ADB has approved a $160 million loan to develop at least 310 MW of new solar capacity in Bhutan
It will support 3 solar farms and 46 km of transmission lines, including Bhutan's first private-majority energy PPP
The project supports Bhutan's 5 GW solar target by 2040; ADB says it will also promote skills development, green jobs, and additional private investment
The Asian Development Bank (ADB) has approved a $160 million loan to help Bhutan expand its solar power capacity. The financing will support the installation of at least 310 MW of new solar generation capacity across 3 projects.
The investment also marks a milestone for Bhutan's power sector as it will help launch the country's first private-majority public-private partnership (PPP) in the energy sector. This opens the door for greater private investment in renewable energy, says the bank.
The initiative, called the Solar Farm Expansion Project, comprises 3 solar farms located in 2 districts. Of the total planned capacity, Druk Green Power Corporation (DGPC) will develop the 120 MW Wobthang and 40 MW Pedseling solar farms in Bumthang. DGPC was seeking bidders for the 120 MW solar project, with ADB’s help, in December 2025 (see Bhutan Invites Bids For 120 MW Solar PV Project).
Another project, the 150 MW Dramthang solar farm in Lhuentse, is planned as a joint venture (JV) between DGPC and Tata Power Renewable Energy Limited. It will be developed under the public-private partnership (PPP) model, making it Bhutan's first private-majority partnership in the energy sector.
Notably, Tata Power and DGPC announced a partnership for 2 GW of hydro, 2.5 GW of pumped storage, and 500 MW of solar PV projects in November 2024 (see Asia Pacific Solar PV News Snippets).
Alongside the generation assets, Bhutan Power Corporation will construct 46 km of transmission lines. The new infrastructure will connect all 3 solar farms to the national electricity grid.
Bhutan's electricity system is almost entirely dependent on hydropower. While hydropower has enabled the country to produce clean electricity, generation falls during the dry winter season as river flows decline. At the same time, electricity demand has continued to grow.
According to the bank, Bhutan's peak winter demand increased from 487 MW in 2021 to 1,477 MW in 2025. The country's winter power deficit is projected to exceed 1,000 MW by 2030. As a result, Bhutan has increasingly relied on electricity imports during the winter months.
ADB said adding solar capacity will complement hydropower because solar generation is higher during the dry season, when hydropower output is lower. This is expected to improve energy security and reduce dependence on imported electricity.
“This project is a turning point for Bhutan's energy security,” said ADB Country Director for Bhutan Sonomi Tanaka. “By scaling up solar energy alongside hydropower, Bhutan can cut costly electricity imports, attract private investment through its first private-majority PPP in the energy sector, and create green jobs for women and youth—building a more resilient and inclusive economy for the long term.”
The project also supports the Bhutanese government's goal of developing 5 GW of solar capacity by 2040. At the end of 2025, the country had only 21 MW of installed solar PV capacity, according to the International Renewable Energy Agency (IRENA).
The $160 million ADB loan will finance most of the projects’ costs. It will also cover DGPC's equity contribution to the PPP joint venture. In addition, the project will receive a $500,000 grant from the Innovative Finance Facility for Climate in Asia and the Pacific (IF-CAP), funded by the Government of Japan. The grant will support training programs and scholarships for green jobs.
ADB will also provide a separate $1 million technical assistance grant. The funding will help strengthen Bhutan's institutional capacity for solar development and prepare policy guidelines to attract more private investment. According to ADB, the project is expected to mobilize an additional $68.7 million in private equity and commercial debt.
In April 2024, the European Investment Bank (EIB) announced a €150 million loan for Bhutan to install 310 MW hydropower and solar power generation capacity (see European Finance For Bhutan’s Renewable Energy Market).
