Bhutan is endowed with abundant natural and renewable energy resources. However, its mountainous terrain and the resulting difficulties in extending the grid have prevented a large percentage of the rural population from accessing clean energy. In addition, despite an annual net power surplus, Bhutan’s power generation from run-of-the-river hydropower plants is very seasonal, as water flows and levels are difficult to control in the dry season.
The Rural Renewable Energy Development Project, approved by the Asian Development Bank (ADB) in October 2010 for a grant of $21.59 million, was designed to support the government’s Rural Electrification Master Plan 2005. It aimed to assist in closing the gaps projected to be left behind by the initiatives under the master plan, including further electrification through grid extension of around 8,500 households and electrification through off-grid solutions of another 1,900 households, by 2012. It also sought to diversify Bhutan’s renewable energy sources to include solar, wind, and biomass.
The project’s envisaged impact was sustainable, inclusive economic growth through expanded access to reliable and affordable clean energy. Its expected outcome was sustainable, expanded coverage and mix of clean energy supply throughout the country. Its intended outputs at appraisal were: (i) reliable power through grid extension to 5,075 households by 2015; (ii) solar home systems for 1,896 new households by 2014; (iii) 2,500 existing solar home systems rehabilitated by 2014; (iv) 120 village technicians, 40% of them women, trained for operation and maintenance (O&M) by 2013; (v) livelihood improvement programs to 200 women by 2014; (vi) 4,500 user manuals for solar home system safety and operational awareness distributed; (vii) wind power mills with a capacity of 360 kilowatts and three wind masts constructed/installed by 2014; and (viii) 1,600 domestic biogas plants built through microfinance on a pilot basis by 2014.
At completion, the project substantially achieved or exceeded its output targets, and consequently, also those at the outcome level. It helped increase access to electricity, resulting in a national electrification ratio of 99.9% by the end of 2015. Access to clean renewable energy sources for all off-grid rural households was achieved by 2015. Villagers trained under the project have been deployed as O&M technicians under the supervision of the Bhutan Power Corporation (BPC). BPC’s financial health has remained satisfactory, consistently complying with prudential financial indicators related to net profit generation and debt service coverage. Greenhouse gas emissions were reduced by 52,103 tons of CO2-equivalent.
All the environmental and social safeguard mitigation measures were satisfactorily implemented and there were no adverse environmental and social safeguard impacts from the project. The gender mainstreaming measures, and gender action plan were effectively carried out, resulting in (i) the reduced time spent by women on household and care work, and a decrease in the number of households using firewood for cooking; and (ii) gender equality strategic benefits, including the training of 31 women (20% of the total) as village electrical entrepreneurs and electrical technicians; 53% participation by women and girls in awareness campaigns on the safe and efficient use of electricity; and the training of 159 women (59% of participants) in energy-based livelihoods.
The many social and economic benefits brought about by the project are expected to improve the living standards of rural communities in Bhutan. By project completion in 2017, three impact targets had already been achieved: the proportion of people living below the national poverty line was 8.2%, versus the target of 20%; the forestry area in the country was 71%, versus the target 72.5%; and biomass consumption was reduced by 54% during the period 2005–2014, versus the target 30% by 2020. One impact target was not achieved: the energy sector share of Bhutan’s gross domestic product fell to 13.2% by 2017, versus the target of 40%. Another impact target was also unlikely to be achieved: diversification of energy supply sources through renewable energy including solar, wind, and biogas was 0.6 MW in 2019 vs the target of 70 MW equivalent by 2020.
Project completion was extended twice to respond to changes in the demand for solar home systems and biogas plants and to improve power reliability and better use loan savings. Actual project implementation period thus spanned 6.75 years, against the 5-year estimate at appraisal.
The Department of Energy initially served as the executing agency, but was replaced by the Department of Renewable Energy (DRE), in accordance with Bhutan’s Alternative Renewable Energy Policy approved in 2013. The implementing agencies were: (i) BPC for the on-grid rural electrification and wind power components; (ii) DRE for off-grid solar rural electrification; and (iii) the Department of Livestock, Ministry of Agriculture and Forests and the Bhutan Development Finance Corporation (BDFC)—later renamed the Bhutan Development Bank (BDB)—for the biogas component.
