Economics of Regional Energy
Cooperation: Nepal Case Study
Dr Priyantha D C Wijayatunga
Head, Portfolio Management Unit
Nepal Resident Mission
Asian Development Bank
6th Japan-SAARC Energy Symposium
6-7 March 2013
Kathmandu, Nepal
Outline
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Need for Regional Cooperation
Regional Energy Trade Study
India-Nepal Interconnections
Economic benefits
Final Remarks
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Regional cooperation?
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Wide variation in resource endowments
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Full potential not exploited
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Economic opportunities energy exporting countries
Enhanced opportunities for climate change mitigation
Single fuel dominance
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Hydropower, coal, natural gas and other renewable energies
Sharing of low cost energy resources
Energy resource diversification and energy security
Acute power shortages
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Sri Lanka
0%
Pakistan
20%
Nepal
40%
Maldives
60%
India
80%
Bhutan
100%
120%
Bangladesh
Traditional Fuel Use
Afghanistan
Sri Lanka
Nepal
India
Bhutan
Bangladesh
Contribution of Traditional
Fuels
Energy Sector
Energy Access
100%
80%
60%
40%
20%
0%
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Energy Sector ….
Generation Composition
Demand Supply Gap
100%
80%
60%
40.00%
40%
20%
India
Gas
Sri Lanka
Liquid Pet
Nepal
Hydro
Bhutan
Sri Lanka
Pakistan
Nepal
Maldives
India
Bhutan
0.00%
Bangladesh
0%
20.00%
Bangladesh
Demand Supply Gap (%)
60.00%
Coal
Other
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Energy Sector ….
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Per Capita Resources
200.00
160.00
120.00
80.00
40.00
Sri Lanka
Nepal
India
Bhutan
Bangladesh
0.00
Electricity Supplies
• Region to add about
63000MW of coal power
(2012-2017)
• Will generate about 410
TWh per year
– About 390 million CO2
emissions
Hydropower (GW per 100 persons)
Coal (tons per person)
Gas (tcf per 100 persons)
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Short distances to connect
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SAARC Regional Energy Trade
Study (SRETS)
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Proposed projects
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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 crossborder trade
India-Sri Lanka interconnection
Establishment of a regional power market
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Proposed interconnections
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India-Nepal interconnections
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India-Nepal Electricity Trade
700
500
400
300
200
100
Import from India
2011
2010
2009
2008
2007
2006
2005
2004
0
2003
Electricity (GWh)
600
Export to India
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Economic Benefits
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Benefits of regional cooperation
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Dhalkebar-Muzaffarpur transmission line
Analysis carried out with an investment
planning model
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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-BhutanBangladesh-Sri Lanka (>3200 buses)
Equivalent network
NATGRID optimisation with DC approx. to load
flow using equiv network (40 nodes, 166 lines)
Scenarios
NATGRID run without
interconnector
NATGRID run with
interconnector
Comparison of scenarios
Benefit = Difference in cost
without and with link
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Economic Benefits …..
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Generation investments
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Based on generation plans of the individual
countries
Transmission capacity and electricity demand
projections
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Based on the national plans
Extrapolated in certain cases
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Economic Benefits …..
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Benefit of cross-border transmission
measured
Reduced generation costs both investment
and operation
Reduced cost of unserved energy
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Due to increased overall effective generation
capacity at the disposal of each of the countries.
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Economic Benefits …..
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Project estimated to cost $186 million
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The study analysed
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inclusive of in-country transmission network strengthening
to support 1000MW of cross-border flows
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
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Final remarks
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Economic rationale for India-Nepal
interconnections is high
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High energy transfers
Significant difference in economic costs
Additional benefits
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Climate change mitigation
Improved reliability
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Thank you
Priyantha D C Wijayatunga
E-mail: pwijayatunga@adb.org
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