economics of regional energy cooperation: nepal case study dr priyantha d c wijayatunga head,...

 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

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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

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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)

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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)

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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.

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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

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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

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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.

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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

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Thank you

Priyantha D C WijayatungaE-mail: pwijayatunga@adb.org

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