Energy is essential for promoting living standards and the level of material progress of a country is often measured in terms of per capita energy consumption. Hydro-power energy production is Bhutan’s outstanding and singular comparative advantage and its sustainable exploitation has had an immeasurable impact in boosting the country’s economic situation. Resources from hydropower exports have enabled the country to develop greater economic self-reliance and ability to meet increasingly larger shares of the country’s development expenditures. In this sense it has steadfastly underpinned the rapid growth of the economy and further contributed valuable resources for social and other investments.
Bhutan has an estimated 23,760 MW with a mean annual energy production capability close to 100,000 GWh. At present, only 5% of this vast potential has been tapped with the completion of the 1020 MW Tala Hydro-electric project. The completion of the latter project in 2007 has increased the share of electricity revenue from around 32% of the total revenue to 45%. Electricity sector’s share of the GDP also rose to about 20% in that period, rising to become the single largest contributor to the economy. The development of several more mega hydro-power projects over the current and future plan periods is likely to see an even greater prominence of the electricity sector within the national economy.
HYDRO-POWER DEVELOPMENT IN BHUTAN
Water is a natural resource that is in great abundance in Bhutan and the mountainous topography and climatic characteristics have endowed the country with a vast hydropower potential of around 30,000 MW. Of this 23,760 MW is technically feasible which translates into a mean annual energy production capability of around 100,000 GWh. This tremendous comparative advantage for the country has been tapped effectively through a mutually beneficial and highly successful partnership with the Government of India resulting in a win-win situation for both countries. India has generously provided valuable financial and technical resources to undertake the implementation of these complex and mega projects in addition to assuring purchases of any surplus power generated. The availability of reliable electricity also serves India’s growing needs for cheap power to continue growing rapidly and
ensure its energy security. For Bhutan, the effective and sustainable utilization of its water resources has proved to be the key strategic success factor in furthering its sustainable development goals. The harnessing of the country’s hydropower potential closely parallels the rapid pace of socio-economic development and progress in Bhutan and has largely underpinned the strong economic growth and generated valuable resources to pay for a significant part of its social and other development investments.
At the start of the new millennium in 2000, hydropower generation capacity in Bhutan stood at around 353.65 MW. By 2007 it has quadrupled to 1,489 MW. This capacity is further expected to be increased to 1,602 MW by the end of the Tenth Plan and possibly reach 10,000 MW by 2020. On average, this represents adding capacity of around the size of a Chukha annually, a substantial accomplishment considering the small size and limited absorptive capacity of the country’s economy. The expansion of hydropower production capacity has had an enormous impact as by the end of the Ninth Plan, the energy sector contributed to around a quarter of GDP and 60% of national revenues. This also excludes the major contribution that hydropower infrastructure development makes to the construction sector, which accounts for another quarter of GDP. With a further doubling of capacity envisaged by the end of the 11th Plan in 2017 or by the year 2020, the energy sector will probably contribute close to half of GDP and account for around three-fourths of the total national revenues.