Bhutan Gets Boost for Renewable Energy with €150 Million EIB Loan

Funding to Support New Hydropower Plants and Solar Facilities

The European Investment Bank (EIB), the world’s largest multilateral lender and a leader in financing clean energy projects, announced its first-ever investment in Bhutan today. The €150 million loan will support the construction of new hydropower plants and solar photovoltaic facilities, bolstering the country’s commitment to renewable energy and its fight against climate change.

Bhutan, a nation known for its environmental leadership, is one of only three countries in the world with net negative carbon emissions. This achievement is due in large part to its existing hydropower capacity and vast forests, which cover over 70% of the land. However, the country remains vulnerable to the impacts of climate change, particularly during dry seasons when hydropower generation dips.

The new EIB financing aims to address this challenge by providing Bhutan with the resources to diversify its energy mix. The loan will fund the construction of small and mid-sized run-of-river hydropower plants alongside solar photovoltaic generation facilities. This dual approach will ensure a more reliable and consistent supply of clean energy throughout the year.

“Bringing green, reliable and affordable energy to communities around the world, especially in more remote regions, has huge benefits not just in environmental terms, but also by improving access to health, education and economic activity,” said EIB President Nadia Calviño. “We’re looking forward to working as a key partner for climate action and sustainable economic development in Bhutan.”

The project is expected to generate an estimated 310 MW of clean energy and 670 GWh in its first year of operation. This increase in solar power generation is particularly significant, as it will lessen Bhutan’s dependence on energy imports during dry seasons. The additional hydropower plants will further bolster electricity generation capacity throughout the year, potentially allowing Bhutan to export surplus power during the wet season.

Lyonpo Lekey Dorji, Bhutan’s Finance Minister, hailed the partnership with the EIB, stating, “This partnership not only strengthens Bhutan’s renewable energy sector, but also contributes to the broader regional and global effort in combating climate change.”

The EIB loan comes under the umbrella of the EU’s Global Gateway initiative, which supports infrastructure projects that enhance global connectivity in various sectors, including climate and energy. This investment marks a significant step forward in Bhutan’s pursuit of sustainable development and its ambitious goal of maintaining carbon neutrality.