In a major boost to Bhutan’s renewable energy ambitions, the Asian Development Bank (ADB) has approved a US$160 million loan to support the development of large-scale solar power projects aimed at strengthening the country’s energy security, reducing seasonal electricity imports and attracting private investment into the energy sector for the first time.
The financing will support the Solar Farm Expansion Project, which will add at least 310 megawatts (MW) of new solar generation capacity through three utility-scale solar farms in Bumthang and Lhuentse. The project represents one of Bhutan’s largest investments in renewable energy diversification and marks a significant milestone in the country’s transition towards a more resilient and balanced energy mix.
Under the project, Druk Green Power Corporation (DGPC) will develop the 120 MW Wobthang Solar Farm and the 40 MW Pedseling Solar Farm in Bumthang. The largest component, the 150 MW Dramthang Solar Farm in Lhuentse, will be implemented through a joint venture between DGPC and Tata Power Renewable Energy Limited, making it Bhutan’s first private-majority public-private partnership (PPP) in the energy sector.
To integrate the new generation capacity into the national electricity system, Bhutan Power Corporation (BPC) will construct 46 kilometres of transmission lines, enabling efficient evacuation of power from the solar farms to the national grid.
ADB Country Director for Bhutan Sonomi Tanaka described the project as a transformative investment for the country’s energy future.
“This project is a turning point for Bhutan’s energy security. By scaling up solar energy alongside hydropower, Bhutan can reduce costly electricity imports, attract private investment through its first private-majority PPP in the energy sector, and create green jobs for women and youth, building a more resilient and inclusive economy for the long term,” she said.
Addressing Bhutan’s Seasonal Energy Challenge
Bhutan currently relies almost entirely on hydropower for electricity generation. While abundant river flows during the summer enable the country to export surplus electricity, generation declines sharply during the winter months when water levels fall.
At the same time, domestic electricity demand has grown rapidly due to urbanisation, industrial expansion and increasing electrification.
According to ADB, peak winter electricity demand has nearly tripled, increasing from 487 MW in 2021 to 1,477 MW in 2025. Without additional generation capacity, Bhutan’s winter electricity deficit is projected to exceed 1,000 MW by 2030, resulting in greater dependence on imported electricity.
The solar farms are expected to complement hydropower by generating electricity during daylight hours in the dry season, helping reduce imports while improving the reliability and resilience of Bhutan’s electricity supply.
The investment also supports the Royal Government’s long-term target of developing 5,000 MW of solar power by 2040 as part of efforts to diversify the country’s renewable energy portfolio and strengthen energy security.
Attracting Private Investment
Beyond expanding renewable energy generation, the project is expected to open a new chapter in Bhutan’s energy sector by demonstrating the viability of private investment through a public-private partnership model.
ADB said the project is expected to mobilise approximately US$68.7 million in additional private equity and commercial financing, complementing the bank’s own investment and reducing the financing burden on the government.
The ADB loan will finance most project expenditures, including DGPC’s equity contribution to the joint venture developing the Dramthang Solar Farm.
In addition, a US$500,000 grant from the Innovative Finance Facility for Climate in Asia and the Pacific (IF-CAP), funded by the Government of Japan, will support renewable energy skills development and scholarship programmes.
The initiative aims to train more than 250 people, with at least 70 percent of beneficiaries expected to be women, helping build a skilled workforce for Bhutan’s emerging solar energy industry while creating green employment opportunities for youth and local communities.
ADB is also providing a separate US$1 million technical assistance grant to strengthen institutional capacity for solar energy development. The assistance will support the preparation of policy guidelines, regulatory frameworks and investment mechanisms designed to attract further private participation in the renewable energy sector.
Building on ADB’s Long-Term Partnership
The latest financing builds on ADB’s long-standing partnership with Bhutan in supporting infrastructure, energy, urban development and climate resilience.
Over the past several years, ADB has financed major hydropower transmission infrastructure, road connectivity, water supply systems and urban development projects across the country. More recently, the bank approved a US$13 million Inclusive and Resilient Urban Development Project to strengthen municipal infrastructure and affordable housing in Thimphu and Phuentsholing, including investments in drainage, roads, flood protection, water supply and rental housing for low-income households.
ADB has also supported climate adaptation initiatives, financial sector reforms, skills development, transport infrastructure and public sector governance, positioning itself as one of Bhutan’s largest multilateral development partners.
Officials say the Solar Farm Expansion Project aligns closely with Bhutan’s 13th Five-Year Plan, which identifies renewable energy diversification, private sector participation, green industrialization and climate resilience as key drivers of sustainable economic growth.
With the addition of more than 310 MW of solar capacity, Bhutan moves a significant step closer to building a diversified, climate-resilient and future-ready energy sector capable of supporting long-term economic transformation.
Tashi Namgyal, Thimphu
