The World Bank provided a grant on Thursday to help fund a hydroelectric power project, developed by Tata Power in Bhutan. The funding will be utilized for the purposes of generating renewable energy as well as improving cross-border electricity trade between countries.

The project forms part of Bhutan’s long-term strategy to scale up its hydropower capacity and export clean electricity to India, which remains a major source of revenue for the country. Hydropower continues to be central to Bhutan’s economy and export earnings.

Tata Power has been involved with various forms of hydropower projects (as a joint venture) with the government of Bhutan and has been present in the hydropower sector in Bhutan for an extended period. The project will provide new, low-carbon electricity sources.

According to the World Bank, the finance will provide funding for the development of sustainable infrastructure in Bhutan while also providing energy security across both regions. Furthermore, large-scale hydroelectric power projects facilitate reduced reliance on fossil fuels and facilitate the mitigation of the long-term impacts of climate change.

During the development phase, jobs are created through the construction of the hydroelectric power project, in addition to supporting commercial activity in the surrounding areas from the construction of the facility. In addition, the project will further Bhutan's electricity exports and assist with meeting the increasing energy demand in India once the project has become operational.

In India’s energy transition, hydropower is still one of the most significant sources due to its reliability and compatibility with solar generation and wind power. Cross-border hydropower development between Bhutan and India is recognized as important for maintaining the stability of the grid and as an avenue to achieve clean energy targets.

The involvement of the World Bank indicates that global investment continues in South Asian countries to develop renewable sources of electricity while simultaneously ensuring the security of energy supplies and addressing climate issues.