In a decisive effort to accelerate renewable energy adoption, the Asian Development Bank (ADB) has finalized a USD 30 million loan agreement with Bhutan’s Royal Government. The funding will underpin the Distributed Solar for Public Infrastructure Project, a major initiative aimed at enhancing the nation’s energy sustainability.
The ambitious project, set to launch in October, will span five years and focus on installing solar panels across the rooftops of various public edifices. Government offices, hospitals, schools, marketplaces, and parking structures are among the targeted sites, collectively expected to generate up to 35 megawatts of clean energy.
The loan agreement was formalized yesterday during a ceremony attended by ADB President Masatsugu Asakawa. President Asakawa is currently on a three-day official visit to Bhutan, dedicated to strengthening the partnership between ADB and the Royal Government of Bhutan (RGoB).
Jongmi Son, an Energy Specialist with ADB, highlighted the critical role of solar power in Bhutan’s climate adaptation strategies. “Energy security has become a growing concern due to rising electricity demand and insufficient power supply, especially during the winter months,” she explained. “Harnessing Bhutan’s high solar radiation can significantly reduce reliance on hydropower, particularly as solar generation peaks during the dry winter season when river flows are lower. This complementary approach will enhance grid stability and ensure year-round energy reliability.”
Traditionally, Bhutan has depended heavily on hydropower to meet its energy needs. However, this reliance has led to increased electricity imports during the winter and lean seasons. From December 2023 to May 2024, Bhutan imported electricity worth Nu 6.07 billion, a substantial rise from Nu 1.75 billion in the same period the previous year. Concurrently, hydroelectricity exports have declined sharply, dropping from Nu 24.2 billion in 2021 to Nu 16.67 billion last year.
In response, the Bhutanese government has set ambitious renewable energy targets, aiming to achieve 500 megawatts of solar energy capacity by 2025 and expanding to 1,000 megawatts by 2030. According to the Renewable Energy Management Master Plan 2016, the country possesses the potential to generate up to 12 gigawatts of solar power and 760 megawatts of wind energy.
Jongmi Son emphasized the advantages of distributed solar photovoltaic systems, noting their rapid deployment capabilities compared to the more complex and time-consuming hydropower projects. “Distributed solar offers a swift solution to meet the escalating energy demands,” she said. “Moreover, the solar sector presents significant opportunities for job creation across various skill levels, particularly given the labor-intensive nature of distributed solar installations.”
In addition to the loan, the project includes a USD one million technical assistance grant from ADB’s Technical Assistance Special Fund and Clean Energy Fund, part of the Clean Energy Financing Partnership Facility. This grant will facilitate the development of guidelines for expanding rooftop solar investments, promote the adoption of new solar technologies through pilot projects, enhance the skills of the local workforce—especially among young people entering the solar energy sector—and strengthen the institutional capacity of Druk Green Power Corporation Limited in solar energy development.
“The technical assistance component is crucial for laying the groundwork for sustainable solar energy growth in Bhutan,” stated an ADB spokesperson. “It will not only drive investment and technological innovation but also empower the local workforce and institutional frameworks necessary for long-term success.”
As Bhutan continues to navigate its energy landscape, the collaboration with ADB marks a significant step towards a more resilient and diversified energy future, harnessing the nation’s abundant solar resources to complement its hydropower capabilities.
