Introduction:
Bhutan is a small south-Asian country set in the eastern Himalayas. The landlocked country with a dramatic landscape has limited economic competitiveness for the geographic barriers. As a result, harnessing water resources to produce electricity has made hydropower the main force of the Bhutanese economy. Bhutan is an obvious choice for hydropower production with its altitudinal variations and swift-flowing rivers. India, the neighboring country of Bhutan has a huge power deficit where Bhutanese hydropower plays a key role which gives them political bargaining power as well as financial incentives (Tshering and Tamang, 2004)
Energy and Emission Scenario in Bhutan:
Though Bhutan is a small country in terms of area and population, it is an environmental leader by being the first net carbon negative country in the world as it sequesters more carbon than it emits (IRENA, 2019). Thermal energy (72%) is the presiding energy demand of Bhutan where the rest of 28% of demand is met by electricity. Biomass is the largest source of thermal energy (36%) followed by diesel, coal and other petroleum products. The total energy consumption of the country has seen a compound annual growth rate (CAGR) of 5.49% since 2005 and is estimated to be yearly 650220 tonnes of oil equivalent (toe) by the end of 2014 (DRE–MOEA, 2016a).
Figure: Fuel mix of total energy consumption of Bhutan (DRE–MOEA, 2016a)The building sector is the key energy-consuming sector of Bhutan accounting for 41.6% of the total energy demand where the residential segment forms the majority part of the residential demand. The industrial sector comes second with 37% consumption, followed by 19% by the transport sector and the rest of the energy consumed by agriculture and auxiliary activities (DRE–MOEA, 2016a).
Bhutan is a highly environmentally progressive nation that emits only 2.2 million tons of CO2 while it absorbs 7 million tons of CO2 by which is roughly more than three times making them a net carbon negative country thanks to its huge forest area of around 70% of the total area of the country (Alessandra Ruggeri, 2018). Per capita CO2 emission of Bhutan is only 1.58 tonnes whereas the same for Sweden is 4.25 tonnes (Ritchie and Roser, 2020).
Although with more industrialization and an increase in living standard, Bhutan has seen an almost 30000% higher emission level compared to 1970 and the current emission level can almost double by 2040, it is still expected that Bhutan will remain carbon negative with its present forest cover as it is mandatory by its constitution that 60% of total land must be covered by forest (Scott, 2018). Bhutan can save almost 1.029 tonnes GHG emission per MWh electricity produced from hydropower and by importing this electricity India also saves 460,000 tonnes of CO2eq each year by substituting electricity produced from mostly coal based plants (Alam et al., 2017)
Evolution of Hydropower in Bhutan:
Bhutan has seen a major electrification growth and has presently ensured almost 100% electrification overall where only 1% comes from solar home systems or stand-alone generators. Hydropower exclusively works as a supply source of electricity. This upward trend in electrification has helped to shift the use of biomass mainly fuelwood which comprises 28% of the total energy demand (IRENA, 2019).
The techno-economically feasible hydropower potential of Bhutan is almost 26.6 GW MW while the installed power generation capacity of Bhutan is only 6% of the total potential (1.6 GW). In 2017, Bhutan produced 7729 GWh of electricity from hydropower whereas its national annual demand was only 2243 GWh. As a result, Bhutan exports overproduced electricity to India and earns revenue which was around USD 171 million in 2017 (DRE–MOEA, 2016a).
Electricity was introduced to Bhutan via a 256 KW diesel generator back in 1966 while the first hydroelectric plant (360 KW) started its operation in 1967. By 1974, few other small hydro projects ranging from 300 KW to 1250 KW were installed to meet the lighting demand of five major districts. Chukha hydel project is the first major hydroelectric project 336 (4X84) MW of Bhutan done by an agreement with India in 1974 which could meet the entire domestic demand and export extra power to India. Between 1975 to 2000, around 14 small scale off-grid hydro plants were installed to empower the remote villages (Tshering and Tamang, 2004). At present, Bhutan has four major power plants Chukha (336 MW), Kurichhu (60 MW), Tala (1020 MW), and Basochhu (64 MW) along with 20 other small to medium-sized plants. The total installed capacity is around 1500 MW while the peak domestic demand is only 300 MW. Bhutan is constructing seven more plants of capacity around 4684 MW to fulfill the goal to generate 10000 MW by 2020 to export more electricity to India and Bangladesh (Alam et al., 2017).
Until now, all small to large hydro plants of Bhutan are designed as Run-of-River (ROR) plants, but the ongoing mega hydroelectric projects are mostly reservoir based design to tackle the probable impact of climate change which created some concern from the environmental viewpoint (IRENA, 2019).
With a small peak demand of 300 MW, Bhutan exports almost 80% of the generated electricity to India which has a huge power deficit. Bhutan has a rather small economy of the size US$1.91 billion estimated in 2016 where electricity export constituted almost 20% of the GDP and 80% of the total export earnings. The cross-border power trade has largely contributed to increasing the per capita GDP of Bhutan to US$2,613 in 2016 compared to US$780 in 2000 (Alam et al., 2017).
Policies in action:
Bhutan Electricity Act (2001) aided to notably re-structure and modernize the institutional management and governance of Bhutan’s power sector. Under this act, the Bhutan Electricity Authority (BEA) came into action which takes care of providing licenses, setting tariffs and ensure monitoring across the nation (Alam et al., 2017). This has revolutionized the hydropower installation projects and electricity export scenario with India.
The key aspects of hydropower development are covered under “The Bhutan Sustainable Hydropower Development Policy 2008” which deals with the institutional formation of the hydropower sector, project entreaty, project investment, fiscal stimulus etc. This policy facilitates the acceleration of hydropower development by mobilizing funds and attracting investors. Income tax for ten years is waived and an exemption is made for sales tax and duties on imported equipment and exported electricity are offered under this policy. It also stimulates both public and private investment from home and abroad to build medium (25 MW to 150 MW) or large (150 MW to 1 GW) hydropower projects. Under this policy, mega-scale (more than 1 GW) projects are planned to be done by the government to government (G2G) partnerships. To cope up with the future changes, this policy is being reviewed by the related department at present (IRENA, 2019).
Another policy known as The Alternative Renewable Energy Policy, 2013 (AREP), focuses mainly on the distributed renewable energy projects in the remote rural areas that are mostly dependent on firewood and kerosene for heating, lighting and mostly cooking. Only small scale (<25 MW) hydropower projects are under the scope of this policy. 10-15 years of tax exemption, custom duties and sales tax waiver on the equipment and subsidy to cover lifetime project cost if required are ensured under this policy. AREP also has a provision to make Renewable Energy Development Fund (REDF) which aims to generate an investment-friendly atmosphere for renewable energy-based projects funded partially by the hydropower owners (IRENA, 2019).To tackle the environmental impacts of hydro plants a provision is added in the Water Act 2011 where it dictates that thirty-meter buffer strips alongside rivers should not be disturbed (Chhopel, 2014).
Energy Security around Hydropower:
Hydropower is susceptible to change in weather patterns around the year and also can fall victim to extreme weather due to climate change. During winter months, rainfall decreases in Bhutan coupled with less meltwater from snow and ice which badly affects the regular flow of the river. To tackle this issue, Bhutan has to import electricity from India which was almost 4% of the total electricity demand of Bhutan in 2017 (IRENA, 2019). From 2006 to 2017, the electricity import from India increased from 34 GWh to 92 GWh (DHPS, 2018).
Climate change can cause a reduction in flow and flow patterns can be more erratic. River flow can also be disturbed by the receding glaciers whereas heavy monsoon rains can cause higher inflow bringing more silts to damage hydro plant structures (Walker, 2016). It is assessed that the river flow in Bhutan can either increase by 7% or decrease by 13% between 2000 and 2100 due to the impact of climate change which is influencing decision-makers to shift from existing run of river plants to hydropower with reservoirs that can incur a higher cost and more environmental impacts (Gyelmo, 2016). In extreme cases, glacial lake outburst floods (GLOFs) cause destruction of hydropower plants in Bhutan as happened in Nepal (Lutz, et al., 2015). Energy security concern for Bhutan raises high due to its exclusive dependency on hydropower for electricity supply as it can be extremely vulnerable to the long term impacts of climate change.
Geopolitics:
Bhutan is massively dependent on financial backing from India regarding the hydropower projects as all the major hydropower projects are funded by India and Bhutan has agreements to sell excess electricity to India. Hydropower infrastructure development projects and exports contribute almost 50% to the GDP of Bhutan (Lovelle, 2016). Bhutan has to carefully consider a trade-off between economic competitiveness and environmental concerns as more and more large dam based hydro projects are being installed to supply power to India and Bangladesh. The heavy reliance on India also creates a risk of the Bhutanese economy being vulnerable to any change in Indian policy.
India has long played the role of a leader in the south-Asian region where China is now trying to get a good grip by investing profusely in south Asian countries like Bangladesh, Nepal, Srilanka and Pakistan whereas Bhutan does not even have an official diplomatic relationship with China let alone any investment (Schleich, 2020). India can solidify its ground in Bhutan even further by continuing to buy hydropower at a fair tariff and investing in hydro projects. India, Bangladesh and Bhutan are planning to perform cross-border power trade that can promote substantial regional integration and escalated energy security for this politically unstable region (Alam et al., 2017).
Environmental Impacts:
The existing run-of-river (ROR) hydro plants have managed to attain Bhutan the title of being a net carbon negative country, but ROR plants do have some impacts on the environment. A few of the impacts include potentially causing irreversible damage to riverine ecosystems by drying up of riverbeds caused by water tunneling required for ROR plants. The Punatsangchhu hydro project has made the main river stream almost completely dewatered by diverting the entire river which has put Golden Mahsheer species in danger of being smothered (Chhopel, 2014). There can also be other associated impacts like wildlife disturbance, noise and dust pollution during construction, disturbance in the natural stream of river and ponds and water stress on the project area (IRENA, 2019)
As mentioned before, to cope up with the changing scenario caused by climate change, Bhutan is shifting towards implementing more dam and reservoir based hydro plants like 180 MW Bunakha HEP, 2 585 MW Sunkosh HEP, 2 640 MW Kuri-Gongri HEP and 540 MW Amochhu HEP. Reservoir based hydropower plants have considerable impacts on the environment compared to ROR as they can destroy habitats and cause more methane emissions (Premkumar, 2016).
Small hydropower plants (<25 MW) which have been promoted by the AREP 2013 can minimize some of the environmental impacts caused by large projects if they are implemented in a sustainable way. Small hydropower plants are mostly ROR plants that can provide benefits on land use, flow pattern and protection of ecosystems. Having a short gestation period, requirement of low investment and increased firm power make small hydropower plants more attractive (IRENA, 2019).
Energy Access and Energy Justice:
Though there is no universal definition of energy access, as a whole this concept involves ensuring household electricity, access to clean cooking, availability of energy for economic and public sectors. Hydropower has predominantly helped Bhutan to reach the goal of 100% electrification, but still, a major share of biomass is used in rural villages for cooking which can be replaced by electricity produced by small-sized hydro plants installed by taking the advantage of AREP 2013 policy (IRENA, 2019).
While hydropower in Bhutan can be applauded for the social justice it serves, the new reservoir based mega hydro projects raise concerns from a procedural and restorative justice point of view. Siciliano et al., 2018 have shown that energy justice principles are often ignored by the policymakers in the decision-making process of large dam based projects. These projects can increase energy access on a national level whereas local communities and ecosystems are sometimes damaged beyond repair. An environmentally conscious country like Bhutan should not ignore these aspects and ensure proper restoration for all hydropower projects.
Conclusion:
Hydropower is and will continue to be the backbone of Bhutanese energy and economic scenario. It helps Bhutan to retain its environmental commitment and ensure the social, economic development of its citizens. Cross-border power trade facilitated by Bhutanese hydroelectricity strengthens regional energy security and low carbon economic growth of the region. But, Bhutan should be cautious to implement hydropower projects keeping all possible consequences in mind and diversify its energy mix by harnessing energy from other renewable sources to make sure it can withstand the effects of climate change.
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