Dagachhu Hydropower Project, located in the south-western part of Bhutan under Dagana Dzongkhag is run-of-the-river scheme developed on the left bank of the Dagachhu, located between 10.5 km and 20.2 km upstream of the confluence with the Sunkosh. The elevation of the project area and the catchment area ranges from 500 m to 4,000 m above the sea level. The feasibility study of the the 126 MW Dagachhu Hydropower Project was conducted by M/s Bernard Engineers, Austria in 2006 and was approved by Royal Government of Bhutan on July 10, 2006 to develop Dagachhu Hydroelectric Project as a CDM Project.The establishment of the Dagachhu Hydroelectric Project Authority was approved by Royal Government of Bhutan on April 27, 2007 to manage the business of development of the Dagachhu Project. Dagachhu Hydro Power Corporation Limited (DHPC) was incorporated under the Companies Act of the Kingdom of Bhutan 2000 on May 13, 2008 to undertake the construction of the Project.​The project was approved for implementation at an estimated cost of US$ 201.50 million, corresponding to Nu. 8.16 billion at 60:40 dept equity ratio at price level of 2008. This is the first Hydropower Project in the Kingdom financed through Public- Private Partnership. Due to poor geological conditions encountered at sites, the cost of the project has escalated to Nu. 13,215 million. The Austrian Development Agency, Republic of Austria has provided technical assistance for the Capacity Development to Bhutanese Department of Hydropower and Power Systems, RGOB.​The civil works of the project was constructed by Hindustan Construction Company and the supply and installation of Electro-Mechanical equipment's to Austrian Hydro Consortium Dagachhu (Joint Venture of Alstom & Andritz, Austria). The civil works was completed on January 19, 2025 and unit I & II were commissioned on February 21, 2015 and March 15, 2015 respectively. All the power from the project including the Royalty Energy is bring evacuated to India through a long term Power Purchase Agreement with Tata Power Trading Company Limited, India.