India Can Gain from Regional Trade in Electricity

28 June 2016

Regional trade in power could save India from having to invest in 35,000 megawatts (MW) in coal-fire facilities, estimated at $26 billion, over the next 25 years. India could benefit through reduction in fuel costs by using less thermal energy, and energy trade with Afghanistan, Bhutan, and Nepal. Energy trading could also reduce greenhouse gas emissions by 6.5%.

According to a South Asian Association for Regional Cooperation (SAARC) study on energy, Bhutan and Nepal, because of their smaller domestic economies, could maximize their potential to generate hydroelectric power, depending on opportunities to trade. The study refers to an expectation that Nepal would add 52.1 gigawatt (GW) by 2040, on top of its existing 1 GW capacity from hydroelectric generation. Bhutan is expected to add 9.1 GW, and Afghanistan 3.6 GW capacity from hydroelectric generation.

Currently, the region has a combined generation capacity of 325 GW: India shares 276 GW; Afghanistan, 1 GW; Bangladesh, 16 GW; Bhutan, 4 GW, Nepal 1 GW, Pakistan 25 GW, and Sri Lanka, 3 GW.

Without cooperation in energy trade, Pakistan would have to increase its energy production by seven times to meet its demand in 2040, Bangladesh by 4.3 times, Sri Lanka by 3.7 times, and India by 2.8 times. With cooperation, Bangladesh can save 11 GW capacity addition, Pakistan 13 GW, and Sri Lanka by 0.5 GW.

The study attempted to quantify the anticipated benefits of energy cooperation. It aimed to promote the market-based trade of electricity and looked at regional trade in other parts of the world.

The SASEC Program aims to boost regional energy cooperation among its member countries by enhancing regional power exchange structures, to reduce costs and import dependence, improve efficiency in the power sector, and strengthen energy security.

  

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