India and Bhutan strengthen ties with Tata Power’s 5,000 MW clean energy deal

In a historic development for South Asia’s energy landscape, Tata Power, one of India’s leading integrated power companies, has signed a strategic agreement with Bhutan’s Druk Green Power Corporation (DGPC) to develop an impressive 5,000 MW of clean energy capacity. The partnership, formalised through a Memorandum of Understanding (MoU) in Thimphu, Bhutan, signifies a crucial step toward enhancing regional energy security and advancing the clean energy transition.

The project, hailed as the largest energy collaboration between the two nations, will encompass 2,000 MW of hydropower, 2,500 MW of pumped hydro storage, and 500 MW of solar energy. The clean energy generated will serve both Bhutan and India, bolstering India’s ambitious target of achieving 500 GW of clean energy by 2030. The collaboration also aligns with Bhutan’s long-term vision to elevate its energy generation capacity to 25,000 MW by 2040.

Strengthening energy ties

With the Royal Government of Bhutan and the Government of India lending their support, the partnership underscores over 15 years of collaboration between Tata Power and DGPC. In addition to the current initiative, Tata Power had earlier acquired a 40% stake in Bhutan’s Khorlochhu Hydroelectric Project. This joint venture further consolidates Tata Power’s role as a regional leader in renewable energy, with a current clean energy portfolio exceeding 12.9 GW and plans to reach 70% renewable capacity by 2030.

Dr. Praveer Sinha, CEO and Managing Director of Tata Power, emphasised that the partnership will unlock Bhutan’s hydropower potential and ensure a steady supply of green energy to meet the region’s growing demands. Meanwhile, Dasho Chhewang Rinzin, Managing Director of DGPC, expressed confidence in the collaboration, highlighting its role in Bhutan’s economic development and energy security.

Energy innovation across borders

This partnership introduces innovative approaches to project financing and structuring, diversifying Bhutan’s energy landscape beyond hydropower to include solar and geothermal energy. Bhutan’s hydropower generation, peaking during monsoons, complements India’s seasonal energy demand, offering an efficient energy exchange mechanism.

The projects to be developed include the 1,125 MW Dorjilung Hydroelectric Project and the 1,800 MW Jeri Pumped Storage, among others. Tata Power’s subsidiary, Tata Power Renewable Energy Limited, will oversee the 500 MW solar component.

Impact on regional development

The collaboration not only addresses energy security but also fosters economic growth through job creation and infrastructure development in Bhutan. With Bhutan’s economy projected to grow by 7.2% in FY25, this energy initiative will play a pivotal role in meeting rising power demands while ensuring sustainable development.

This partnership also highlights Bhutan’s pivotal role in regional energy integration, with plans for cross-border energy trade involving India and other neighbouring countries. Such initiatives promise to unlock significant investment opportunities, benefiting Bhutan’s renewable energy sector.