The Asian Development Bank (ADB) has approved a $160 million loan for Bhutan under the Solar Farm Expansion Project to help the South Asian nation expand its solar power capacity, modernize its electricity grid, and support private-sector participation in the renewable energy sector.

The financing, provided through ADB’s ordinary capital resources, will support at least 310 MW of new solar generation capacity.

ADB said the project will also attract private investment through Bhutan’s first private-majority public-private partnership in the energy sector.

The Solar Farm Expansion Project will support the development of the 120 MW Wobthang and 40 MW Pedseling solar systems in Bumthang, to be constructed by Druk Green Power Corporation (DGPC). The project will also support the 150 MW Dramthang solar farm in Lhuentse, to be developed through a joint venture between DGPC and Tata Power Renewable Energy.

The ADB loan will cover most project costs, including DGPC’s equity investment in the public-private partnership joint venture. The loan will include a separate $1 million ADB technical assistance grant to strengthen solar development capacity and policy guidelines. The Solar Farm Expansion Project is also expected to mobilize approximately $68.7 million in private equity and commercial debt.

ADB stated that Bhutan relies heavily on hydropower, but lower winter river flows have reduced generation and increased electricity imports. Peak winter demand rose from 487 MW in 2021 to 1,477 MW in 2025, with the deficit expected to exceed 1,000 MW by 2030. The Solar Farm Expansion Project aims to diversify Bhutan’s energy mix and support its target of harnessing 5,000 MW of solar by 2040.

Bhutan Power Corporation will set up 46 km of transmission infrastructure to connect the solar projects to the national grid.

Last December, ADB approved a $650 million policy-based loan to support the Government of India in accelerating the adoption of residential rooftop solar systems.

In October 2025, ADB approved a $460 million results-based loan to modernize rural power infrastructure, promote distributed renewable energy generation, and provide farmers with reliable daytime solar electricity for irrigation in Maharashtra.