The growing Himalayan risks in Bhutan’s hydropower ties with India

The telephone line is barely holding up, but glaciologist Karma Toeb is too preoccupied to be bothered by it. He is busy inspecting a vulnerable glacial lake at 4,500 metres above sea level in Bhutan.

“The environment is changing so fast,” Toeb tells Dialogue Earth over the crackling connection. “I feel quite sad… I also feel quite angry because with these kinds of changes, there are a lot of impacts downstream, including risks and hazards.

“We [Bhutan] are not contributing anything to the impact of climate change, but still we have to face this burden.”

Toeb is at the Thorthormi glacial lake in Lunana, a settlement in north-west Bhutan that’s among the country’s most remote. For his 32nd visit to the lake since 1997, Toeb is leading a team of experts testing technology that determines if the lake can be drained to reduce the risk of a glacial lake outburst flood (GLOF).

A GLOF from the lake complex, which includes Thorthormi and Raphstreng lake right below it, could threaten two major hydropower projects. Punatsangchhu-II is a 1-gigawatt (GW) project that began operating in December 2024, while the 1.2 GW Punatsangchhu-I is still under construction.

For years, Bhutan has been working on ways to protect its population and key hydropower projects from potential GLOFs in Lunana. Apart from attempts to drain glacial lakes, Bhutan has also been upgrading its early-warning system, moving from flood detection towards forecasting that could offer more time to respond.

Its efforts are facing renewed urgency and public attention in the wake of the devastating floods in neighbouring Nepal and China on 26 August. The disaster has left a trail of destruction: alongside a death toll reaching nearly 1,500, at least 15 hydropower plants and transmission infrastructure were damaged, disrupting generation and exports, and prompting Nepal to seek additional electricity from India.

A potential GLOF at Thorthormi could impact Bhutan similarly, leaving Lunana residents – and the government – worried.

Hydropower contributes a substantial 12-15% to Bhutan’s GDP, with electricity revenues accounting for about 40% of export and 36% of government revenues.

The energy source has also been important for diplomatic ties between India and Bhutan. India is currently the sole importer of Bhutanese hydropower. The two countries have spent decades building dams, transmission links and financial arrangements around the trade. Most of Bhutan’s hydropower-related debt has also been historically linked to projects financed by the Indian government. Both Punatsangchhu projects have been partly funded by India.

In 2025, electricity exports to India reached BTN 24.3 billion (USD 285 million) after Punatsangchhu-II began operating, helping Bhutan’s economy grow nearly 9%.

Mostly mountains

The recent floods in Nepal highlight the need “to consider a broader range of cascading and compound hazards [in the Himalayan mountains]” rather than conventional rainfall and flooding risks alone, says Michael Williamson, chief of the Sustainable Energy Development and Utilization Section at the UN Economic and Social Commission for Asia and the Pacific. This includes ice and rock avalanches, landslides and GLOFs.

For new hydropower projects, “more systematic screening for cascading and compound hazards” could be conducted before major investments are committed, he notes.

Almost 99% of Bhutan’s territory is mountainous, and its glaciers are becoming increasingly unstable as temperatures rise.

High-altitude headwaters of Bhutan’s Pho Chhu sub-basin include Thorthormi, Raphstreng and Luggye glacial lakes (Map: Dialogue Earth)

Its 2026 glacial lake inventory recorded an increase from 567 to 620 lakes over the last five years. The Pho Chhu sub-basin, which covers part of Bhutan’s north-west and is home to Thorthormi and Raphstreng, saw the largest increase, from 157 to 187.

A 2024 study of the basin estimated that a GLOF from Thorthormi and Raphstreng lake could produce a peak discharge of nearly 16,400 cubic meters of water per second within four hours. This would inundate up to 245 hectares of agricultural land and nearly 1,300 buildings, and put both Punatsangchhu-I and II at serious risk.

Raphstreng’s moraine dam has stabilised, but Thorthormi’s hasn’t, says Trashi Namgyal, chief of the Hydrology and Water Resources Division at Bhutan’s National Center for Hydrology and Meteorology (NCHM).

Official assessments have also documented flooding, riverbank erosion and landslide risks around other hydropower projects elsewhere in Bhutan, such as the 336-megawatt (MW) Chhukha and 60-MW Kurichhu.

Dasho Chewang Rinzin is managing director of Druk Green Power Corporation, a state-owned electricity utility and Bhutan’s main hydropower developer and operator. He says a GLOF should not affect Bhutan-India energy cooperation.

“During an actual event, generation may need to be backed down temporarily in affected areas [to reduce risk to power infrastructure], but otherwise, the electricity grid is very strongly connected,” he says.

But the risk is not limited to floodwater. A former official at state-owned utility Bhutan Power Corporation, requesting anonymity, says that it is not enough for the dams to have enough spillway capacity. They may still face serious problems if a flood carries heavy debris, sediment, boulders and trees, as these can choke tunnels, gates and intakes.

Recent regional floods illustrate the risk. The Rasuwagadhi hydropower project in Nepal was completely washed away in the August floods. Last year, a GLOF in the same region deposited more than two metres of sediment while washing away structures designed to keep out debris. In Bhutan, flash floods and landslides in north-eastern Lhuentse in July 2023 killed at least six people and damaged the 32-MW Yungichhu hydropower project.

The new tech

The team is testing siphon technology, a method of controlled reservoir drainage, to lower Thorthormi’s water level. An attempt last year was unsuccessful, but the team is now testing the technology at a new site near the existing outlet, after adjusting for the topography, site conditions and engineering problems identified during the first attempt, Toeb says.

The siphon project is part of wider efforts to reduce GLOF risks alongside use of early-warning systems. Bhutan currently has 10 upstream hydro-meteorological and water level monitoring stations, as well as 18 siren stations along the Punatsangchhu basin. Among these are monitoring stations in several glacial lakes in the Lunana region, which lie about 130 kilometres upstream from the Punatsangchhu hydropower projects.

But the current system relies on detecting floods as they develop. Since at least 2017, the NCHM has been working on a forecast-based warning system that would use indicators such as rainfall and temperature to provide earlier warnings.

Punakha Dzong lies 90 kilometres downstream of Thorthormi lake at the confluence of Pho Chhu and Mo Chhu rivers (Image: Pema Dendup / Punakha Dzongkhag Administration)

In the worst-case scenario modelled by NCHM, Thorthormi and Raphstreng overflow into each other.  

Based on the existing detection system and simulation, the model estimates that it would take about six hours for the floodwaters in this scenario to reach the historic fortress of Punakha Dzong. The forecast-based system would provide more lead time than the current system, and although Namgyal says it is not yet possible to say how much, “we will save a lot of lives” with it, he notes.

Not just megawatts

The first phase of India-Bhutan hydropower cooperation centred around the Chhukha, Kurichhu and Tala projects, with a combined capacity of 1.4 GW. Since 2019, capacity has been expanded by another 2.5 GW with Mangdechhu and Punatsangchhu-II.

Hydropower has been central to Bhutan’s growth, says Udisha Saklani, a human geography and climate lecturer at King’s College London in the UK who has researched India-Bhutan hydropower.

India’s role goes beyond financing and technical expertise. Its geographical proximity provides Bhutan a large market for electricity that cannot be consumed domestically, Saklani notes.

Prolonged disruption to Bhutan’s hydropower would impact its economy by preventing sale of electricity to India, she adds. “There’s going to be a hydropower debt [for the projects] because a hydropower project is an expensive, long-term undertaking.”

India would face less severe impacts. Bhutanese hydropower forms a small share of India’s 520 GW electricity system. Meanwhile, Bhutan exports an estimated 65% of its 2.5 GW hydropower capacity to India, according to Debajit Palit, head of the Centre for Climate Change and Energy Transition at the non-profit Chintan Research Foundation.

But cross-border connections can also serve to build resilience in the region, notes Williamson. After the Nepal floods, “India was able to redirect electricity to Nepal through existing interconnectors”, helping manage the immediate supply shortfall.

For India, sourcing hydropower from both Bhutan and Nepal provides “greater diversification of commercial and counterparty risk than of physical climate and geological risk,” Williamson says. It also spreads India’s exposure across different regulatory systems, generation companies, transmission corridors and river basins. This means a disaster affecting one plant or transmission corridor would be less likely to cut off India’s entire imported hydropower supply, he notes.

But Bhutanese hydropower isn’t just about the number of megawatts crossing the border, Saklani notes: “It also balances the grid which contains large amounts of variable renewable energy” such as solar and wind. Hydropower can complement these by providing electricity when their output fluctuates.

The resilience of that system depends not only on individual projects, but on how risks are assessed before new infrastructure is built.

“The planning of hydropower facilities has been evolving from conventional models to consider shifting hydrological conditions and the impacts of climate change,” Williamson says. “The Nepal disaster demonstrates the need to expand and update current approaches to create increasingly robust planning processes.”

Financial risks

Bhutan’s 2025 National Energy Policy sets an ambitious target of 15 GW of hydropower capacity by 2040, up from 3.5 GW that year. The policy also identifies climate impacts and unpredictable hydrological inflows as challenges to energy security, and calls for greater grid flexibility, battery storage and diversification to include other renewable sources.

But Bhutan is already deep in hydropower debt.

The country’s public debt, which hovers near 100% with nearly 70% tied directly to hydropower loans, presents a unique paradox: an extended disruption in generation would severely strain national liquidity, but pose little risk of an immediate sovereign default, according to a joint World Bank-IMF Debt Sustainability Analysis. This is because most of Bhutan’s hydropower-related debt has historically been linked to projects financed by the Indian government. Some new projects are being developed through joint ventures with Indian companies.

Extended disruption to Bhutan’s hydropower generation could put pressure on public finances and the broader economy, the analysis notes. But the structure of its hydropower debt and its financing and power-purchase arrangements with India mitigate the risk of debt default.

As hydropower expands in Bhutan, the country is incorporating climate risks into planning, including through stronger dam-safety norms and consideration of the risks of building multiple projects along the same river basin, notes Saklani.

But “how much of that policy and guideline is actually going to transfer into practice is a big question”, she says.

For people living downstream of Thorthormi and Raphstreng, the threat feels imminent. 

Lunana resident Gup Kaka, who is in his 50s, remembers running uphill with his family and other villagers when Luggye lake burst its banks over three decades ago. “It was only after Luggye GLOF in 1994 [that] we the people of Lunana started to understand the risks of GLOF, and so did the government,” Kaka says. His home is just a few kilometres from Thorthormi and Raphstreng, and he notes that what happened in Nepal recently has sent shockwaves and heightened fear among the people of Lunana.

Further downstream, people have been making evacuation plans. In Punakha Dzong, early last month, authorities conducted a GLOF evacuation drill, with activities including strengthening risk awareness, identifying escape routes and establishing and orienting evacuation teams.

Bhutan’s prime minister Tshering Tobgay reportedly said last month that the early warning system provides up to six hours to evacuate the Punakha Dzong area in the event of a GLOF at Thorthormi. In the aftermath of the Nepal floods, this, alongside the drills and increased awareness, “has given us some hope that we could evacuate [in] time”, says one resident.