Export sale of hydropower decreases by a staggering 72%
Bhutan, known for its abundant hydropower resources, has experienced a substantial decline in revenue from its major hydropower projects in the first five months of 2023 compared to the same period last year. According to reports, the revenue from these projects plummeted by 33%, with revenue generated through export in these months decreasing to Nu 937 mn, compared to Nu 3,497.62 mn last year.
Between January and May 2023, the six major hydropower projects in Bhutan collectively generated a revenue of Nu 3.2 bn from both domestic sales and exports. This is a stark contrast to Nu 4.8 bn, which was generated during the same period in 2022.
Among the contributing factors, export sales witnessed a staggering decrease of 72%. The export of power from the major hydropower plants generated only Nu 937 mn in the first five months of 2023, compared to Nu 3,497.62 mn in the same period last year.
The overall production of electricity also experienced a decline, with a drop of over 100 million units in the first five months of 2023 compared to the previous year. This decrease occurred despite the temporary shutdown of the Tala Hydropower Plant from January to mid-March in 2022 for maintenance.
One of the prominent issues contributing to this decline is Bhutan’s increasing dependency on domestic power consumption during the winter months. In previous years, the country was able to export more power than it consumed domestically. However, in 2023, the trend has shifted, with a drastic increase in domestic demand. This shift has led to more power being used for domestic sales. As the domestic tariff is lower than the export tariff, it has impacted the overall revenue.
In an earlier interview, Dasho Chhewang Rinzin, the Managing Director of Druk Green Power Corporation (DGPC), highlighted the impact of domestic consumption on overall revenues. “The increase in domestic demand has affected our revenue since the domestic tariff generation is lower than the export tariff,” he stated.
In the first five months of 2023, domestic sales of electricity increased significantly, generating Nu 2.2 bn, which is an increase of Nu 953 mn compared to the same period in 2022.
Meanwhile, domestic tariffs were revised and reduced beginning September 2022. The domestic tariffs for Chukha Hydropower, Kurichhu Hydropower, Tala Hydropower, and Basochhu Hydropower were revised from Nu 1.42 to Nu 1.34 per unit, while the tariff for Mangdechhu Hydropower was reduced from Nu 3.77 to Nu 3.64 per unit.
Further, hydropower revenue in May 2023 also witnessed a decline compared to the revenue generated in the same month of the previous year. The country’s revenue in May 2023 amounted to Nu 1.4 bn, while in May 2022, it reached Nu 1.7 bn , reflecting a decrease of almost Nu 200 mn.
Moreover, Bhutan’s struggle to meet its power requirements during the winter months has resulted in the country importing electricity from the Indian Energy Exchange. This year, Bhutan had to import power from January to April, amounting to Nu 1.75 bn. In contrast, in 2022, the country imported power only until March, amounting to Nu 800 mn.
Despite the challenges faced by the hydropower sector in 2023, Dasho Chhewang Rinzin had mentioned that the long-term Power Purchase Agreement with India allows Bhutan to export any surplus power after meeting domestic consumption, providing opportunities for the industry to bounce back.
Additionally, Dasho had stated that industry stakeholders and policymakers are closely monitoring the situation and seeking solutions to enhance hydropower revenue and bolster the country’s sustainable energy goals.
Tshering Pelden from Thimphu
