Bhutan generates almost all its electricity from hydropower sources, with 70% exported to its neighbor, India. However, the country’s steep terrain and widely spread rural population has made it difficult to provide electricity to some remote communities. As a consequence many families still depend heavily on traditional fuels, with Bhutan the world’s highest per capita consumer of fuelwoods.

The government has provided electricity to around 60% of all rural households, with the figure expected to reach 84% by 2012. ADB has been an active supporter of the rollout program through several previous loan and grant projects. The latest assistance will help the government reach remaining rural households through a mix of both on-grid and off-grid power supplies.

The project will connect more than 5000 households to on-grid electricity supplies sourced from hydropower, while nearly 1900 homes in remote areas that can’t be readily connected to the grid will get solar power packs. A further 2500 existing solar power users will have their systems upgraded. Pilot wind power and biogas production plants will also be established.

The project will be carried out in tandem with rural electrification work being undertaken by the Austrian Development Agency and Japan International Cooperation Agency.

ADB’s grant from its concessional Asian Development Fund covers around 87% of the total project investment cost of almost $25 million. The SNV Netherlands Development Organisation will provide $270,000 to support the biogas development component, while the government and biogas users will finance the remainder through a microfinancing scheme.

The Department of Energy is the executing agency for the project which is due for completion around June 2015.