Bhutan is entering a new era of renewable energy expansion, with an ambitious push to harness its rivers and sunlight to power the country’s next phase of economic transformation. Under the 13th Five-Year Plan, the nation is accelerating investments in hydropower and solar energy, not only to strengthen energy security and overcome seasonal power shortages, but also to build a more diversified and resilient energy system capable of supporting industries, attracting investment and sustaining long-term growth.
According to the Ministry of Energy and Natural Resources (MoENR), renewable energy development has gained momentum since the start of the 13th Plan in July 2024, supported by the Renewable Energy Development Roadmap 2024 and the National Energy Policy 2025.
As part of its long-term energy strategy, Bhutan has identified 15 new hydropower projects expected to add around 15,000MW of capacity by 2040. Alongside this, the country plans to develop 5,000MW of solar capacity, taking the targeted additional renewable energy capacity to 20,000MW.
The long-term ambition is to achieve a cumulative generation capacity of 25 gigawatts by 2040.
Bhutan’s current hydropower capacity stands at around 3,576MW, following the commissioning of the 1,020MW Punatsangchhu-II Hydropower Project and three small hydropower projects developed by Druk Green Power Corporation (DGPC).
The three small hydropower projects include the 18MW Suchhu, 32MW Yungichhu and 54MW Burgangchhu projects.
Construction is also underway on three major hydropower projects—the 600MW Khorlochhu, 1,125MW Dorjilung and 570MW Wangchhu projects—which together will add 2,295MW of installed capacity.
Meanwhile, construction of the 1,200MW Punatsangchhu-I Hydropower Project has resumed, with dam works progressing. DGPC is also initiating around 400MW of small hydropower projects under Phase II and III through its subsidiary, DHyE.
The Government has also signed memorandums of understanding for 16 hydropower projects with a combined capacity of 8,622MW and secured a budget of Nu 201 billion to support energy development.
Preparatory work is underway for several other projects, including the 404MW Nyera Amari-I and II integrated project, 180MW Bunakha, 365MW Khomachhu, 101MW Dangchhu, 770MW Chamkharchhu-I and Sankosh projects.
MoENR said several major hydropower projects will be developed through strategic partnerships, particularly with investors from India. Potential partners include companies such as Tata Power, Adani, GMR, CRPL and JSW Neo Energy.
Alongside hydropower, Bhutan is significantly expanding its solar energy programme. The original 13th Plan target of 500MW of utility-scale solar capacity has now been revised upward to 1,000MW.
A major milestone has been the 22.38MW Sephu Solar Project in Wangduephodrang, with its two phases commissioned in July and November 2025 and formally handed over to DGPC in January 2026.
Construction has also begun on the 120MW Jamjee Solar Project, while additional projects identified for development include the 120MW Wobthang, 80MW Dongmanma, 150MW Gogona and 150MW Apa Ama Pang solar projects.
The Department of Energy has also prepared the National Solar Energy Roadmap 2025 with support from the International Solar Alliance, identifying around 310 potential solar sites across the country.
These initiatives are aimed at complementing hydropower generation, particularly during winter months when reduced river flows affect electricity production.
Bhutan currently has around 31MW of installed solar capacity, including 22.38MW developed by the Department of Energy, 7.83MW of rooftop photovoltaic capacity added by DGPC and the remaining capacity developed by Norion Renewable Energy Ltd.
The Government is also opening the energy sector to greater private and foreign investment. MoENR said the approval of the National Energy Policy 2025 has enabled private sector participation in energy development for the first time.
Under the strategic partnership model for hydropower, DGPC will retain a 51 percent majority share, while investors will contribute financing, markets and technical advantages.
For solar projects, investors can participate through full ownership models, foreign direct investment, independent power producer arrangements or partnerships with DGPC and local developers.
Since July 2024, more than 50 private developers, including foreign investors, have expressed interest in developing solar projects with a combined potential capacity of around 2,500MW.
The ministry said investor interests from India, Sri Lanka, Thailand and Singapore have been cleared to undertake detailed project reports, with actual investment levels to be determined after completion of feasibility studies.
With major hydropower projects advancing, solar capacity expanding and private investment entering the sector, Bhutan is positioning renewable energy as a key driver of economic transformation under the 13th Five-Year Plan.
While hydropower remains the foundation of Bhutan’s electricity sector, the growing emphasis on solar energy is expected to provide greater energy security and help bridge the seasonal supply gap.
Sherab Dorji, Thimphu
