BHUTAN HYDRO AND SOLAR ENERGY FACILITY

The project consists in a framework loan to finance new solar photovoltaic (PV) and hydroelectric power plants (expected in the range of 10 - 100 MW) in Bhutan.

The aim is to support Bhutan meet its Nationally Determined Contributions (NDCs) under the Paris Agreement, as well as increase the share of renewable energy generation consumed in the country.

The framework loan will support schemes developed by a state-owned power generation utility and which will produce electricity from low carbon sources (solar PV and hydro), addressing negative climate and environmental externalities, a market failure, through the reduction of carbon and air pollution. The schemes are expected to contribute to Bhutan's "NDCs" under the Paris Agreement. The financing of this project is in line with the Bank's lending priority objectives on renewable energy and climate action. The project is expected to generate a broader social benefit by generating electricity below the cost of alternatives at regional level. The PV plants are also expected to enable adaptation by diversifying the generation portfolio from hydro, creating system change and building resilience against climate change impacts. An overarching objective is the increase in the provision of clean and efficient energy to productive users and the population, with the project stemming the ambitious roll-out of renewable energy sector investments to go ahead. Moreover, the project is expected to be supported by adequate governance and capabilities of the promoter. The project is expected to be supported by adequate capabilities of the promoter, which has track record in the hydro sector in Bhutan.

The project is strongly aligned with EU objectives for the region and with national development programmes of Bhutan. It contributes to several Sustainable Development Goals, in particular to SDG 7 "Affordable and Clean Energy" and SDG 13 "Climate Action".

If the plants were located within the EU they would fall under Annex I (e.g. hydro power plants) or Annex II (e.g. solar PV plants) of the Environmental Impact Assessment (EIA) Directive 2011/92/EU as amended by Directive 2014/52/EU, depending on the specific component. The EIB will assess the capacity and procedures of the Promoter during the appraisal of the framework loan. The compliance with the EIB's environmental and social standards and the principles of relevant EU Directives (including, where applicable, Birds Directive 2009/147/EC, Habitats Directive 92/43/EEC, Water Framework Directive 2000/60/EC) will be reviewed when processing the individual allocations.

The promoter has to ensure that implementation of the project will be done in accordance with the EIB's Guide to Procurement.

Under EFSD+ Guarantee