Potential Gains from Regional Cooperation
and Trade of Electricity in South Asia
Govinda R. Timilsina and Mike Toman
The World Bank, Washington, DC
5th Asian Conference of IAEE
University of Western Australia
Perth, Australia
14-17 February 2016
Disclaimer
The views expressed in this presentation are those of the
speaker’s only, and do not necessarily represent the World
Bank and its affiliated organizations
Presentation Outline
Motivation
Analytical approach
Baseline results
Results from full regional trading scenario
Sensitivity analysis
Conclusions
Motivation
Why do we need expansion of cross-border or regional trade
on electricity in South Asia?
Supply deficit and huge room for demand growth
Diversity on resource availability across nations and states/provinces
Surplus hydro resource in some nations whereas a high demand for it
in the others
Peak load sharing due to seasonal disparity in demand
Environmental and climate change obligations
The region is lagging much behind from other parts of the world on
regional electricity trading
Per capita electricity consumption 1
22
20
5
21
8
24
0
33
5
34
8
37
7
41
8
47
0
49
4
52
5
55
0
60
2
67
5
73
6
85
0
87
4
88
0
90
3
95
2
96
7
1,0
28
1,1
12
1,1
32
1,2
22
1,3
40
1,3
80
1,5
27
1,5
47
1,6
15
1,6
51
1,7
43
2,2
64
Bih
ar
Assam
Naga
lan
d
Ma
nip
ur
Tri
pu
ra
Uttar
Pra
desh
Miz
ora
m
Laksh
adw
ee
p
Aru
na
ch
al P
rade
sh
And
am
an &
Nic
ob
ar
Kera
la
We
st
Be
nga
l
Ma
dhya
Pra
desh
Me
gha
laya
Raja
sth
an
Sik
kim
Orissa
Jh
ark
ha
nd
Karn
ata
ka
Ja
mm
u &
Ka
shm
ir
And
hra
Pra
desh
Ma
hara
sh
tra
Uttara
nch
al
Tam
il N
ad
u
Hary
ana
Chan
dig
arh
Him
ach
al P
rad
esh
Pun
jab
Chatt
isga
rh
Guja
rat
Delh
i
Pud
uche
rry
Goa
kWh in 2010
Source: World Bank (2013) for countries and PIB, GOI (2011) for Indian States
As a multiple of India's consumption
Brazil 4
China 5
South Africa 8
South Korea 16
US 22
Kuwait 30
Iceland 84 1163
61
6
45
7
449
279
93
Bhuta
n
India
Pakis
tan
Sri
Lan
ka
Bang
lade
sh
Ne
pa
l
Electricity Supply Deficit
Available capacity below the peak load in 2011-12 (%)
-44
-26
-25
-11
-10
Ne
pa
l
Bang
lade
sh
Pakis
tan
India
Sri
Lan
ka
-25
.0
-22
.1
-18
.9
-17
.5
-16.9
-16
.3
-15
.7
-14
.8
-14
.4
-10
.6 -7.1
-7.1
-7.1
-5.4
-5.3
-5.1
-5.0
-4.9
-4.5
-4.2
-3.3
-2.5
-2.3
-1.8
-1.8
-0.9
-0.9
-0.7
Ja
mm
u &
Ka
sh
mir
Maha
rashtr
a
Karn
ata
ka
Ta
mil
Nad
u
Punja
b
Megh
ala
ya
Jhark
ha
nd
Andh
ra P
radesh
Bih
ar
Goa
Him
achal P
rad
esh
Raja
sth
an
Madh
ya P
radesh
Nag
ala
nd
Assam
Ke
rala
Sik
kim
Miz
ora
m
Chh
attis
ga
rh
Hary
ana
Unio
n T
err
itori
es
Aru
nachal P
radesh
Utta
r P
radesh
Guja
rat
Orissa
West B
en
gal
Manip
ur
Utta
rakhan
d
Source: National Electricity Authorities for Bhutan, Bangladesh,
Nepal, Pakistan and Sri Lanka and CEA (2012a) for India
Future Demand
Load Forecasts (2021-22) - MW 1
50
18
9
19
6
31
9
44
5
66
6
75
1
1,4
29
2,8
49
2,9
07
3,8
57
3,9
85
5,6
34
5,9
16
7,2
79
9,1
29
9,5
67
10
,07
4
12
,06
9
12
,55
7
15
,07
2
15
,10
1
16
,12
9
17
,46
4
18
,35
2 25
,44
7
26
,83
4
28
,21
6
29
,81
5
35
,94
4
Sik
kim
Aru
na
ch
al…
Miz
ora
m
Naga
lan
d
Ma
nip
ur
Tri
pu
ra
Me
gha
laya
Go
a
Uttara
nch
al
Him
ach
al P
rad
esh
Ja
mm
u &
Ka
shm
ir
Assam
Un
ion T
err
ito
ries
Kera
la
Chatt
isga
rh
Jh
ark
ha
nd
Bih
ar
Orissa
Delh
i
Ha
rya
na
We
st
Be
nga
l
Raja
sth
an
Ma
dhya
Pra
desh
Karn
ata
ka
Pun
jab
Guja
rat
Uttar
Pra
desh
And
hra
Pra
desh
Tam
il N
ad
u
Ma
hara
sh
tra
18
,83
8
46
2
2,3
63
59
,19
0
5,2
96
Ban
gla
de
sh
Bhu
tan
Nepa
l
Pakis
tan
Sri L
an
ka
Total Indian Peak
Load = 381,000 MW
Source: National Electricity Authorities for Bhutan, Bangladesh, Nepal, Pakistan and Sri Lanka and CEA (2012c) for India
Seasonal complementarity on electricity
demand
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Bangladesh India - NE Bhutan India - East Nepal India - North India - West Pakistan India - South
Difference in color for across grids for a month indicates seasonal complementarity
Summer or Monsoon season complementarity is the strongest as hydro rich
Bhutan and Nepal have surplus power to export to high demand grids in India,
Bangladesh and Pakistan
Source: Timilsina, GR (2014), An Overview of Power System in South Asia, Incomplete Draft Paper
Low Medium High
Monthly electricity demand
The Model
Our focus is on a longer-term, 2015-2040 planning horizon;
The model jointly optimizes both generation and transmission
interconnection systems;
Key input data include: electricity load projections; capacity and
operation costs and thermal efficiencies of each type of power
plant; resource profiles for renewable energy sources; and fuel
prices;
The methodology and key assumptions were agreed among Bank
Country Office and other experts in a regional meeting held in
Kathmandu in November 2013.
Electricity Load Forecasts
• Official load forecasts received from government sources and exogenous to
the model;
• For later years, especially after 2025, for which load forecasts are not
available, they are projected based on population and income growth.
5%
7%
2%
5%
6% 6%
4%
5%
Afg
hanis
tan
Ban
gla
de
sh
Bhu
tan
Ind
ia
Nepa
l
Pakis
tan
Sri L
anka
Sou
th A
sia
Annual Average Load Growth
Baseline Results: Installed Capacity (MW)
2015 2040
Afghanistan 1 7
Bangladesh 16 68
Bhutan 4 15
India 276 784
Nepal 1 9
Pakistan 25 173
Sri Lanka 3 12
South Asia 325 1,067
Installed Capacity (GW) Ratio of 2040 to 2015 capacity
2.8
3.3
3.7
3.8
4.3
7.0
10.7
13.3
India
South Asia
Sri Lanka
Bhutan
Bangladesh
Pakistan
Nepal
Afghanistan
Baseline Results: Capacity Mix
30%
92% 75% 75%
30% 57%
34% 64%
59%
3%
1% 2%
11% 2%
30%
7%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2020 2040 2020 2040 2020 2040 2020 2040
Bangladesh India Pakistan Sri Lanka
Others
Gas
Coal
Hydro
8
12
13
25
77
206
518
859
Nepal
Afghanistan
Sri Lanka
Bhutan
Bangladesh
Pakistan
India
Total
Baseline Results: Investment Requirement
Cumulative (undiscounted) investment over the 2015-2040 period
Baseline Results: Power Sector CO2
Emissions
Power sector GHG Emissions
(Million tCO2)
Ratio of 2040 to 2015 GHG Emissions
2015 2040
Bangladesh 29 265
India 915 2,660
Pakistan 71 438
Sri Lanka 6 24
South Asia 1,021 3,387
2.9
3.3
4.1
6.2
9.1
India
South Asia
Sri Lanka
Pakistan
Bangladesh
Full Trading - Impacts on Installed Capacity
Changes in total installed capacity from the baseline in 2040 by country (GW & %)
(51%)
(-17%)
(62%)
(4.5%)
(560%)
(-8%)
3.6
-11.3
9.1
-35.1
52.1
-13.1
-0.5
4.8
Afg
ha
nis
tan
Ba
ngla
desh
Bh
uta
n
Ind
ia
Ne
pa
l
Pa
kis
tan
Sri L
an
ka
To
tal
(0.5%)
(-4%)
Changes in total installed capacity from the baseline in 2040 by technology (GW and %)
-9.3
71.6
-54.3
-6.6
3.4
Gas T
urb
ine
Hyd
ro
Co
al
Win
d
Co
mb
ine
Cycle
Full Trading - Impacts on Installed Capacity
(-15%)
(42%)
(-9%)
(6%)
(-6%)
3,300 10,015 8,538 5,400 2,117
50,265
14,900
500
Afg
ha
nis
tan -
Pa
kis
tan
Ba
ngla
desh
-In
dia
Bh
uta
n -
Ba
ngla
desh
Bh
uta
n -
Ind
ia
Ne
pa
l -
Ba
ngla
desh
Ne
pa
l -
India
Pa
kis
tan -
Ind
ia
Sri L
an
ka
- I
nd
ia
Change in cross-border interconnection
capacity from the baseline (GW)
In the baseline, there would be only 9,425 MW of cross-boarder interconnection
Capacity (India-Bhutan: 7800 MW, India – Nepal: 1125 MW and
India – Bangladesh: 500 MW)
Full Trading - Impacts on Grid
Interconnection
Regional Trade
Baseline
North Eastern
India
Bangladesh
Bhutan Nepal Northern
India
Western
India
Eastern
India
Southern
India
Sri Lanka
2,8
50
5,2
38
5,6
00
7,178
7,810
7,800
1,636
4,800
23
,30
4
9,777
10,677
9,600
75
500
Pakistan
3,600
Afghani
stan
2,3
00
10,100
500
41,6
56
48,540
1,0
50
26,078
9,115 1,400
2,117
8,538
Grid interconnection capacity in the baseline and
regional trading scenarios (MW)
Grid Interconnection (more Details)
Regional Trading Scenario: Impacts on
Electricity Supply Costs
Changes in total investment and fuel costs
over 2015-2040 relative to baseline (Billion
US$) 21
-114
Investment Fuel cost savings
Savings/Investment ratio exceeds 5
Regional Trading Scenario: Impacts on
Power Sector CO2 Emissions
Changes in 2015-2040 cumulative CO2 emissions from the baseline (Million tons and %)
-1,170
-2,949
-322
12
-4,429
Ba
ngla
desh
India
Pa
kis
tan
Sri L
an
ka
To
tal
(-32.8%)
(-6.5%)
(-7%)
(-8.2%)
Sensitivity Analysis
Seven sensitivity analysis
Increased demand
Increased coal price
Lower availability of hydropower due to climate change
Lower costs of renewables (wind and solar)
Sub-regional trading instead of full regional trading
Delays in planned or committed projects
Carbon pricing
Sensitivity analysis: Higher demand growth
If the electricity demand in each country grows 1%
more each year than assumed in the baseline (regional
demand for electricity increases 6.2% on average
instead of 5.2% assumed in the baseline), then:
Baseline Regional Trade
Installed Capacity 24% 24%
Transmission Interconnection 16% 22%
Total cost for electricity supply 28% 29%
CO2 Emissions 19% 21%
Sensitivity analysis: Higher coal price
If the growth of coal prices increases by 1% more than
assumed in the baseline (1.9% instead of 1% in the
baseline):
Baseline Regional Trade
Installed Capacity
Coal (-5%); Hydro
(1%);Wind (4%);
CC (43%)
Coal (-4%); Hydro
(4%);Wind (12%);
CC (21%)
Transmission Interconnection -15.5% -2.5%
Total cost for electricity supply 6.3% 5.6%
CO2 Emissions -1.6% -2.2%
Sensitivity analysis: Higher price and lower
availability of hydro
If the capital cost of hydro increases by 10% and
availability of hydro generation decreases by 10% due
to drought:
Baseline Regional Trade
Installed Capacity
Coal (0.5%); Hydro (-
2%);Wind (3%); CC
(3%)
Coal (2%); Hydro (-
1.3%);Wind (5%);
CC (3%)
Transmission Interconnection -0.2% -2.1%
Total cost for electricity supply 2.2% 3.6%
CO2 Emissions 1.2% 2.3%
Sensitivity analysis: Lower costs for wind
and solar
If the capital cost of wind decreases by 24% (from
US$1900 to US$1440/kw) and capital cost of solar
decreases by 32% (from US$2200to US$1490/kw):
Baseline Regional Trade
Installed Capacity
Coal (-2%); Solar
(64%);Wind (25%);
CC (-5%)
Coal (-2%); Solar
(98%);Wind (34%);
CC (-2%
Transmission Interconnection -4% -5%
Total cost for electricity supply -1.6% -1.9%
CO2 Emissions -1.8% -1.3%
Key Conclusions
All countries in South Asia will gain from regional
electricity cooperation over the 2015-2040; the
benefits-cost ratio at the regional level exceeds 5.
Although the contribution of cross-border trade to meet
India and Pakistan’s total electricity demand would
be relatively small (approximately 5%, because
of their large size of demand), it would absorb almost
all economic potential of hydropower resources in
Afghanistan, Bhutan and Nepal.
Regional trade enhances the exploitation of cleaner
source of electricity generation; power sector CO2
emissions reduces by 8%.
Full Paper Link
http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2015/
06/26/090224b082f93b46/1_0/Rendered/PDF/How0much0could0peration0and0trad
e00.pdf
THANK YOU
Govinda R. Timilsina
Sr. Research Economist
Development Research Group
The World Bank
1818 H Street, NW
Washington, DC 20433, USA
Tel: 1 202 473 2767
Fax: 1 202 522 1151
E-mail: [email protected]
