November 6, 2025
THIMPHU – Bhutan’s electricity supply is projected to fall short of domestic demand for much of the next decade, forcing the country to scale back power exports and rely more on imports during winter, according to the Department of Energy’s latest demand–supply projections up to 2040.
The report warns that Bhutan’s export earnings from electricity, the country’s largest single source of revenue, will continue to decline until new generation projects come online after 2032.
Electricity exports are projected to fall to 32 percent of total generation in 2025, a steep drop from 63 percent in 2016 and the peak of 81 percent in 2017.
The declining export share reflects rapidly growing domestic consumption driven by expanding industries, electrification of transport, heating needs, and anticipated demand from the digital transformation.
The downward trend began in recent years, with export share falling to 40 percent in 2022 and further to 32 percent by 2025.
The Director General of the Department of Energy,Karma Penjor Dorji, said that sharp decline is due to the widening mismatch between demand and supply, particularly during winter, when hydropower generation drops drastically and the country is forced to import power.
He said that Bhutan’s reliance on hydropower makes the sector vulnerable to seasonal fluctuations.
While the monsoon season provides surplus energy, winter shortages continue to place pressure on the country’s Balance of Payments and threaten its carbon-negative standing due to fossil-fuel based imports.
The report cautions that the next eight to 10 years will be the most challenging period for Bhutan’s energy security.
A turnaround is expected only after 2032, when a series of hydropower and renewable projects are scheduled to come online.
If implementation stays on track, Bhutan’s export share is forecast to recover to 71 percent by 2035, and 76 percent by 2040, restoring the country’s power export capacity.
Bhutan’s total hydropower potential is estimated at 36,888MW, of which 33GW is considered techno-economically viable. In addition, the country holds significant renewable energy potential, 12,000MW in solar, 761MW in wind, 2,600MW in biomass, and an emerging opportunity to produce 69,000 tonnes of green hydrogen annually.
To support the transition, the government is introducing key policy reforms including a National Energy Policy, an Energy Bill, a National Energy Market Platform for competitive pricing, and a National Energy Information System.
Private sector participation and Public–Private Partnerships are also being explored to mobilise investments and reduce dependence on traditional hydropower financing.
The Director General said that any delay in commissioning new energy projects could result in higher winter imports, lower export revenues, and energy supply constraints for high-value sectors such as data centres, digital services, and the green economy.
However, if Bhutan succeeds in scaling up renewable energy and expanding generation capacity as planned, the country would shift from a hydro-dependent exporter to a diversified renewable energy powerhouse by 2040, ensuring long-term energy security and economic competitiveness.