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Bhutan's Hydropower and Energy
Bhutan’s installed hydropower capacity is 3,632 MW, and generation reached a record 15,803 GWh in 2025. The export share is falling fast: 2025 was the first year in Bhutan’s history that domestic consumption (9,160 GWh) exceeded exports to India (7,925 GWh) — roughly half of generation now leaves the country, where a few years ago about three-quarters did.
The cleanest external earner the country has is also the source of its most uncomfortable structural dependence. In calendar 2023, Bhutan earned about USD 208 million exporting hydroelectricity to India. In calendar 2025, the country spent about USD 442 million importing fuel from India — diesel, petrol, jet fuel — 2.2 times the electricity revenue. Even at peak hydrology, hydropower exports do not cover the fuel-import bill. PHPA-II coming online in late 2024 will lift export earnings, but not above the fuel bill at current tariffs.
The financial mechanics make the dependence sharper. Public debt is roughly 107% of GDP, of which 68–72% is Indian rupee-denominated and concentrated in the bilateral loans that financed the hydropower stations. The debt-service ratio has averaged 35% of exports for the past five years. More than a third of every dollar Bhutan earns abroad flows back to Delhi to service the loans that paid for the dams whose electricity it sold to Delhi. The ngultrum is pegged 1:1 to the Indian rupee, locking monetary policy to RBI decisions made for a different economy.
In one third of the year — the lean season from December through April — Bhutan is a net electricity importer. Lean-season imports run 1,000–1,400 GWh annually at Indian Energy Exchange clearing prices, costing Nu 5–7 billion. The “electricity superpower” is, for the four months when its rivers run low, a fuel and power importer from its single border country.
The exit ramps are visible but unbuilt: electrify domestic transport at scale, electrify cooking and heating, complete the storage-hydropower projects that would smooth seasonal output, diversify export buyers beyond a single offtaker. None is novel. Each is the work of a decade.
Read these in order
- Chapter Two — The Closed Loop — the structural framing.
- Paradox #1 — Bhutan exports green and imports brown — the headline ledger.
- Paradox #2 — One in three export dollars goes back to Delhi — the debt-service ratio.
- Paradox #3 — The engineer who’ll retire on the same project — the mega-project timeline.
- Paradox #4 — Tala’s tariff was set when Tala didn’t exist — the legacy PPA structure.
- Paradox #5 — Summer seller, winter buyer — the storage gap.
- Paradox #59 — The aid that came back as a fuel bill — the May 2026 ESP episode.