𝐍𝐚𝐭𝐢𝐨𝐧’𝐬 𝐀𝐦𝐛𝐢𝐭𝐢𝐨𝐧 𝐃𝐫𝐢𝐯𝐞𝐬 𝐒𝐞𝐯𝐞𝐧-𝐅𝐨𝐥𝐝 𝐄𝐱𝐩𝐚𝐧𝐬𝐢𝐨𝐧 𝐀𝐧𝐝 𝐚 𝐑𝐚𝐜𝐞 𝐀𝐠𝐚𝐢𝐧𝐬𝐭 𝐓𝐢𝐦𝐞

…𝒕𝒉𝒆 𝒏𝒂𝒕𝒊𝒐𝒏 𝒑𝒖𝒓𝒔𝒖𝒆𝒔 𝒓𝒂𝒑𝒊𝒅 𝒆𝒏𝒆𝒓𝒈𝒚 𝒈𝒓𝒐𝒘𝒕𝒉 𝒕𝒐 𝒂𝒄𝒉𝒊𝒆𝒗𝒆 𝒖𝒏𝒑𝒓𝒆𝒄𝒆𝒅𝒆𝒏𝒕𝒆𝒅 𝒈𝒓𝒐𝒘𝒕𝒉 𝒂𝒏𝒅 𝒔𝒆𝒄𝒖𝒓𝒆 𝒂 𝒔𝒖𝒔𝒕𝒂𝒊𝒏𝒂𝒃𝒍𝒆 𝒇𝒖𝒕𝒖𝒓𝒆

By Yeshi Dolma

The nation is embarking on a bold energy transformation that could reshape its economic and environmental future. The country aims to expand its installed generation capacity from 3,500 MW today to 25,000 MW by 2040- a target that represents a radical acceleration compared with the six decades it took to build the first 3,500 MW. This ambitious expansion is not just about power generation; it is central to the nation’s strategy for industrial growth, investment, and sustainable development.

Officials describe the effort as a transformative journey, while some caution that it will test the country’s institutional readiness and financial capacity. At the core of the plan is recognition that energy is a strategic national resource, crucial for enabling economic transformation and advancing Bhutan’s climate commitments.

The recent national addresses of the Monarch have set the tone for the sector. Hydropower must be treated as a strategic national resource, benefiting all citizens. Energy is expected to serve as a pillar for accelerated economic growth and the success of the broader transformation agenda. Responsibility for this future, however, extends beyond institutions- it lies with every actor in the system, from government officials to private-sector innovators.

Taken together, these mandates form the backbone of the current energy roadmap. They redefine the role of the state, recast hydropower’s purpose, and set clear expectations for institutional reform.
The urgency behind the 25,000 MW target is driven by a widening gap between demand and supply. For decades, domestic demand and generation capacity ran almost parallel. That balance no longer holds. The country’s peak demand has risen to the point where, since 2022, it has been forced to import power during winter months. These imports last four to five months and come predominantly from fossil fuel–based sources.
This seasonal reliance carries three consequences.
First is availability. Imports depend heavily on India’s domestic energy position and political considerations. As India’s own demand rises, assured supply to the country becomes less certain.

Second is price. Lean-season energy is more expensive, narrowing fiscal space and widening the balance-of-payments gap.
Third is environmental cost. Nearly 70 percent of India’s energy mix is fossil fuel–based. For the world’s first carbon-negative country, the increasing share of imported fossil fuel power is a direct threat to its climate commitments.
Officials worry that, without rapid capacity expansion, this pattern could deepen before it improves.
The number is not arbitrary. Current assessments place the nation’s technically feasible hydropower potential at around 33,000 MW. Only about 10–11 percent of this has been developed.

But the real driver is projected domestic demand. Under a “business-as-usual” forecast, peak demand would reach 2,500 MW by 2034- still resulting in deficits. Under the accelerated growth scenario envisioned under the transformation agenda, especially with digital industries expanding, peak demand is estimated at around 5,000 MW.
Because winter generation from hydropower drops to about 20 percent of installed capacity, the country would need around 25,000 MW of total capacity to ensure 5,000 MW of firm winter power. This is the rationale behind the headline target.

The most complex barrier is financing. The cost of building 20,000 MW of new hydropower- beyond projects already underway- is estimated at USD 26-27 billion. That figure is approximately nine times the country’s current GDP. Senior officials call it a Herculean task. They also acknowledge that domestic financing is not possible at the required scale. The sector must seek external funding, diversify project partnerships, and build new models for risk-sharing.
A financing strategy has been prepared through Druk Green Power Corporation (DGPC), but its details have not yet been made public. The Director General has indicated that the plan includes the use of concession agreements, new forms of power purchase agreements, and strategic public–private partnership frameworks. These are intended to ensure that national ownership is protected while still attracting the capital needed to push construction at unprecedented speeds.

Whether international investors will accept the terms remains an open question.
The Renewable Energy Development Roadmap outlines how the 25,000 MW target will be pursued. For hydropower alone, 16 new projects have been identified. These include both large and small schemes selected from the Power System Master Plan of 2019, which ranked projects across the country with support from JICA.
Seventy-five percent of the new generation capacity is expected to come from hydropower. The remainder- around 5,000 MW- will come from solar. This hybrid approach is designed to address the sector’s chronic seasonality: solar peaks in winter, exactly when hydropower output drops.

The first wave of projects already has detailed project reports and reconnaissance studies completed. Construction is expected to start in phases, but the pace required remains unprecedented.
To enable this scale of development, the sector is undergoing major policy reforms. A new Electricity Act is being drafted to replace the 25-year-old legal framework. Officials describe it as “future-ready,” particularly in terms of regulation, private-sector participation, and energy trading.

Alongside this, a National Energy Information System is being developed. Until now, energy data- covering electricity, fossil fuels, and biomass- has been scattered across agencies. The new system aims to consolidate this data to support planning, regulation, and investment decisions.
Institutional coordination is also being strengthened. A more integrated system between utilities, regulators, and the system operator is expected to reduce inefficiencies and prepare the sector for regional market integration.
For the first time, private-sector engagement is being actively encouraged. The Sochu Hydropower Project, a fully Bhutanese-designed and built 18 MW plant, is used as an example of how local expertise can now handle full project cycles.

What often gets overlooked in high-level plans is the human dimension. The energy transition is expected to create between 10,000 and 15,000 jobs over the next decade. The sector already employs more than 5,000.
But the more transformative element may be the shift toward prosumer models. By installing rooftop solar, households will be able not only to consume electricity but to produce and supply excess energy back into the grid. Officials see this as a way to democratize the energy economy, encourage efficiency, and broaden public participation in the sector.
The government is also exploring solar thermal systems, geothermal potential, and standards for more efficient appliances. A small-scale green hydrogen pilot- around 1 MW is planned, using hydropower to produce clean fuel for mobility. Future technologies, including small modular reactors and advanced nuclear options, are being monitored, though no commitments have been made.

Modernizing the grid is another strategic pillar. Utilities are moving toward digital integration, predictive forecasting, and real-time energy management. With cross-border trading now scheduled in 15-minute blocks, precision is critical; deviations attract penalties.
Recent digital interventions include automation at the main generating company, integration of information and operational technologies at the power distributor, and digital oversight tools for the regulator and system operator. These upgrades are considered essential for participating in future regional energy markets.
The energy transition is not only a sectoral issue; it is foundational to the country’s broader economic strategy. Without adequate power, the digital economy cannot expand. Manufacturing cannot scale. Investments cannot materialize. And the country’s carbon-negative identity could erode as fossil-fuel imports rise.

The Director General closed his address by noting, “To power the nation’s future, the sector must evolve with integrity, innovation, and timely reform. Achieving 25,000 MW will require urgency, coordination, and capital on a scale the country has never attempted. But the alternative- falling behind its own development ambitions- may cost even more.”
In the coming years, the real story will lie in whether institutions can move as quickly as the national vision demands. The stakes reach far beyond electricity- they reach into the heart of the country’s economic and environmental future.