IEEJ: April 2010

Energy Policy
Country ReportbyTashi DorjiandSatchi
Department of Energy, Ministry of Economic Affairs
Thimphu: Bhutan.

IEEJ: April 2010

Outline of the Presentation
 All about Bhutan – Physical, social & economicfeatures
 Institutional set-up for management of energy
resources.
 Status of development – Energy and hydropower Present Situation – Energy & Power andDevelopment partners.
 Policy Initiative
 Constraints and bottlenecks currently being faced
in formulating policies
 Challenges and Constraints
 Subjects that we would like to study

IEEJ: April 2010

IEEJ: April 2010

Physical & Socio-economic
features of the Kingdom ofBhutan
Location: Southern slope of Eastern
Himalayas , North-East of India and South ofTibet/China, 26o45’- 28o10’ N Latitude,
88o45’- 92o05’ East Longitude (land locked)
Area: 38,394 square kilometres
Altitude: Varying from 100 metres in the Southto 7550 metres in the North
Forest/vegetation coverage: 72.5 %, snow
capped mountain range in the North, Alpine
trees in the mid range, deciduous/sub-tropicalforest in the South.

IEEJ: April 2010

Physical & Socio-economic
features (cont’d) Sources of Revenue Income :Hydropower, tourism, cement, oranges,apples, agro-fruit products, finishedtimber products etc.
 Economy: GDP –Nu. 54.15 billion,
more than 70% people live onsubsistence farming, Food: Stable diet is rice, cheese &chillies, meat curry.

IEEJ: April 2010

Institutional Set-up of Energy
Resources Management
 Under Ministry of Economic Affairs
 Electricity Policy, Planning and Utility

functions (Generation, transmission &Distribution)
 Import of Fossil Fuels
 Under Ministry of Agriculture• Fire-wood, food and animal power

IEEJ: April 2010

Organogram (DoE) w.e.f.
1 July 2002
DEPARTMENT OF ENERGY

Planning & Coordination
Division

Renewable Energy
Division

Meteorology
SectionHydromet Services
Division

Hydrology
SectionChief Executive Officer
Bhutan Electricity
Authority

Flood warning
SectionIEEJ: April 2010

Vision and Mission of the DOE
 The DOE has the vision “to be a dynamic,

high performing government agency, that
effectively
promoteshydropower
development to achieve economic selfreliance and that fosters the sustainable useof other modern forms of energy in thekingdom”.
 The mission of the DOE is stated as to“Govern and facilitate integrated developmentof a sustainable and robust energy sector thatdrives the national economy and meets thedemand for quality modern energy services ofthe Bhutanese society”.

IEEJ: April 2010

Energy Scenario (2005)
 Primary energy – Bio-mass-Fuel wood

(724,597 tonnes in 2005) for lighting,cooking and heating
 Import of Kerosene (12,545 kl), Diesel(51,440 kl), Petrol (13,775 kl), LPG(44,72 MT) – increasing demand !

IEEJ: April 2010

Energy Supply Mix
Liquefied petroleumgas (1.3%)
Petrol(2.8%)

Coal(6.8%)

Kerosene(2.8%)
Others
(1.3%)

Diesel(11.5%)

Electricity(15.9%)

Fuelwood(57.7%)IEEJ: April 2010

Sector -wise Energy Consumption
Industrial(25.0%)

Transport(14.3%)

Agriculture(1.2%)

Auxiliary
consumption(0.7%)

Domestic/Residential(48.7%)

Commercial andInstitutional(10.2%)IEEJ: April 2010

Status of Hydro Power Development Techno-economicallyfeasible >10 MW, 76 sites=
23,760 MW (=100,000) GWh, 6 reservoir and 70 RoR
 Developed so far – 1488.17 MW (7416 GWh/Annum,5% of potential) Small Hydro: 23 nos of 8.6 MW installed capacity
Mini/Micro Hydels ( 8 kW-2200 kW), First plantcommissioned in 1967.
 Solar PV installed – 0.045 MWp
 Diesel Power installed capacity-17.39 MW Total installed capacity – 1505.60 MW

IEEJ: April 2010

Present Power Supply & DemandSituation
 Generation capacity = 1488.17 MW (6562 GWhin 2007-08)
 Total Export =5429 MU in 2007-08
 Total Import = 7.25 MU
 Power system demand =194 MW
 Total electricity consumers ~ 81181
 Per capita energy consumption – 1773.4 kWh
 Net revenue from electricity contributed 50% ofcountry’s revenue accounted for 22% of GDP

IEEJ: April 2010

Major Development Partners
Project

Installedcapacity-MW

Bilateral
AssistanceYear ofcommission

Financing Mode

Chukha336

GOI

1986-88

60% grant, 40% loan
@ 5% interest rate

Kurichhu

60

GOI

2001-02

60% grant, 40% loan
@ 10.75% interestrate

Basochhu Upper
Stage

24

Austrian Govt.

2001

43% grant, 57%
interest free loan

Basochhu Lower
Stage

40Austrian Govt.

2004

2.8% soft loan

Tala1020

GOI

2006-0760% grant, 40% loan
@ 9% interest rate

Punatsangchhu -I

1200

GOI

2015 (underconstruction)

40% grant, 60% loan
@ 10% interest rate

IEEJ: April 2010

Development of 10,000 MW by 2020
Project

Installedcapacity-MW

Estimated
Project Cost(Mill Nu.)

Implementation Model

Expected year ofcommissioning

Punatsangchhu-1

1200

36,348IG2015 (Under construction)

Mangdechu

720

38,105IG2017 (Agreement signed)

Punatsangchhu-2

1000

42,301

IG2017 (Agreement signed)

Sankosh Reservoir

4060

42,301

IG

2020

Kuri-Gongri

1800

79,200IG

2020

Chamkharchhu-I

670

37,520

JV

2018

Amochhu Reservoir 620

39,680IG

2017

Kholongchu

486

25,272JV2018Wangchhu
Reservoir

900

50,400

JV2020

Bunakha Reservoir

180

12,240

JV

2020

Total

11,636500,263

IEEJ: April 2010

Policy Initiative
 Bhutan Sustainable Hydropower DevelopmentPolicy 2008
 Economic Development Policy (Draft) Captive Power Development Policy (Underformulation)
 Renewable Energy Policy (under formulation)IEEJ: April 2010

Bhutan Sustainable Hydropower
Development Policy 2008
The key objectives of the policy are to: Mobilize funds and attract investments for acceleratedhydropower development
 Enhance the revenue contribution to the Royal Government
 Contribute to socio-economic development
 Ensure domestic electricity supply security and reliability
 Ensure that the hydropower development is in accordancewith the sustainable development policy of the Royal
Government, keeping in view the fragile mountain ecosystemof the country Contribute towards development of clean energy to mitigate
problems related to global warming and climate change.

IEEJ: April 2010

Economic Development Policy(Draft)
The Economic Development Policy shall be
the apex economic development policy of thecountry and shall be the guiding document for
all ministries and agencies to stimulate
economic development. The following aresome of the important excerpts of the
Economic Development Policy related toenergy sector:
 The Royal Government shall strive to provide

electricity to all households by the year 2013.

IEEJ: April 2010

Economic Development Policy(Draft) – con’td
 Essential

public institutions and services shallreceive highest priority for supply of electricity.
 The development of hydropower shall be accelerated
by promoting construction of projects and interlinking of transmission grids to ensure energy
security and reliability. The Royal Government shallstrive to achieve a minimum power generation of10,000 MW by 2020.
 While hydropower development shall be one of themain thrust of the government; an integrated
approach shall be pursued to meet different energy
needs in the most efficient manner

IEEJ: April 2010

Captive Power GenerationPolicy (under formulation)
General objectives ofGeneration Policy are:
 To

CaptivePower

reduce the gap between supply anddemand for electricity, and to make best useof energy resources particularly in the lean
generation/peak consumption period.
 To ensure energy security for industries andencourage sustainable industrial development

IEEJ: April 2010

Renewable Energy Policy(under formulation)
The objectives of the policy are:
 Initiate exploration and development of REresources.
 Institutionalize development of national andlocal capabilities for enhanced use of REsystems.
 Promoting efficient and cost‐effective RE based
commercial application by providing fiscal andnon‐fiscal incentives.

IEEJ: April 2010

Renewable Energy Policy(under formulation) – cont’d Mobilize funds and attract investments,

especially private sector, for RE development.
 Contribute to socio‐economic development
 Enhance energy security.
 Establish the necessary infrastructure andinstitutional mechanism to carry out themandates specified under various Acts andpolicies having an impact on RE.

IEEJ: April 2010

Difficulties and bottlenecks currently
being faced in formulating policies
While, the Renewable Energy Policy is under formulation, thefollowing are some of the difficulties being faced by theDepartment in formulating the policy:
 Due to high initial cost
 Ineffective implementation framework at the implementationlevel Lack of resource assessment
 Lack of standardized technology
 Lack of capacity in long term planning Limited private sector involvement

IEEJ: April 2010

Challenges and constraints
 DOE is currently understaffed Capacity of local contractors
 Limitations of National Environment

Commission to handle EIA’s andenvironmental clearances Renewable Energy is capital intensive

IEEJ: April 2010

Subjects/topics that we would
like to study areEnergy policies of Japan and the world
especially in the field of renewable energy
 Energy demand forecasting tool
 Energy scenario of the world Various technologies for energy generation

IEEJ: April 2010

THANKS FOR YOURKIND
ATTENTION

Contact:report@tky.ieej.or.jp