Two Himalayan neighbours have just raised the stakes in South Asia’s clean energy race with a sweeping new agreement. India and Bhutan recently formalised a Memorandum of Understanding that fundamentally expands their renewable energy collaboration beyond traditional hydropower. The MoU covers solar, wind, biomass, green hydrogen, energy storage, and capacity building—essentially the entire spectrum of clean energy technologies.
Signed by Bhutan’s Energy Minister Lyonpo Gem Tshering and India’s Renewable Energy Minister Pralhad Venkatesh Joshi, this agreement builds on decades of energy partnership whilst pivoting decisively towards sustainable solutions. What makes this particularly significant is the INR 4,000 crore concessional credit line backing these ambitions, ensuring financial muscle matches political commitment. This isn’t just diplomatic theatre—it’s a practical blueprint for regional energy transition that addresses both nations’ pressing climate and development needs.
Expanding Cooperation Across Renewable Energy Sectors
The new MoU institutionalises joint efforts across multiple renewable energy domains, moving beyond Bhutan’s traditional hydropower strength into diversified clean technologies. Solar and wind power feature prominently, alongside biomass conversion, green hydrogen production, and advanced energy storage systems. The agreement facilitates knowledge exchange, technical expertise sharing, and policy collaboration between Indian and Bhutanese institutions working on energy transition. Both countries aim to promote sustainable energy practices whilst supporting Bhutan’s ambitious green energy goals and India’s expanding renewable agenda.
Indian entities now have formal pathways to participate in new energy projects within Bhutan, creating commercial opportunities alongside governmental cooperation. The partnership leverages their long hydropower collaboration history—dating back to the 1970s—as a foundation for this expanded renewable engagement. Technical inputs and financial support flow both ways, ensuring mutual benefit rather than one-sided assistance in this evolving relationship. This proactive engagement reflects shared recognition that diversifying energy sources reduces climate vulnerability whilst advancing regional energy security objectives.
Strategic and Economic Benefits for Both Nations
The India-Bhutan energy partnership carries substantial strategic and economic weight for both countries in a rapidly changing energy landscape. Bhutan’s predominantly hydro-based power sector gains from diversification into solar, wind, and biomass, reducing vulnerability to climate variability affecting water resources. For India, the collaboration directly advances renewable energy targets whilst strengthening regional energy security through reliable cross-border clean power flows. The agreement’s emphasis on green hydrogen and cutting-edge energy storage technologies demonstrates forward-thinking approaches aligned with global clean energy trends. This partnership ensures energy supply stability in Eastern India whilst providing Bhutan with technical expertise and financial resources for infrastructure development.
Fuelling development, deepening friendship and driving sustainability!
Energy cooperation remains a key pillar of the India-Bhutan partnership. Today, we inaugurated the Punatsangchhu-II Hydropower Project. This is an enduring symbol of friendship between our countries. pic.twitter.com/amYDqzxD1Q
— Narendra Modi (@narendramodi) November 11, 2025
Both nations benefit economically through job creation in emerging green sectors and reduced fossil fuel import dependence over time. The MoU updates bilateral engagements to meet contemporary energy transition challenges, moving beyond outdated frameworks towards climate-aligned sustainable development. Researchers and policymakers will exchange data, cooperate on energy efficiency measures, and deploy modern technologies increasing clean energy access. The arrangement reflects broader ambitions for a sustainable energy future that aligns with international climate commitments both countries have made.
Capacity Building and Technology Transfer Initiatives
Capacity building and technical cooperation form critical pillars of this renewable energy agreement between the neighbouring nations. Both countries will collaborate on skill development programmes nurturing renewable energy expertise, enabling Bhutan to build self-sustaining green energy capabilities. Technology transfer proves crucial for implementing modern solar panels, wind turbines, biomass conversion systems, and innovative energy storage solutions. The agreement fosters mutual research and development initiatives aimed at enhancing energy efficiency and adapting technologies to Bhutan’s unique terrain.
This collaboration helps Bhutan accelerate its renewable energy roadmap by learning from India’s experience scaling solar parks and integrating smart grids. Sustainable livelihood opportunities emerge through green jobs created in these expanding sectors, benefiting local communities in both nations. Ensuring availability of energy-efficient products and sharing conservation best practices will amplify positive environmental impacts across the region. Experts from both countries will regularly exchange information to monitor progress, troubleshoot challenges, and optimise project outcomes collaboratively. The partnership emphasises practical knowledge transfer rather than theoretical frameworks, ensuring technologies deployed actually work in Bhutanese conditions effectively.
This renewable energy cooperation marks another milestone in the extraordinary bilateral relationship between India and Bhutan, founded on trust and shared development goals. The partnership reinforces connectivity and cultural ties rooted in Buddhist heritage and longstanding people-to-people contacts spanning generations. Following high-level talks and the 1020 MW Punatsangchhu-II hydropower project inauguration, this MoU showcases tangible outcomes of sustained collaboration. Officials stress continuous dialogue and transparent cooperation to meet climate challenges whilst promoting economic prosperity for both populations. The focus on green hydrogen and battery storage illustrates vision towards next-generation energy solutions that position both nations competitively. Together, India and Bhutan demonstrate how regional cooperation can build resilient, sustainable energy futures that benefit everyone involved.