Chamkharchhu-I Hydroelectric Project

The Chamkharchhu-I Hydroelectric Project is a major planned run-of-river hydropower development on the Chamkhar Chhu (Chamkharchhu) river in Zhemgang District, central Bhutan. With a designed installed capacity of 770 megawatts (MW), it is one of the largest hydropower projects currently in the pipeline for the Kingdom of Bhutan and represents a significant component of the country's long-term strategy to harness its vast hydroelectric potential for both domestic energy needs and export revenue, principally to neighbouring India.^[1]

Bhutan's hydropower sector is central to its national economy, with electricity exports to India accounting for a substantial share of government revenue and gross domestic product. The country has an estimated technically feasible hydropower potential of approximately 30,000 MW, of which only a fraction has been developed. The Chamkharchhu-I project, alongside other planned ventures such as the Punatsangchhu-I and Punatsangchhu-II projects, is intended to move Bhutan closer to its aspiration of becoming a major clean-energy exporter in South Asia.^[2]

Technical Design

The Chamkharchhu-I project is designed as a run-of-river scheme, meaning it will divert river water through tunnels and channels to generate electricity without creating a large storage reservoir that would inundate significant upstream areas. The principal engineering components include a 108-metre concrete gravity dam on the Chamkhar Chhu, a 19.2-kilometre headrace tunnel conveying water from the dam to the powerhouse, and an underground powerhouse housing turbine-generator units with a combined installed capacity of 770 MW. The considerable length of the headrace tunnel reflects the topography of central Bhutan, where steep valleys and significant elevation drops can be exploited to maximise the hydraulic head available for power generation.^[3]

The Chamkhar Chhu river originates in the high mountains north of Bumthang District and flows southward through Zhemgang, eventually joining the Manas river system that drains into the Brahmaputra in India. The river's flow is characterised by strong monsoon-season peaks and reduced dry-season discharge, a pattern common to Himalayan rivers. The run-of-river design means that generation will vary seasonally, with peak output during the summer monsoon months.

Project History and Development

The Chamkharchhu-I project has had a lengthy and complex development history. It was first identified as a priority hydropower site in Bhutan's long-term energy planning documents and was initially envisaged as a bilateral project with India, following the established model of Indian-financed hydropower development that has characterised projects such as Chhukha, Kurichhu, and Tala. However, the project experienced significant delays due to difficulties in finalising intergovernmental agreements, geological uncertainties, and the broader challenges that have affected Bhutan's hydropower expansion programme, including the troubled construction histories of the Punatsangchhu projects.^[4]

A consortium led by Lahmeyer International GmbH was commissioned to update the Detailed Project Report (DPR) and prepare the Environmental and Social Impact Assessment (ESIA) for the project. This technical review was intended to refine the original design parameters, incorporate modern engineering standards, and assess the environmental and social implications of construction and operation in the ecologically sensitive landscape of central Bhutan.^[5]

Reliance Power Partnership

In October 2024, a significant milestone was reached when Druk Holding and Investments (DHI), Bhutan's sovereign investment arm, signed a strategic partnership agreement with India's Reliance Enterprises, jointly promoted by Reliance Power Ltd and Reliance Infrastructure Ltd, for the development of the Chamkharchhu-I project. Under this agreement, the project is structured as a long-term concession under a Build-Own-Operate (BOO) model, aligned with Bhutan's national energy strategy. The partnership represented a departure from the traditional government-to-government financing model that had characterised earlier Bhutanese hydropower projects, introducing a significant private-sector and foreign direct investment (FDI) component.^[6]

As part of the broader strategic partnership, Reliance and DHI also agreed to jointly develop 500 MW of solar generation capacity in Bhutan, with a combined capital outlay of up to Rs 2,000 crores (approximately USD 240 million), representing the largest private-sector FDI in Bhutan's energy sector to date. In May 2025, Reliance Power signed a commercial term sheet for a long-term power purchase agreement (PPA) with Green Digital, a Bhutanese entity, further solidifying the commercial framework for the project's output.^[7]

Economic Significance

Upon completion, the Chamkharchhu-I project is expected to generate substantial revenue for the Bhutanese government through electricity exports to India and potentially to other regional markets. The 770 MW capacity would make it one of the largest single generating facilities in the country, comparable in scale to the existing Tala Hydropower Plant (1,020 MW). The project is also expected to create employment opportunities during its multi-year construction phase and to stimulate infrastructure development in the relatively underdeveloped Zhemgang District.

However, Bhutan's hydropower expansion has also raised concerns about the accumulation of hydropower-related debt, environmental impacts, and the country's heavy economic dependence on a single sector. The introduction of private-sector financing through the Reliance partnership may help mitigate the debt burden that has characterised earlier government-to-government projects, though it also raises questions about revenue sharing and long-term ownership arrangements.^[8]

Environmental Considerations

The Chamkharchhu-I project is situated in a region of significant ecological value. Central Bhutan's forests support a rich biodiversity, including several threatened species, and the Chamkhar Chhu river system provides important aquatic habitats. The Environmental and Social Impact Assessment commissioned as part of the project's development is intended to identify potential impacts on terrestrial and aquatic ecosystems, water flows, sediment transport, and local communities, and to propose mitigation measures. Bhutan's constitutional commitment to maintaining at least 60 per cent forest cover and its broader environmental ethos — rooted in the philosophy of Gross National Happiness — place particular emphasis on ensuring that hydropower development proceeds in an environmentally responsible manner.^[9]

References

1. "Energy in Bhutan." Wikipedia.
2. "Bhutan's Hydropower Sector: 12 Things to Know." Asian Development Bank.
3. "Lahmeyer Consortium Begins Work on Chamkharchhu-I Hydropower Project." Water Power Magazine.
4. "Bhutan's Failed Hydropower Goal and Geopolitics of Energy." Dialogue Earth.
5. "Reliance Group, Druk to Jointly Develop 500 MW Solar, 770 MW Hydropower Projects." PV Magazine India, October 2024.
6. "Reliance Power Signs PPA with Green Digital for Bhutan Hydropower." Reliance Power, May 2025.
7. "Bhutan's Clean Energy Boom and Future Power Outlook." Daily Bhutan.
8. "Environmental Assessment: Chamkharchhu-I Hydroelectric Project." River Resource Hub.