Dynamics of Electricity Demand: Analysis and Forecasting for Bhutan

Abstract

Bhutan is endowed with abundant renewable energy sources to generate electricity from hydro,
solar, and wind. Bhutan achieved over 99% electrification in 2016, well ahead of its year 2020
target. This paper provides a comprehensive overview of Bhutan’s electricity demand, a country
experiencing significant economic growth and accelerated energy demand growth. This study aims
to assess current trends and project future electricity demand. Bhutan's electricity demand has been
growing over the years, reaching 9,167 kWh per capita in 2024, with a 12% CAGR over two
decades. The industrial sector dominates consumption, accounting for over 88% of total demand,
while residential, institutional, and commercial consumers contribute just over 12%. Electricity
demand follows seasonal patterns, peaking in winter due to heating needs. To forecast low voltage
demand, the Holt-Winters method was used, a time series forecasting technique incorporating trend
and seasonality. This model effectively captures demand fluctuations, which are influenced by
economic growth and seasonal variations. The forecast for the existing and upcoming high voltage
industries are based on the contract demand, demand factor and load factor of existing industries.
Using the Holt-Winters forecasting method for low voltage and contract demand for industries, the
study projects a 15.05% CAGR in electricity demand over the next five years, with 94% demand
from energy-intensive loads. As demand outpaces supply, strategic planning, capacity expansion,
and policy actions are critical for ensuring reliable energy to support Bhutan’s socio-economic
development. The projections suggest that there is a need to enhance firm generation capacity to be
able to ensure energy security and meet the increasing demand and eliminate winter power deficits.