India's Tata Power in deal with Bhutan utility to develop 5 GW of clean energy

India's Tata Power Co Ltd and Bhutan's Druk Green Power Corp Ltd have entered into an agreement to develop at least 5,000 MW of clean energy in Bhutan in a bid to boost regional energy security, Tata Power said in a filing with Indian stock exchange BSE Nov. 19.

The projects comprise 2,000 MW of hydro, 2,500 MW of pumped storage, and 500 MW of solar capacity ensuring round-the-clock energy supply to Bhutan and India, Tata Power said in the filing.

"This partnership will help unleash Bhutan's great potential for hydropower and its important role in ensuring energy security in the region," the Indian power company said.

Bhutan's energy requirement is mainly driven by hydropower generation, which peaks during the monsoon months and complements India's demand patterns during the summer months.

Druk Green is a subsidiary of Druk Holding and Investments Limited and is the sole generation utility in Bhutan.

Bhutan is aiming to take its overall generation capacity to 25,000 MW by 2040 for its energy security and regional energy integration.

Tata Power already has a transmission project of a 1,200 km long transmission line that evacuates clean power from Bhutan to India.

The Indian power company has a green portfolio of about 12.9 GW, of which 6.4 GW is operational and 6.5 GW is under construction. Green energy constitutes 42% of its total capacity, and the company aims to expand this to 70% by 2030.

Industry observers have emphasized the need to develop strong grid and transmission infrastructure to facilitate cross-border power trading, particularly with India's neighboring countries.

While Nepal currently imports and exports power with India, it also plans to export power to Bangladesh, with India playing a crucial role in supporting this initiative, Nepal Electricity Authority Managing Director Kulman Ghising said last month at an industry gathering. The tripartite agreement between the three countries was signed last month, with first power starting to flow last weekend. Nepal is to supply up to 40 MW of power to Bangladesh using the Indian power grid.

"With the recent agreement reached for Bangladesh to import power from Nepal through India, there are also growing opportunities for regional energy integration that would boost investments in Bhutan's hydropower," Tata Power said in the filing.

Tata Power and Druk Green have already developed a 126 MW hydropower plant in Bhutan in 2008.