Overview:
Given the shared challenges of climate change, energy security, and development in South Asia, regional partnerships are becoming increasingly important. Through this interview, we’d like to understand the country’s priorities, existing collaborations, and the opportunities and challenges in building stronger bilateral/ multilateral energy partnerships across South Asia.
Interview:
- There are several key drivers:
- First, political will and regional cooperation are fundamental. Without strong commitment from governments, cross-border initiatives can’t succeed.
- Second, there’s a significant opportunity to enhance regional energy security by leveraging complementarities. For example, Himalayan mountainous countries like Bhutan & Nepal have abundant hydropower potential, especially during the summer monsoon months, which can help meet the rising cooling demand in countries like India and Bangladesh.
- Third, climate commitments play an important role. By sharing renewable energy resources and green attributes, South Asian countries can collectively move closer to their Nationally Determined Contribution (NDC) targets under the Paris Agreement.
- Fourth, market development and maturity are crucial. A more integrated regional energy market can improve competition, reduce costs, and attract private sector investment.
- Finally, cross-border transmission infrastructure is a major enabler. Strengthening and expanding these networks can unlock the full potential of energy trade and integration in the region.
- Bhutan has a long-standing bilateral energy partnership with India, which has been the cornerstone of our hydropower development for over five decades.
- The collaboration in hydropower development in Bhutan with India’s support commenced with the 336 MW Chhukha Hydropower Plant, our first major project under this partnership, followed by larger projects like the 1,020 MW Tala Hydropower Plant.
- These initiatives have been highly effective in shaping Bhutan’s energy landscape.
- Through this cooperation, Bhutan has been able to export surplus electricity to India, which has become a critical driver of our socio-economic development.
- Hydropower revenue contributes significantly to our GDP, while domestically, it ensures access to clean, reliable, and affordable energy.
- This partnership has therefore been instrumental not only in strengthening our economy but also in supporting sustainable growth and improving the quality of life in Bhutan.
- There are several sectors where collaboration is particularly urgent.
- Cross-border transmission infrastructure is critical. Strengthening and integrating regional grids will be a major enabler for scaling up energy trade and fully leveraging Bhutan’s abundant hydropower resources. This would allow us to export surplus clean energy efficiently while improving regional energy security.
- Green hydrogen and its derivatives, such as green ammonia, represent a huge opportunity for the future. Given Bhutan’s vast hydropower and renewable potential, collaborating with regional and global partners on technology, financing, and market development will be essential to position Bhutan as a clean energy hub.
- Renewable energy manufacturing and supply chains—particularly in areas like solar, wind, and battery storage—are becoming increasingly important. Partnering with neighbors can reduce costs, enable technology transfer, and accelerate energy transition towards clean energy systems.
- Finally, regional knowledge sharing and technical collaboration are also critical. By exchanging expertise in grid management, energy storage, and decarbonization technologies, Bhutan and its neighbors can collectively move faster toward climate goals and sustainable growth.
- Regional platforms like SAARC and BIMSTEC, along with others such as SASEC and the International Solar Alliance (ISA), have acted as important enablers for energy cooperation in South Asia.
- They’ve provided a framework for dialogue, knowledge sharing, and policy alignment among member countries. For example, they facilitate the exchange of technical know-how, best practices, and innovations in renewable energy and grid integration.
- Through these platforms, countries can pool resources and leverage complementarities—for instance, hydropower potential in Bhutan and Nepal supporting peak demand in India and Bangladesh, or solar energy advancements under ISA benefiting the entire region.
- There are several interconnected challenges, but also clear pathways to overcome them:
- Political will and alignment are fundamental. Regional energy cooperation requires consensus on priorities and trust between countries. Without strong political commitment, even well-designed frameworks struggle to move forward. Establishing high-level joint mechanisms and fostering continuous dialogue can help build this alignment.
- Long-term infrastructure planning is critical. Scaling cross-border trade depends on adequate transmission capacity and grid integration across South Asia. Collaborative regional masterplans and coordinated investments can ensure infrastructure keeps pace with demand and resource potential.
- Market harmonization remains a challenge. Different regulatory frameworks, pricing mechanisms, and policies across countries make cross-border power trade complex. Establishing common market rules, transparent pricing, and regional trading platforms can significantly reduce these barriers.
- Financing and investment are major constraints, particularly for large-scale renewable integration and transmission projects. Encouraging public-private partnerships, concessional funding, and blended finance models can help attract the necessary capital.
- Technical capacity is another gap. Advanced grid management, energy storage, and integration of renewables require strong institutional and technical expertise. Regional platforms for capacity building and knowledge exchange can play a vital role here.
- South Asia is home to some of the fastest-growing economies in the world, and that growth brings both challenges and opportunities. The region has vast untapped renewable energy potential, particularly in hydropower, solar, and wind, which positions it as a prime destination for climate-aligned investments.
- By presenting a collective regional vision, South Asian countries can create a much stronger value proposition for global investors and climate finance institutions. Pooling resources and aligning policies can help build bankable, large-scale regional projects that are attractive to private capital.
- There’s also a growing global focus on just energy transition, and South Asia can leverage this by framing projects not just around clean energy, but also around inclusive growth, social transformation, and resilience building. Coordinated efforts to harmonize regulations, de-risk investments, and create transparent market mechanisms will further strengthen investor confidence.
- Ultimately, by working together, South Asian countries can transform the region into a hub for sustainable growth while accelerating the shift toward a low carbon economy
- Multilateral organizations can play a pivotal role in accelerating the regional energy transition by acting as both enablers and catalysts. For South Asia, where energy demand is rising rapidly, they can support the development of cross-border infrastructure and grid integration that are essential for scaling up renewable energy and facilitating regional energy trade.
- Support to harmonize policies and regulatory frameworks across countries, making it easier to establish regional power markets and attract private sector participation. Beyond financing, MDB’s role in de-risking investments (guarantees, blended finance, concessional funding, etc) can significantly improve the bankability of large scale regional energy infrastructure projects.
- In Bhutan’s context, multilateral support is particularly valuable in helping diversify the renewable energy mix beyond hydropower, by enabling investments in solar, wind, and emerging technologies like green hydrogen and storage systems. Multilateral support for technical assistance and capacity building to strengthen Bhutan’s institutional and operational readiness for participating in a more integrated regional energy market are important.
- Additionally, these organizations can foster knowledge sharing and technology transfer among South Asian countries, ensuring that smaller economies like Bhutan benefit from global best practices in energy storage, smart grids, and decarbonization pathways.
- By combining financial support, policy alignment, and technical expertise, multilateral organizations can help create an ecosystem where Bhutan and its neighbors can transition collectively toward a low carbon, sustainable, and inclusive energy future.
- Policymakers in South Asia would benefit from strengthening platforms like SAARC, BIMSTEC, SASEC, ISA, etc to focus more on knowledge sharing and capacity building. These forums can host technical workshops, peer-to-peer learning, and joint research initiatives on renewable energy, grid integration, and decarbonization strategies.
- Digital hubs can provide real time data, policy toolkits, and case studies to support evidence-based decisions. Collaborating with multilateral organizations like the ADB and World Bank can bring in global expertise and technical assistance, helping policymakers design effective policies, harmonize regulations, and accelerate a clean, resilient, and sustainable regional energy transition.
- To accelerate bilateral and multilateral energy partnerships, there is a need to focus on diplomatic alignment, technical collaboration, and innovative financing.
- Strengthening dialogue and formal mechanisms builds trust and aligns priorities.
- Coordinated grid integration, cross-border transmission planning, and knowledge sharing can bring in efficient regional energy trade.
- Leveraging joint investment vehicles and climate finance can make large scale renewable projects bankable.
- Further, Bhutan’s experience in clean hydropower trade can serve as a model for the region.