Together, Bangladesh, Bhutan, India and Nepal are home to 21 per cent of the world’s population . Notwithstanding the rich endowment of clean energy resources (natural gas, hydropower etc.), the region still predominantly depends on fossil fuel for meeting its energy needs which also includes electricity. With a sustained economic growth in the BBIN countries as forecasted by many studies, there will be a consequent increase in the demand for electricity in the region. With the heavy dependence on fossil fuels, the region also faces substantial climate change concerns.
Thus, to be able to cope up with the increasing need for energy in future and also to address sustainability concerns, there is an urgent need to explore opportunities for energy cooperation across borders in the BBIN region. This will helpto attain, among others, the following objectives:
At present the region already has existing arrangements for cross border electricity trade and they are expected to gain further traction in the coming days. To this end, this chapter explores the opportunities and challenges involved in cross border electricity trade in the BBIN region.
1.1. Social and Economic Indicators
Countries in the BBIN region are typically characterised by moderate economic growth, coupled with problems of unemployment and poverty, dependence on imports and predominance of fossil fuel in the energy consumption basket .
The countries in the BBIN region have significant diversities in their demographic composition, socio-economic features, business environment, openness to trade etc.:
1.2. Energy Reserves in the BBIN Sub-region
The potential total energy reserve of various energy forms in the BBIN region has been presented in Table 5 below. It is evident that there is significant variation in the energy reserves available in the BBIN region which offers opportunities for cooperation in regional economic cooperation in the energy sector. For example, if the hydropower capacity in Bhutan and Nepal be developed effectively, then the same can be exported to the other countries in the BBIN sub-region. Together accounting for a total 1,425.9 million population, India and Bangladesh provide an important market for the electricity imported from Nepal and Bhutan.
|Table 5. Energy Reserves in the BBIN Sub-Region|
|Country Name||Coal (million tonnes)||Oil (million barrels)||Natural Gas (Trillion Cubic Feet)||Biomass (million tonnes)||Hydro Power (Gigawattes)|
|Source: SAARC Regional Energy Trade Study, March 2010.|
1.3. An overview of electricity sector in the BBIN sub-region: Composition and usage pattern
3.1. System Operational Benefit
3.2. Economic and Financial Gains
4.1. The Greater Mekong Sub-Region (GMS)
The Greater Mekong Sub-region (GMS) comprises Cambodia, the People’s Republic of China (PRC), Lao People’s Democratic Republic (Lao PDR), Myanmar, Thailand, and Vietnam. Electricity cooperation in the region is characterised by trade between countries having varied energy resources. The Lao PDR, Myanmar, Vietnam, and the two PRC provinces account for about 94% of the hydropower resources in the region. Myanmar, Thailand, and Viet Nam possess natural gas deposits; Vietnam has the most oil reserves; and Yunnan Province, PRC holds the main coal deposits. Cross border electricity trade in the GMS have led to the following pattern of electricity trading :
The savings resulting from expanding the interconnection of GMS powersystems alone are estimated at $14.3 billion, mainly due to the substitution of fossil fuelgeneration with hydropower .
4.2. The Southern African Power Pool (SAPP)
The SAPP, or Southern African Power Pool, is an international power pool in Africa that aims at providing reliable and economical electricity supply to the consumers of each of the SAPP members.
The pool includes 12 countries in themainland African Region – Angola, Botswana, Democratic Republic of Congo (DRC), Lesotho,Madagascar, Mozambique, Namibia, South Africa, Swaziland, Tanzania, Zambia, and Zimbabwe. In SAPPcountries multiple interconnections were established between hydro-dominant and coal-dominantcountries to ensure that the systems do not become over-dependent on hydropower, which is proneto much more natural risks than coal .
SAPP has made it possible for members to delay capital expenditure on new plants due to the existence of interconnections and a power pool in the region. This is an important aspect in developing the economies of southern Africa.
4.3. The Nordic Pool
The Nordic Pool is the world’s first international exchange for power trading. It operates in Norway, Denmark, Sweden, Finland, Estonia, Latvia, Lithuania, Germany and the UK.
The Nordic countries deregulated their power markets in the early 1990s and brought their individual markets together into a common Nordic market. Estonia, Latvia and Lithuania deregulated their power markets, and joined the Nord Pool market in 2010-2013.Deregulation was undertaken to create a more efficient market, with exchange of power between countries and increased security of supply. Available power capacity can be used more efficiently in a large region compared to a small one, and integrated markets enhance productivity and improve efficiency.
Now that transmission capacity and coupling is in place between the Nordic countries, the European continent and the Baltics, the power market covers large parts of Europe. This means that power from many different sources– hydro, thermal, nuclear, wind and solar enters the grid. This ensures a more ‘liquid’ market, where large volumes are traded daily, and a more secure power supply .
5.1. India – Nepal Electricity trade
Nepal is predominantly dependent on India for importing electricity. Electricity trading is governed by bilateral agreements. Both countries share a long border, which has 22 cross border power exchange facilities operational at 132/33/11kV.
The second Nepal-India inter-country cross-border transmission interconnection, called the Dhalkebar-Muzaffarpur 400kV line project, includes the strengthening of the sub-national transmission network in Nepal and the development of cross-border interconnection. This would add 1,000MW of cross-border transfer capability as per the availability and demand in the respective countries .Presently, Nepal has started importing 80 MW power through the Dhalkebar-Muzaffarpur line charged at 132 KV. Efforts are underway to step up import 200 MW at 220 KV, and then to 600 MW by December 2017 at 400 KV .
Asapartof the Power Development Agreement signed between the Government of Nepal and Government of the India, efforts are being undertaken to create the infrastructure to facilitate evacuation of power from the hydro Power Stations in Nepal[like Arun-IIIHEP(4x225MW)by SJVNL,Upper Karnali(900MW)and Upper Marsyangdi(600MW)HEPs by GMR,India] to India .
An agreement has been signed between Power Trading Corporation (PTC), India and Government of Nepal for purchasing 150 MW of power from Nepal for 25 years once the proposed transmission link between India and Nepal is established.
5.2. India – Bhutan Electricity trade
In Bhutan, all electricity is generated from hydro projects, and it is estimated that current capacity accounts for only 6% of the total potential. During dry seasons (particularly winter), Bhutan imports electricity from India. India imports Bhutan’s surplus power to meet its domestic demand during summer and monsoon seasons. Further, to strengthen the transmission network, HVDC corridors are under construction.India imports 1,542 MW of power from Tala (1,020 MW), Chukha (336 MW), Kurichhu (60 MW) and Dagachu (126 MW)Hydro Power plants of Bhutan .
5.3. India – Bangladesh Electricity trade
A memorandum of understanding (MoU) was signed in January 2010 between Government of India and Government of Bangladesh for bilateral Co-operation in the areas of Power Generation, Transmission, energy efficiency, Renewable energy, Consultancy services, Training & Development, Constitution of Steering Committee on Working Group and establishment of grid connectivity between India and Bangladesh etc.
According to this MoU, NTPC will export 250 MW power to Bangladeshfor a period of 25 years from the unallocated quota available with the Ministry of Power, India. The tarifffor this power trade is determined by CERC regulations. In addition, a PPA has been signed between NTPC and Bangladesh Power Development Board (BPDB) for supplying 250 MW of electricity over a period of 3 years to Bangladesh. At present India is exporting 500 MW and 100 MW of power to Bangladesh through the Baharampur-Bheramara and Tripura-Comilla inter-connection respectively. Tripura state government has agreed to sell another 100 MW of power to Bangladesh from the Manarchak Thermal Power Plant in West Tripura.
|The Palatana Project: A Case in perspective|
The central government-owned Oil and Natural Gas Corporation (ONGC) has commissioned its biggest 726 MW-capacity commercial power project in southern Tripura's Palatana, 60 km south of Agartala, Tripura.
Uniqueness of the project lies in the fact that the heavyequipment and turbines to Palatana have passed through Bangladesh’s territory by road and waterways from Haldia port in West Bengal. In return the project will supply 100 MW electricity to Bangladesh.
Further, the level of cooperation was successful in securing a 10 GBPS bandwidth gateway for the entire North East via Bangladesh.
One of the most vital enabler for higher energy cooperation in the BBIN region will be the creation of a regional power market and progressing beyond the bilateral arrangements for power trade that presently exist. This will be beneficial for both the generating and importing country. For e.g. Bhutan exports power exclusively to India, with a regional power market it can export power to both Bangladesh and Nepal leading to market diversification. The other important pillar for such regional market to function will understandably be a regional grid network that is interconnected. India’s North East region has a lot of hydropower potential and some projects are already underway. To be able to effectively utilise such potential, evacuation of the generated power is essential. The North East region being land-locked, evacuation will be much less expensive affair when done through Bangladesh, wherein Bangladesh can get its share of power and wheeling charges for sending power to eastern India through its territories. India already has extensive transmission lines in its border states with Bhutan, Bangladesh, and Nepal. With the right kind of policy and infrastructure initiatives, a regional power grid and market can be a reality that will not only ensure energy availability across the region, but also effective use of all transmission infrastructures, further lowering costs. In the medium-term, intraregional trade in electricity in the BBIN region can be promoted by enhancing the scope of the existing bilateral energy trade arrangements between the countries, into a multilateral trade arrangement within a regional framework. However, for such a regional power market to function, the countries in the region would need to harmonise and coordinate their legal- regulatory frameworks, technical and institutional procedures. To this end, a BBIN regional framework agreement on power trading can be an effective enabler.
Many regional and national projects are presently on or soon to be commissioned to cater to the increasing energy needs of the BBIN region. Some of the key national, bilateral and regional projects may be listed as follows:
These projects are part of India and Bhutan framework agreement on hydropower development and trade,signed in July 2006 to develop 10,000 MW of hydropower from 10 large projects by 2020.
Bhutan India Bangladesh:
Other than those listed above there are several other projects planned/under construction in the region, both at the national and regional level. The Asian Development Bank (ADB) is providing financial assistance to many of the above listed projects and most of the Bhutan projects are being developed with assistance and loan from India. Many of these projects, including some of those listed above (e.g. Nalsing Gad project in Nepal), have had controversies surrounding them, mostly relating to displacement and environmental concerns. Two of the most controversial projects have been the 2000MW Lower Subansiri project along Assam-Arunachal border in India and the India and Bangladesh joint venture for a 1320 MW coal fired power plant at Rampal,Bangladesh.
Harmonisation of policies and regulations across borders is very crucial component in the implementation of an effective regional cooperation arrangement. Lack of harmonious policy framework is a major hurdle towards development of a regional power market in the BBIN region. On the lines of the SAARC Framework Agreement on Energy Cooperation, a framework agreement on energy cooperation in the BBIN region can help a lot towards bringing policy harmonisation and enabling regional trade. Some of the policy and regulatory challenges faced by the regionare mentioned below:
Infrastructural / Technical constraints:
Investment Challenges/ Financial Constraints:
There is an urgent need to promote cross border electricity trade in the BBIN region not only to facilitate energy security but also for holistic development of the region.Cross border electricity trade can followeither of the three international models discussed in the chapter or can take the major learnings from the existing models and synthesize a new model suited to regional needs.
The GMS and SAPP models in the cross border electricity trade is especially interesting since in both the cases there is an attempt to rationalise fossil based electricity generation and replace the same with cleaner sources.
However, the process of mainstreaming and institutionalising cross border electricity trade takes long time and the good part with the BBIN sub-region is, the process has already started though on a bilateral basis. The same needs to be up-scaled which will require political consensus among the policy makers coupled with investment support.