Bhutan will strive to generate 200MW of electricity from renewable energy sources by 2020 according to the newly released draft renewable energy policy.
It will be achieved through renewable energy systems like wind, solar, bio energy and mini hydro projects to meet the domestic energy demand.
All the renewable projects will be developed under BOO (build, own, and operate) model which will include the private sector and the time period a private enterprise can run the project after construction will be according to the size of the project and its economic life.
Private individuals can run a pico sized hydro project which is up to 10 kW for five years, micro sized hydro projects which is up to 100kW for 15 years, wind projects for 20 years, biomass for 20 years, solar PV for 25 years, concentric solar power for 25 years, MSW projects 20 years, and geothermal projects for 30 years, excluding the construction period. However, the BOO model will not apply to hydro project sizes of 1,000 kW and above.
The investors in the renewable energy will be exempted from all taxes for 15 years from the date of commercial operation. The project developer, manufacturer and system integrators of renewable energy will be exempted from import duties and Bhutan sales tax on import plants and equipment.
After the economic life of the project, the Bhutan Electricity Authority (BEA) can recommend the project to be given an extension or renewal of license only if it does not require anymore government subsidies.
The policy has also identified four systems to generate renewable energy projects.
Under the first system of “decentralized distributed generation,” electricity will be generated from various renewable energy sources for local consumption mainly to meet rural demand.
The grid connected renewable energy projects will be connected to a 33kV and above to sell electricity to the grid.
The stand-alone renewable energy projects will have the system installed at an individual’s household, community, institution, and commercial entities for self consumption.
Finally, the fourth one is the green energy based technology substitution which will use bio fuel and hybrid vehicles.
The investment in grid connected Renewable Energy projects which has to be connected to a 33kV line is open to 100% foreign investment. This, however, excludes hydro projects.
The policy states that the investment in hydro projects up to 5MW will be reserved only for the Bhutanese private sector with 100% ownership.
The investment in hydro projects from 6MW to 25MW should have a minimum of 74% equity held by Bhutanese companies for joint ventures. However, no foreign investors can enter into joint ventures for more than five projects.
For the decentralized distributed generation and stand alone renewable energy projects, the investment is open for 100% foreign investment.
The state owned electricity companies mainly the Druk Green Power Corporation and Bhutan Power Corporation are required to develop 45 MW and 25 MW renewable energy by 2020.
The BEA will determine the tariff guidelines and will be the Nodal agency for implementation of the policy.
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