Bhutan aims to build a Nu 40 bn green hydrogen facility

2026-02-16 - 07:57

Druk Holding and Investments (DHI) pitched a green hydrogen facility powered by renewable hydropower at the Bhutan Investment Summit. Phase I of the project will focus on green hydrogen production through electrolysis using renewable electricity, while Phase II will expand into downstream products, including green ammonia (NH3), urea, methanol, and other synthetic fuels. DHI stated that the project aligns with Bhutan’s carbon-neutral commitment and is positioned to supply green hydrogen to the Indian market. The project benefits from a strategic location, situated approximately 50 km from the IOCL Bongaigaon Refinery and within 500 km of multiple other refineries and fertiliser plants. The delivered cost of hydrogen from the facility is estimated at approximately USD 3.2 per kilogram, lower than the cost of green hydrogen produced in India. The project also benefits from strong market pull from Indian refineries and fertiliser producers seeking to meet decarbonisation mandates. The total project investment is estimated at around Nu 40,499 million (USD 448 million). Investment structures are open for discussion and include multiple investors, debt financiers, technical partners, and off-takers. Potential customers include Indian refineries, which are transitioning toward green hydrogen, and the fertiliser sector, which currently relies on grey hydrogen imports for around 50 percent of its requirements. The project may also supply hydrogen to the mobility sector under the Hydron Roadmap 2024 and has potential export opportunities to Bangladesh. Founder projections indicate an internal rate of return (IRR) of 14.2 percent and a net present value (NPV) of USD 703 million. Potential risks include ensuring a constant supply of large volumes of electricity, which will be mitigated through an agreement with the Department of Energy to secure electricity supply. Another risk is securing off-takers prior to production, which will be addressed by requiring off-taker confirmation before production begins. Transportation of hydrogen is another consideration, and the project plans a dedicated pipeline to the off-taker site located 50 km from the plant. The project is considered investable due to the availability of surplus hydropower for low-cost electricity, government encouragement of green industries through regulatory and policy support, and strong market demand from Indian refineries and fertiliser producers.