The renewable energy framework loan was signed on the margins of the International Monetary Fund and the World Bank spring meetings on April 17 between the Finance Secretary, Leki Wangmo and Acting EIB Global Managing Director, Markus Berndt, in the presence of the President of the EIB, Nadia Calviño in Washington D.C., the USA.
According to the press release from the finance ministry, Bhutan, being one of the only three net-carbon negative countries in the world, the project will support construction of small to mid-size run-of-river hydropower plants and solar photovoltaic generations to diversify the power generation mix to meet its ambitious Nationally Determined Contribution target of permanent carbon neutrality.
The EIB President, Nadia Calviño, said, “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. That’s why I am delighted that we’ve been able to agree to this 150 Euro million investment with our Bhutanese partners, under the EU’s Global Gateway initiative. We look forward to working as a key partner for climate action and sustainable economic development in Bhutan.”
At the same time, the Finance Minister, Lekey Dorji said, “As Bhutan strives to maintain its carbon-negative status amidst rising global challenges, this partnership not only strengthens Bhutan’s renewable energy sector but also contributes to the broader regional and global effort in combating climate change. We welcome the EIB as our partner in our pursuit of the sustainable development goals and look forward to more collaboration in the future as we take forward our agenda of building a more sustainable planet.”
Bhutan is highly vulnerable to the impact of climate change and is committed to increasing access to energy without increasing carbon emissions.
With the 150 million Euro financing, it will support installation of an estimated 310 megawatts (MW) of hydropower and solar power generating capacity. The initiative is expected to generate around 670 gigawatt hours per year.
The new projects, to be implemented by Druk Green Power Corporation, will contribute to climate action, helping Bhutan to strengthen its energy security, and increase use of renewable energy.
Additionally, the expanded solar photovoltaic capacity will also address hydropower challenges during the dry season, reducing the potential need for energy imports when river flows and hydropower generation capacity are reduced.
The project will also allow clean energy to be traded across borders, improve access to green power, supplying thousands of households with reliable and affordable energy, and allowing Bhutan to profit further from its renewable energy resources.
