Bhutan Unveils National Energy Policy 2025 to Diversify Energy Portfolio and Secure a Green Future

Strategic Insights -

The Ministry of Energy and Natural Resources (MoENR) has introduced the National Energy Policy 2025, a comprehensive plan to transform Bhutan's energy landscape by diversifying its energy mix, increasing installed capacity, and promoting sustainable growth. The policy aims to achieve an installed capacity of 25,000 MW by 2040, with a significant focus on renewable energy sources, including solar, wind, and green hydrogen.

Key Takeaways:

  • The National Energy Policy 2025 sets an ambitious target to achieve an installed capacity of 25,000 MW by 2040, with a focus on diversified renewable energy sources.
  • The policy aims to expand Bhutan's generation capacity to 25,000 MW by 2040, including 15,000 MW from hydropower, 5,000 MW from solar energy, and contributions from other renewable sources.
  • The policy integrates and supersedes previous frameworks, including the Sustainable Hydropower Development Policy (2021) and the Alternative Renewable Energy Policy (2013).
  • Bhutan's heavy dependence on hydropower (93 percent of installed capacity) is a significant challenge, exacerbated by erratic rainfall patterns and accelerated glacial melt due to climate change.
  • The policy recognizes the need for strategic partnerships with multilateral banks, sovereign wealth funds, and private developers to achieve 10x capacity growth by 2040.
  • Institutionally, the Ministry of Energy and Natural Resources (MoENR) will oversee policy formulation and sector coordination, with its Department of Energy (DoE) responsible for planning, allocation, project concessions, technical standards, and cross-border electricity trade.
  • The policy emphasizes modernization of infrastructure through adoption of advanced technologies, including AI-based grid management, Battery Energy Storage Systems (BESS), smart meters, and digital twin systems to improve reliability, security, and resilience of Bhutan's energy supply.

Statistics:

  • Bhutan's total installed capacity stands at 3,490 MW as of June 2025, accounting for only 11 percent of its vast 33,000 MW hydropower potential.
  • Solar and wind energy contribute a combined capacity of just 6 MW, underscoring the country's heavy dependence on hydropower.
  • Bhutan's energy consumption in 2022 was comprised of 62 percent thermal sources, with electricity making up 38 percent.
  • The industrial sector accounted for 63 percent of total energy consumption in 2022, followed by buildings at 21 percent and transport at 15 percent.

Sources:

  • Ministry of Energy and Natural Resources (MoENR)
  • Sustainable Hydropower Development Policy (2021)
  • Alternative Renewable Energy Policy (2013)
  • Hydrogen Roadmap 2024
  • Department of Energy (DoE)
  • Electricity Regulatory Authority (ERA)
  • Bhutan Power System Operator (BPSO)
  • Druk Green Power Corporation (DGPC)
  • Bhutan Power Corporation (BPC)