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
Source: World Bank (2013) for countries and PIB, GOI (2011) for Indian States
1,132
Tamil Nadu
1,615
1,651
Gujarat
Delhi
Goa
1,743
1,547
Chattisgarh
Puducherry
1,527
1,380
Himachal Pradesh
2,264
Nepal
Punjab
1,340
Chandigarh
1,222
1,112
Uttaranchal
Haryana
1,028
967
Andhra Pradesh
Sri Lanka
Pakistan
India
Bhutan
Bangladesh
Maharashtra
952
Rajasthan
Jammu &Kashmir
Meghalaya
903
Madhya Pradesh
Karnataka
West Bengal
880
Kerala
Jharkhand
Andaman & Nicobar
874
Arunachal Pradesh
Orissa
550
Lakshadweep
449
457
616
1163
93
279
4
5
8
16
22
30
84
850
525
Mizoram
As a multiple of India's
consumption
Brazil
China
South Africa
South Korea
US
Kuwait
Iceland
Sikkim
494
736
418
470
675
377
602
348
Uttar Pradesh
240
Manipur
335
218
Nagaland
Tripura
205
122
Assam
Bihar
Per capita electricity consumption
kWh in 2010
Source: National Electricity Authorities for Bhutan, Bangladesh,
Nepal, Pakistan and Sri Lanka and CEA (2012a) for India
Andhra Pradesh
Bihar
-14.8
-14.4
India
Sri Lanka
-10
Pakistan
-25
-11
Bangladesh
Nepal
Jharkhand
-15.7
-26
-44
Meghalaya
-16.3
Manipur
Uttarakhand
-0.9
-0.7
Orissa
-1.8
West Bengal
Gujarat
-1.8
-0.9
Uttar Pradesh
-2.3
Haryana
-4.2
Arunachal Pradesh
Chhattisgarh
-4.5
-2.5
Mizoram
-4.9
Union Territories
Sikkim
-5.0
-3.3
Kerala
-5.1
Assam
-5.3
Madhya Pradesh
-7.1
Nagaland
Rajasthan
-7.1
-5.4
Himachal Pradesh
-7.1
Goa
Punjab
-16.9
-10.6
Tamil Nadu
-17.5
Karnataka
Maharashtra
-22.1
-18.9
Jammu & Kashmir
-25.0
Electricity Supply Deficit
Available capacity below the peak load in 2011-12 (%)
150
445
666
751
Manipur
Tripura
Meghalaya
Pakistan
Nepal
Bhutan
Source: National Electricity Authorities for Bhutan, Bangladesh, Nepal, Pakistan and Sri Lanka and CEA (2012c) for India
Maharashtra
Tamil Nadu
Andhra Pradesh
Uttar Pradesh
Gujarat
18,838
5,296
2,363
462
35,944
29,815
28,216
26,834
25,447
18,352
Punjab
16,129
Madhya Pradesh
17,464
15,101
Rajasthan
Karnataka
15,072
12,557
Haryana
West Bengal
12,069
10,074
Orissa
Delhi
9,567
9,129 Sri Lanka
7,279
Bihar
Jharkhand
Chattisgarh
5,916
3,985
Assam
Kerala
3,857
Jammu &Kashmir
5,634
2,907
Himachal Pradesh
Union Territories
2,849
Uttaranchal
1,429
319
Nagaland
Goa
196
Mizoram
Arunachal… 189
Sikkim
Bangladesh
59,190
Future Demand
Load Forecasts (2021-22) - MW
Total Indian Peak
Load = 381,000 MW
Seasonal complementarity on electricity
demand
Monthly 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
Low
Medium High
 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
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
7%
Annual Average Load Growth
6%
5%
6%
5%
5%
4%
South Asia
Sri Lanka
Pakistan
Nepal
India
Bhutan
Bangladesh
Afghanistan
2%
• 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.
Baseline Results: Installed Capacity (MW)
Installed Capacity (GW)
Afghanistan
Bangladesh
Bhutan
India
Nepal
Pakistan
Sri Lanka
South Asia
2015
1
16
4
276
1
25
3
325
Ratio of 2040 to 2015 capacity
2040
7
68
15
784
9
173
12
1,067
Afghanistan
13.3
Nepal
10.7
Pakistan
Bangladesh
7.0
4.3
Bhutan
3.8
Sri Lanka
3.7
South Asia
3.3
India
2.8
Baseline Results: Capacity Mix
100%
3%
90%
1%
2%
80%
7%
11%
70%
60%
2%
30%
59%
30%
50%
92%
75%
75%
57%
40%
34%
64%
30%
20%
30%
10%
0%
2020
2040
Bangladesh
2020
2040
India
2020
2040
Pakistan
2020
2040
Sri Lanka
Others
Gas
Coal
Hydro
Baseline Results: Investment Requirement
Cumulative (undiscounted) investment over the 2015-2040 period
Total
859
India
518
Pakistan
206
Bangladesh
77
Bhutan
25
Sri Lanka
13
Afghanistan
12
Nepal
8
Baseline Results: Power Sector CO2
Emissions
Power sector GHG Emissions
(Million tCO2)
Ratio of 2040 to 2015 GHG Emissions
2015
2040
29
265
915
2,660
Pakistan
71
438
Sri Lanka
6
24
1,021
3,387
Bangladesh
India
South Asia
Bangladesh
9.1
Pakistan
Sri Lanka
South Asia
India
6.2
4.1
3.3
2.9
Full Trading - Impacts on Installed Capacity
Changes in total installed capacity from the baseline in 2040 by country (GW & %)
(560%)
52.1
(62%)
(51%)
(0.5%)
9.1
3.6
4.8
-0.5
-11.3
-13.1
Total
Sri Lanka
Nepal
India
Bhutan
Bangladesh
-35.1 (4.5%)
Pakistan
(-8%)
(-17%)
Afghanistan
(-4%)
Full Trading - Impacts on Installed Capacity
Changes in total installed capacity from the baseline in 2040 by technology (GW and %)
71.6
(42%)
(6%)
3.4
-9.3
-6.6
(-15%)
(-6%)
Combine Cycle
Wind
Coal
Hydro
Gas Turbine
-54.3 (-9%)
Full Trading - Impacts on Grid
Interconnection
Change in cross-border interconnection
capacity from the baseline (GW)
Sri Lanka - India
500
Pakistan - India
2,117
Nepal - India
5,400
Nepal Bangladesh
14,900
Bhutan - India
8,538
Bhutan Bangladesh
Bangladesh India
Afghanistan Pakistan
3,300
10,015
50,265
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)
Grid Interconnection (more Details)
Grid interconnection capacity in the baseline and
regional trading scenarios (MW)
2,117
48,540
1,050
2,850
41,656
23,304
5,600
2,300
Baseline
Regional Trade
3,600
9,600
Eastern
India
7,810
9,777
10,677
Bhutan
7,800
7,178
4,800
Western
India
8,538
75
26,078
10,100
Pakistan
Nepal
Southern
India
5,238
Northern
India
Afghani
stan
1,636
9,115
1,400
500
500
North Eastern
India
Bangladesh
Sri Lanka
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
Total
Sri Lanka
Pakistan
India
Bangladesh
Changes in 2015-2040 cumulative CO2 emissions from the baseline (Million tons and %)
12
-322
(-7%)
-1,170
(-32.8%)
-2,949
(-6.5%)
-4,429
(-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
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%
-1.6%
-2.2%
Installed Capacity
CO2 Emissions
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
Installed Capacity
Regional Trade
Coal (0.5%); Hydro (- Coal (2%); Hydro (2%);Wind (3%); CC 1.3%);Wind (5%);
(3%)
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
Installed Capacity
Regional Trade
Coal (-2%); Solar
Coal (-2%); Solar
(64%);Wind (25%); (98%);Wind (34%);
CC (-5%)
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]