any task after dusk which was difficult prior to introduction of electricity was now easily possible. Students were able to study while men and women could do their chores with ease. In addition, other productive activities could be done during their free time, thereby increasing the rural income. The use of electricity for lighting, cooking (using rice cooker, water boiler, electric stoves) and heating will reduce the need for firewood fuel, which when burnt exposed all to health hazards from smoke. Not only would the health of the people improve, but also that people increase quality of life along with time for productive activities such as (agriculture, handicraft, carpentry etc) with time which otherwise would have been to fetch fuel wood from the forest. 

Given the importance, the effect of electricity in socio-economic development in rural areas of Bhutan, the effect of electricity in preserving the forest of Bhutan, the target for electrification for ‘all’ has been brought forward to 2013 by the Royal Government of Bhutan. 


The Government’s commitment to the developing all sector of Bhutanese population is envisaged in Bhutan 2020 document with its determination to provide electricity for all by 2020. 

Given the population scattered over the mountainous terrain of Bhutan, the difficulty and financial implication to provide electrify households are enormous at US$ 1,800 per household from on-grid. According to the Bhutan Power Corporation, the average rural consumer utilizes less than 50 kWh per month and falls in the lowest tariff category of US$ 0.013 per kWh. However, the estimate for supplying rural electricity is about US$ 0.10 per kWh. The result is that the enormous difference is being subsidized to ensure that the sustainable tariff principles. 

In a developing country like Bhutan, the affordability of the consumers (citizens) to pay for the electricity charges has been considered while deciding the power tariff. The concept of social justice and fair pricing are considered. If the energy price is kept high, there will be less incentive for the use of electricity which has the potential to encourage income generating activities which would contribute towards economic growth and reduction in poverty. 

While people have more time to work in their communities due to less time spent collecting fuel wood in village, they are also able to work (e.g. weaving clothes, handicrafts for tourism sale etc) after dusk, thereby increasing their rural income. If the people of the community are able to become financially sustainable, then there would be less possibility of migration to the towns in search work. 

With less migration, the social structures in the local communities can remain intact as they have for centuries, while at the same time decreasing the overcrowding of urban centers.

Being a small population across one of the world’s most rugged terrain also means that the per capita cost of essential infrastructure and delivery of social services is high. However, regardless of the financial cost, the government to address the social needs ensures that all social services such as education and medial are available and free through out the entire country for the benefit of all society. 


Wood is used as the primary fuel in the rural areas. The per capita consumption of firewood at 1.22 ton is the highest in the world (Ministry of Planning, 1996), which accounts for about 375,000 trees annually. This fuel wood is the source for lighting, heating (high altitude, cold climate) and cooking. Fuel wood accounts for about 75% of total energy consumption of Bhutan (SASEC, 2005). Given that most of the population like in rural areas, there is a massive pressure on the forest. 

Figure: Carbon stock measurement done by Department of Forest as per IPCC guidelines

Source: Department of Forest, Ministry of Agriculture

Preserving the forest is crucial for the sustainability of hydropower.  Bhutan’s hydropower potential is sustainable if the catchments of rivers are adequately conserved by implementing proper watershed management plans, including biological diversity conservation programs. This is very important because all existing and planned hydropower plants are based on a run-of-the-river system that takes advantage of the natural fall of the river to generate power. Further, most of the rivers originate from lakes in the northern part of the country that are fed by catchments in the forest area. The forest cover defines the water holding capacity and silt contribution of the catchments that has a direct implication on hydropower.

The value of forest are often unrecognized in that it provides services such as water filtration, soil conservation and air purification, which are the fundamentals in maintaining ecological stability as well as good health. Besides benefiting local communities, forest also provide ecological and environmental services of regional, national and global importance. The services provide include protecting the watershed, functions as a carbon sink and also helps in the conservation of biodiversity. 

The importance that Hydropower plays in Bhutan in sustainability is that as there is no fossil fuel burnt, there is no carbon emission nor Green house gases. At the same time, the forest is preserved, which in turn ensures sustainability of the environment. 

With a Government mandate and commitment to ensure forest coverage over 60% at all time, Bhutan is in many ways an ideal model for conservation. Bhutan currently has 72.5% forest cover with 29% as protected area and another 9% as biological corridors connecting the protected areas. Bhutan boasts of having 770 bird species, 7,000 species of vascular plants, 167 species of mammals, 46 species of Rhododendrons and 360 species of orchids.

The Royal Government of Bhutan has been awarded the United Nation Environment Program, Champion of the Earth Award in 2005 for recognition of Bhutan’s “commitment to placing the environment at the center of the country’s constitution and all its development plans” and the Paul Getty Award for Conservation Leadership to His Majesty the King of Bhutan in 2006, for three decades of work to the “conservation of the environment of Himalayan Kingdom” which is administered by the World Wildlife Fund. 

The additional benefit of such pristine environment is that Bhutan is able to promote ecotourism based on tourism management plans developed with consultation with local community in protected areas. These plans ensure that it promotes employment and alternative income of the local community through tourism by training local guides for treks, campsite and trekking trail development. 

The ecotourism of Bhutan’s pristine environment has not only generated income at the community level but also ensure that revenue is earned for the government. As of date, Tourism is the sixth largest generator of revenue for the country. 

Bhutan Hydropower Master Plan

The first survey of the technical feasibility of hydropower was done in the 1990s with the support of the UNDP and NORAD (Norway Government). This was again revised during 2001 to 2003. The report stated that Bhutan’s potential for hydropower of 23,500 MW. It had in the report identified 6 possible hydropower projects to be developed within the next 20 years with a total capacity of 4385 MW.

Though Bhutan had realized that the potential of hydropower as the key to achieving economic self reliance, building the massive hydropower infrastructure to tap the huge potential which required huge financial resources, which was lacking. While all the earlier hydropower construction such as Chhukha hydropower was done with 60% as grant and 40% as ‘soft loan’. Tala hydropower projects followed the same principal However Bhutan was unsure if such projects could be done in similar manner. Given, that such a huge hydropower potential remained untapped, and a lot of resources would be required, Bhutan approach was to liberalize the hydropower sector, and make it part of the country’s foreign direct investment policy. 

The ‘Bhutan Sustainable Hydropower Development Policy’, stated that states that foreign private companies could invest in hydropower development following the BOOT (build, own, operate, and transfer) system.  According to this system, the foreign investor could operate a power project for 30 years with a possible extension of another 15 more years. The investors may have to pay a corporate tax of around 30 percent on profits, though a tax holiday on a case by case basis by the government. Also the companies may be liable to provide 12% free electricity to the Government of Bhutan after building the entire project from stretch at their own expense. This may include, besides the dam, tunnel and plant, other facilities like residence complexes, schools and hospitals.

The ‘fast track’ for Hydro power master plan came when His Excellency Lyonchen Jigme Y. Thinley, the Prime Minister of the first democratically elected Government of Bhutan visited India in July, 2008. The Government of India committed to developing 10,000 MW of hydropower in Bhutan for export to India by the year 2020. 

Major Hydropower Projects (2008 -2020), Government of India Collaboration

Sl.#.ProjectsInstalled Capacity (MW)Tentative DPR ScheduleTentative Project Construction Schedule
 Intergovernmental Authority Model (IG)   
1Construction of Punatsangchhu – I HEP 1,2002004-20062008-2015
2Construction of Mangdechhu HEP7202006-20082009-2016
3Construction of Sankosh Reservoir HEP4,0002009-20102011-2020
4Construction of Kuri-Gongri HEP1,8002009-20112012-2019
5Construction of Amochhu Reservior HEP6202009-20122012-2019
6Construction of Punatsangchhu – II HEP10002006-20082009-2016
7Construction of Chamkharchhu – I HEP6702009-20102011-2017
8Construction of Kholongchhu HEP4862009-20102011-2017
9Construction of Wangchhu Reservoir HEP90020092010-2017
10Construction of Bunakha Reservior HEP18020092010-2016

Additional Hydropower Projects identified to be implemented when possible

Sl.#.ProjectsInstalled Capacity (MW)
1Construction of Nikachhu HEP 210
2Construction of Khomachhu HEP326
3Construction of Rothpashong HEP 400
4Construction of Gamrichhu-III, IV & V HEP270
5Construction of Nyera Amari HEP105
6Construction of Dangchhu-I HEP85

Given that India’s long term plan was aiming to get 60,000 MW from Hydropower by the year 2025, 10,000 MW from Bhutan which is 17%, is a substantial amount in terms of revenue generation for Bhutan. These projects would ensure that Bhutan would be a power giant in the region, well on its way to achieving economic self reliance. 


Bhutan has realized that the potential of hydropower as the key to achieving economic self reliance and for overall socio-economic development. In 2007, Hydropower accounting for 60% of the national revenue, it sustainability is of crucial importance. As of date Bhutan generates less than 5% of the hydropower potential, but is expected to see drastic changes with an increase of another 17% by the year 2020, thereby immense economic benefit. These can be used to finance social projects which will benefit the people of Bhutan.  

Bhutan unique development policy, ‘Gross National Happiness’ is the guiding principal that ensures harmony between the people and environment. With legislation requiring forest cover to be above 60% at all times, Bhutan’s environment provides ecological and environmental services of regional, national and global importance. This is because forest provides services such as water filtration, soil conservation and air purification, which are fundamentals in maintaining ecological stability and good health. In addition, the huge forest provides a good carbon sink, while at the same time due to the use of electricity, less fuel wood is used as a source of energy, thereby reducing carbon emission. 

Given that most of the hydropower projects are mainly run-of-the-river scheme, there is no impact or minimal impact to the environment. Also these planned activities have no negative impacts. In fact during the implementation of the projects, school, hospitals, roads, electricity including employment are opportunities of the local communities. 

While India long term plan of having 60,000 MW of hydropower energy by 2025, with 10,000 MW from Bhutan by 2020. The success of Bhutan’s hydropower lies in the fact that while India will benefit from Bhutan’s renewable hydroelectric energy to meet its power demand, Bhutan will benefit from the revenue earned from the export of electricity. 

Therefore with economic benefit to Bhutan, which helps in development of infrastructure for social benefits, with preserved environment, Bhutan is indeed on its ways to sustainable development with hydropower a sustainable renewable source of energy. 

The policies and program of the Government are very coherent with regard to development of Bhutan in a sustainable manner. In fact, while hydropower is the single most generator of revenue for the economy, tourism is the sixth largest generator for the economy. All these are related development activates support environment conservation, and social development which contribute to the socio-economic development of Bhutan in a sustainable manner.

Prepared by : Jigme T Tsering



1) Power Data Book –2002-2003, Department of Energy, Ministry of Trade & Industry,

Thimphu Bhutan

2) Revenue Data 2002-2003, Department of Revenue and Customs, Ministry of Finance,

Thimphu Bhutan

3) The 2003-2022 Power Master Plan Update (PSMP) Final Report- Main Volume, April

2004, Norconsult International, Norway.

4) Development of Hydropower in Bhutan –the way forward by Sonam Tshering,

Department of Energy, Thimphu Bhutan

5) Hydropower Potential of Bhutan and its Prospective Development by Bharat Tamang,

Department of Energy, Thimphu Bhutan.