The EIB has signed its first-ever investment support agreement for Bhutan, through a 30-year, €150 million loan to increase renewable energy generation in the country.

The funds will back the construction of small- to mid-size run-of-river hydropower plants and solar projects, in a bid to help the Bhutanese government to diversify the country’s power mix and serve communities in remote regions.

The new projects will be implemented by Bhutan’s Druk Green Power Corporation. The total capacity of the solar and hydropower installations is expected to reach an estimated 310 MW. In the first year of operation, the facilities are expected to generate around 670 GWh.

The EIB said that increasing solar power generation will reduce the potential need for energy imports during the dry season, when river levels and hydropower generation capacity are lower.

“Bringing green, reliable and affordable energy to communities around the world, especially in more remote regions, has huge benefits not just in environmental terms, but also by improving access to health, education and economic activity,” said EIB President Nadia Calviño.

Bhutan is one of only three net carbon-negative countries in the world, sequestering much more carbon than it emits, largely thanks to substantial hydropower capacity and forests that cover 71% of the country. But it is also seen as a country that is highly vulnerable to climate change.

“As Bhutan strives to maintain its carbon-negative status amidst rising global challenges, this partnership not only strengthens Bhutan's renewable energy sector, but also contributes to the broader regional and global effort in combating climate change,” said Bhutanese Finance Minister Lyonpo Lekey Dorji.

Bhutan launched a tender for its first solar park in August 2022. According to figures from the International Renewable Energy Agency (IRENA), the country had 1 MW of installed solar at the end of last year.