The role of energy finance in promoting renewable energy investments in Bhutan

Abstract

As a carbon-negative nation that is richly endowed with natural resources, Bhutan is well placed to innovate in renewable energy financing. Through energy finance, stakeholder engagement, funding sources, and green financial instruments, this thesis explores the role of energy finance to venture forward a growing renewable sector in Bhutan. Although hydropower accounts for the vast majority of these, seasonal variables and climate risks call for diversification. The study employs a mixed-methods approach and shows that public funding defines hydropower as “large-scale,” while solar and wind remain under-funded. Policy uncertainties, high costs and weak incentives lead to low private investment. Bhutan is still not leveraging green financial instruments despite having great potential within the carbon trading global market. Practices that can strengthen policies, streamline public funding, and facilitate public-private partnerships might fill in the gaps to ensure Bhutan’s energy transition, security, and economic resilience, providing learnings for other similar economies.