| World news Bhutan Bhutan World Bank sign $515m deal for Dorjilung hydropower project
The Royal Government of Bhutan and the World Bank have signed financing agreements worth $515m for the 1125MW Dorjilung hydropower project, a major infrastructure development aimed at expanding the country’s energy capacity and exports. The project, to be built on the Kurichhu River in eastern Bhutan, is
expected to generate more than 4500GWh of electricity annually. It will help address seasonal power shortages in winter and allow surplus energy exports to India during summer and the monsoon season. “The Dorjilung Hydroelectric Power Project is a cornerstone of Bhutan’s 13th Five-Year Plan and will be the Kingdom’s largest hydropower project developed under a public-private partnership. This transformational investment will supply clean energy, spur economic growth, and advance our carbon-negative commitment,” said Tshering Tobgay, Prime Minister of Bhutan. “This project is a testament to our strong partnership with the World Bank Group and our shared vision for a sustainable and prosperous future for Bhutan’s people.” The plant is expected to increase Bhutan’s GDP by 2.4% and create jobs, while supporting sectors such as manufacturing, tourism and small businesses through more reliable electricity supply. Revenues from energy exports are expected to fund services including health, education and infrastructure. “The project involves an innovative financing model, which brings
together public and private capital and sets a new standard for sustainable infrastructure development in Bhutan,” said Johannes Zutt, World Bank Vice President for the South Asia Region. “Besides providing affordable and reliable power to support growth and job creation, the project will reduce energy import costs and increase energy export revenues for Bhutan, while also lowering carbon emissions and diversifying energy sources across the South Asia region.” Officials said the project will also have a regional impact by reducing carbon emissions by an estimated 3.3 million tons annually and strengthening cross-border energy trade. “The Dorjilung hydropower project is a national priority and will be transformational for Bhutan – delivering clean electricity, spurring economic growth and advancing our carbon-negative commitment,” said Lekey Dorji, Finance Minister of Bhutan. “Its innovative financing structure ensures that this project does not unduly burden public finances, allowing us to continue investing in our people.”
The project is being developed by Dorjilung Hydro Power Limited, a JV between Druk Green Power Corporation and India’s Tata Power. “This project marks a transformative shift in Bhutan’s energy
sector and opens the door for scaling this financing model across the hydropower sector,” said Chhewang Rinzin, Managing Director of Druk Green Power Corporation. “This project is designed to provide critical grid flexibility, allowing us to manage seasonal shortfalls while maximising export revenues. We are deeply committed to the project’s rigorous environmental standards and maintaining Bhutan’s standing as a carbon-negative country.” Earlier in 2026, the World Bank Group approved $300m concessional financing from the International Development Association, including $150m in grants, and $215m from the International Bank for Reconstruction and Development. Up to $300m in additional support is expected from the International Finance Corporation. Dr Praveer Sinha, CEO and Managing Director of Tata Power, said:
“We thank the Royal Government of Bhutan, the World Bank Group, and Druk Green Power Corporation for their partnership in advancing the 1125MW Dorjilung project. Today’s signing of $515 million in financing agreements marks a momentous milestone for a project that will contribute nearly one-third of Bhutan’s generation. This landmark project will strengthen regional energy security and deepen India–Bhutan clean energy cooperation. With nearly 80% of its 4,500 GWh annual generation supplied to India, it will help meet rising peak demand especially in summer while enabling Bhutan to expand clean energy exports for shared economic benefit.” The total cost of the project is estimated at $1.7bn. Officials said the financing structure is designed to limit Bhutan’s borrowing while attracting about $900m in private investment. Over a 30-year period, the project is expected to generate around $4bn in revenues through taxes, dividends and power exports.
“Amid global fuel supply disruptions, the Dorjilung Hydroelectric Power Project represents a model for building energy security that is clean, sustainable and resilient,” said Xavier Furtado, World Bank Group Country Manager for Bhutan. “The World Bank Group brought together IDA, IBRD, and IFC to deliver an innovative financing package that enables a project of this scale while protecting Bhutan’s debt sustainability.”
Spain
Spain urged to expand pumped storage to curb rising renewable energy waste The International Hydropower Association (IHA) has issued a four-point action plan calling on the Government of Spain to accelerate the deployment of pumped storage, warning that delays could lead to escalating energy waste and grid instability. The association said that without immediate investment in long-duration energy storage, Spain risks undermining its recent progress in renewable energy. Spain has doubled its wind and solar capacity since 2019, with renewables meeting 46% of electricity demand in the first half of 2025. Wholesale electricity prices have fallen to 32% below the EU average, but the system is facing increasing strain due to insufficient infrastructure to manage variable supply. Renewable curtailment is rising rapidly and is expected to exceed 3 TWh
in 2026, equivalent to the annual consumption of around 3 million households. At the same time, the April 2025 blackout exposed an over-reliance on gas-fired generation for system stability. Balancing costs subsequently rose to 57% of the final electricity price in May 2025, compared with a 14% annual average. Eddie Rich, CEO of IHA, said: “Spain has the potential to be the global blueprint for a successful energy transition, but they must not waste the progress they’ve made. We have the proven, mass-scale, and secure technology available now. Without immediate action to integrate pumped storage, the economic and structural consequences will be felt for decades.” The IHA’s action plan, endorsed by partners including Iberdrola, EDP, Andritz Hydro, GE Vernova, Voith Hydro and Mott MacDonald, outlines four policy priorities: ● Differentiating between long- and short-duration storage in legislation and national targets
● Introducing compensation fo system services and revenue stabilisation mechanisms
● Updating concession frameworks to allow longer terms for pumped storage projects
● Streamlining permitting processes to accelerate project delivery Pumped storage can provide between 8 and 50 hours of electricity storage and deliver key grid services, including frequency and voltage stability, inertia, and black start capability. It also offers a domestic energy solution that reduces reliance on imported fuels and supply chains. The association added that expanding pumped storage could generate significant economic benefits, including job creation and increased energy independence. “This plan is the best way to ensure the loss of clean energy in Spain,” added Rich. “Water, wind, and sun can get the job done, but only if we have the capacity to store the power we produce.”
www.waterpowermagazine.com | June 2026 | 5
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