Tata Power pushes green energy boundaries with 40% stake in Bhutan’s Khorlochhu hydropower project

Tata Power, one of India’s largest integrated power companies, has taken a bold step in the renewable energy sector by securing a 40% stake in Bhutan‘s Khorlochhu Hydro Power Limited (KHPL) for an investment of ₹830 crore. This acquisition, ratified by Tata Power’s board in August 2024, is part of the company’s strategic push to bolster its renewable portfolio across the South Asian region. Khorlochhu Hydro Power Limited, a project based in Bhutan’s eastern Trashiyangtse district, is a significant joint venture with Druk Green Power Company, which holds the remaining 60% stake. The partnership reflects a new era of cross-border energy collaboration, with Tata Power aiming to help Bhutan harness its abundant hydropower resources.

This hydropower project is anticipated to generate around 600 megawatts (MW) of clean energy, supporting Bhutan’s energy needs while contributing to Tata Power’s renewable energy targets. The project’s estimated total cost is around ₹6,900 crore, covering construction, infrastructure, and operational phases. For Tata Power, this move enhances its clean energy portfolio, supporting India’s aggressive decarbonisation goals and reinforcing Tata Power’s position as a leader in renewable energy expansion across the South Asian region.

Tata Power stock performance and shareholder sentiment

Amidst this acquisition, Tata Power’s stock has remained strong, closing at ₹430.90 on 29 October 2024. Over the past year, the stock has surged nearly 84%, driven by investor confidence in Tata Power’s renewable energy ambitions. Analysts believe that this acquisition aligns with the company’s goal of reaching a 60% renewable energy share by 2026, particularly through international partnerships that will contribute to both regional and company-wide growth.

Growing collaboration in renewable energy across South Asia

The Khorlochhu project has broader implications for regional cooperation in renewable energy. Tata Power’s collaboration with Bhutan’s Druk Green Power Company underlines a growing trend in South Asia to meet energy needs sustainably through strategic partnerships. Rajeev Mohanty, an energy sector consultant, stated that Tata Power’s expansion into Bhutan’s hydropower sector is “strategic,” leveraging natural water resources in Bhutan to create a sustainable power source. Mohanty emphasized that hydropower, especially in water-rich regions like Bhutan, offers stable and climate-resilient energy, strengthening Tata Power’s commitment to clean energy.

This project is also expected to create local jobs and support Bhutan’s infrastructure development, providing socioeconomic benefits beyond electricity production. Additionally, this cooperation could set a model for future cross-border renewable projects, particularly as countries in the region face increasing pressure to meet sustainable energy targets and reduce their reliance on imported fossil fuels.

Future implications for Tata Power’s renewable energy ambitions

Tata Power’s 40% stake in the Khorlochhu Hydropower Project is emblematic of its long-term vision to prioritize renewable energy in its portfolio. Already a major player in India’s renewable sector, Tata Power aims to grow its renewable capacity beyond 11 gigawatts (GW) by 2026, spanning solar, wind, and now international hydropower initiatives. This project is anticipated to serve as a foundational model for future energy partnerships across South Asia.

As the Khorlochhu project progresses, Tata Power is expected to play a pivotal role in both Bhutan’s economic development and the broader South Asian energy landscape, potentially sparking similar initiatives aimed at sustainable growth and energy security across borders.