Developing Dagachhu

21 February 2011

Among the many hydropower schemes that Bhutan is developing through bilateralco-operation, it is constructing another – Dagachhu – with the help of Austria. Report by Patrick Reynolds

Construction work is underway in Bhutan on the 124MW Dagachhu hydropower project, which will be equipped with electrical and hydro-mechanical equipment to be supplied by a joint venture of alstom Hydro and andritz Hydro. The underground plant is due to be completed and operational by early 2013.

The high-head project is located in the south west of Bhutan, in Dagana province which is one of the remotest in the country, is heavily forested and has wet summers and cool, dry winters. While the region is remote and terrain difficult, it is only a straight distance of 40km from the capital, Thimphu.

The project will use the waters of the Dagachhu River, which is a tributary of the Punatsangchhu, which drains into the Brahmaputra in eastern India. While being a run-of-river project, it will call for significant civil engineering infrastructure, much of it underground including the powerhouse, located almost 12km upstream of the confluence of the Dagachhu and Punatsangchhu rivers. The intake is nearly 9km farther up the Dagachhu valley.

Gross head is 304m and the maximum design discharge is approximately 50m3/sec, and the plant is expected to generate about 515GWh of electricity per year. Hydrological risk combined with no water storage led the feasibility study and also due diligence by a major lending bank – the Asian Development Bank (ADB) – to apply a plant load factor of 52% to the project, which is relatively low.

The project is being developed by Dagachhu Hydro Power Corp (DHPC), a special purpose company which was founded by Druk Green Power Corp (DGPC) – the national owner and operator of all large hydro plants in Bhutan. DGPC holds a 59% stake with the other equity partners Tata Power of India (26%) and Bhutan’s National Pension Provident Fund (15%). Tata also arranged the Power Purchase Agreement (PPA) for the import of electricity to India.

Lot 1 civil engineering works are being undertaken by Hindustan Construction Co (HCC). The project will require construction of new and upgrade access roads as well as a 19.5km long, 220kV transmission connection to the existing grid.

Funding for the scheme, budgeted at Euro151M (US$198M), was provided by Bhutan, the Asian Development Bank (ADB) and also Austria, via the Oesterreichische Kontrollbank (OeKB).


Early studies on Dagachhu benefited from significant support from Austria, and involved Bernard Ingenieure ZT GmbH from 2005, and support from Poyry Energy. There was also support from the Austrian Development Cooperation (OeZA) agency. Previous collaboration with Austria led to development of the Basochhu Upper and Lower projects.

Over 2005-6 the project design document for Dagachhu, under the UNFCCC assessment needed for CDM registration and carbon credits, was completed. The feasibility study was also undertaken in parallel in the latter part of that period. As the analyses were further reviewed and developed, however, the relative importance of the revenue share from carbon credits increased due to there having been, it was viewed, over-optimistic views of electricity prices and a better accounting for Bhutan getting a share of output for free.

The validation report by Det Norske Veritas Certification AS (DNV), undertaken at the request of Poyry Energy, concluded that Dagachhu meets all relevant UNFCCC requirements for CDM and relevant cost party criteria, and correctly applies the required baseline and monitoring methodology. Total emission reductions resulting from the electricity generation of the hydropower project are approximately 0.5M tonnes of CO2-equivalent per year over the selected 7-year renewable crediting period.

HCC is undertaking the Lot 1 package of the project, which includes: a diversion weir; intake; connection channel; desilter; flushing channel; a headrace channel and a 7.7km long headrace tunnel; surge shaft; pressure shaft; powerhouse and transformer caverns; control building; and, tailrace tunnel. The contractor’s design consultant is SNC-Lavalin.

alstom-hydro and Andritz Hydro are working together in a joint venture, led by Alstom – Austrian Hydro Consortium Dagachhu – to supply the turbines, generators and associated hydraulic, mechanical, electrical and control equipment for the Dagachhu project. The consortium was awarded a Euro55M (US$72.2M) turnkey E& M contract in mid-2009.

For almost Euro29.7M (US$39M), or 54% of the supply contract value, Alstom is supplying two 70 MVA generators, six transformers and the balance of electrical plant, including automation and protection systems. The generators are being made in Switzerland, the transformers and associated equipment in India, the control and remaining electrical equipment as well as project management services are being provided from Austria.

With a supply contract value of about Euro25.3M (US$33.2M), Andritz is manufacturing and providing two 6-nozzle Pelton turbines and all the hydraulic steelwork for the project.

The two generating units are to be operational by the end of the first quarter of 2013, and the warranty period is two years.

Bhutan hydro

The Dagachhu power plant is one of a number of hydropower schemes in various stages of development in Bhutan and much of its output will be exported to India.

Bhutan’s hydropower potential is estimated to be about 30GW, of which 80% is anticipated to be feasible for development. However, progress towards developing the hydropower potential has had to rely in a major way on external funding due to the lack of internal resources and limited foreign direct investment.

Existing hydro projects in Bhutan include the Chhukha and Kurichhu, developed with support of India, and the Basochhu Upper and Basochhu Lower schemes with Austrian help. The Tata plant is the largest built so far.

• Chhukha – a 336MW (4 x 84MW) plant that was commissioned over 1986-88, and is equipped with Pelton turbines. It is located in the Wangchhu river basin.

• Kurichhu – a 60MW (4 x 15MW) plant with annual generation of about 400GWh of electricity though was built in the Drangmechhu river basin less for straight hydro but more for socio-economic reasons, and so had a relatively high cost per MW for developments in the country. The plant is at the toe of a dam and is equipped with Kaplan turbines. It was commissioned in 2001, and funded by a combination of bilateral assistance and a soft loan from India.

• Basochhu Upper is a 24MW plant (2 x 12MW) and Basochhu Lower is a 40MW facility (2 x 20MW) , both in the Punatsangchhu river basin. They were commissioned in 2001 and 2004, respectively. Each is equipped with Pelton turbines.

• Tata – the 1,020MW (6 x 170MW) scheme in the Wangchhu river basin was commissioned over 2005-6.

Bhutan has taken two approaches to developing its hydro resources – bilateral agreements, and support via international financial institutions.

As noted, Bhutan has a bilateral relationship with Austria which has assisted in its development of hydro. Austria has been active in its hydro contact with Bhutan since the 1980s, and at the end of that decade the countries signed a technical co-operation agreement.

The prime bilateral relationship, though, is with India. The countries have a strategic partnership to jointly develop a series of hydropower projects with much of the electricity generated to be exported. The countries signed a development agreement in 2006 but have been cooperating on the energy sector since the early 1960s.

Projects under development for the bilateral strategy with India include the 1.2GW Punatsangchhu-I scheme, on which HCC is working, and so also is compatriot contractor Larsen & Toubro (L&T).

The Punatsangchhu river basin has been estimated to have the potential for 19 hydro projects with combined capacity of about 8.1GW to generate around 25,500GWh of electricity per year. The Manas valley has even more potential and while there is less in the Amochhu and Wangchhu basins it is still significant.

Daggachuu River Daggachuu River
Tunnel Tunnel
Construction Construction

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