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Economics of Regional Energy Cooperation: Nepal Case Study
Dr Priyantha D C WijayatungaHead, Portfolio Management Unit
Nepal Resident MissionAsian Development Bank
6th Japan-SAARC Energy Symposium6-7 March 2013
Kathmandu, Nepal
Outline Need for Regional Cooperation Regional Energy Trade Study India-Nepal Interconnections Economic benefits Final Remarks
2
Regional cooperation? Wide variation in resource endowments
Hydropower, coal, natural gas and other renewable energies
Sharing of low cost energy resources Full potential not exploited
Economic opportunities energy exporting countries Enhanced opportunities for climate change
mitigation Single fuel dominance
Energy resource diversification and energy security Acute power shortages
3
4
Energy Sector
Traditional Fuel Use
Energy AccessB
angla
...
Bhuta
n
India
Nepal
Sri
Lanka
0%
20%
40%
60%
80%
100%
Contr
ibuti
on o
f Tra
di-
tional Fuels
Afg
ha
nis
tan
Ba
ng
lad
esh
Bh
uta
n
Ind
ia
Ma
ldiv
es
Ne
pa
l
Pa
kis
tan
Sri
La
nka
0%
20%
40%
60%
80%
100%
120%
5
Energy Sector ….
Demand Supply Gap
Bangla
desh
Bhuta
n
India
Nepal
Sri
Lanka
0%
20%
40%
60%
80%
100%
Hydro Liquid Pet Gas Coal Other
Generation Composition
Ba
ng
lad
esh
Bh
uta
n
Ind
ia
Ma
ldiv
es
Ne
pa
l
Pa
kist
an
Sri
La
nka
0.00%
20.00%
40.00%
60.00%
De
ma
nd
Su
pp
ly G
ap
(%
)
6
Energy Sector …. Per Capita
ResourcesElectricity Supplies
• Region to add about 63000MW of coal power (2012-2017)
• Will generate about 410 TWh per year– About 390 million CO2
emissions
Ba
ng
lad
esh
Bh
uta
n
Ind
ia
Ne
pa
l
Sri
La
nka
0.00
40.00
80.00
120.00
160.00
200.00
Hydropower (GW per 100 persons)Coal (tons per person)Gas (tcf per 100 persons)
7
Short distances to connect
8
SAARC Regional Energy Trade Study (SRETS) Proposed projects
India-Nepal power interconnections Dhalkebar to Muzaffarpur Gorakhpur to Butwal
Bangladesh-India power interconnection Western border of Bangladesh Assist Bangladesh to import power from India
Bhutan-India interconnections Catering increased hydropower development and
cross-border trade India-Sri Lanka interconnection Establishment of a regional power market
9
Proposed interconnections
10
11
India-Nepal interconnections
12
India-Nepal Electricity Trade
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
0
100
200
300
400
500
600
700
Import from India Export to India
Ele
ctr
icit
y (
GW
h)
13
Economic Benefits
Benefits of regional cooperation Dhalkebar-Muzaffarpur transmission
line Analysis carried out with an
investment planning model Reduced integrated South Asia
transmission network of 40 nodes and 166 transmission lines
“with” and “without” project scenarios.
14
Methodology Power transfer analysis based on load flow model of India-Bhutan-
Bangladesh-Sri Lanka (>3200 buses)
NATGRID optimisation with DC approx. to load flow using equiv network (40 nodes, 166 lines)
NATGRID run without interconnector
Benefit = Difference in cost without and with link
NATGRID run with interconnector
Equivalent network
Scenarios
Comparison of scenarios
15
Economic Benefits ….. Generation investments
Based on generation plans of the individual countries
Transmission capacity and electricity demand projections Based on the national plans Extrapolated in certain cases
16
Economic Benefits ….. Benefit of cross-border transmission
measured Reduced generation costs both
investment and operation Reduced cost of unserved energy
Due to increased overall effective generation capacity at the disposal of each of the countries.
17
Economic Benefits ….. Project estimated to cost $186 million
inclusive of in-country transmission network strengthening to support 1000MW of cross-border flows
The study analysed Nepal reaching a generation surplus state by
2016/17 Nepal remains a deficit state even by then
Accrued benefits $ 105-215 million per year Cost of the transmission around $ 20 per year Interconnector highly beneficial in both
scenarios Benefits far higher in the latter
Final remarks Economic rationale for India-Nepal
interconnections is high High energy transfers Significant difference in economic costs
Additional benefits Climate change mitigation Improved reliability
18