Under cross-border electricity trading, each country can plan for lesser capacity as well as lesser reserves that may be required when tripping happens. It is always economically beneficial to interconnect and share resources. Nepal would gain from the sale of its hydropower to India, while Bangladesh would gain from buying power from India. India would gain from flexible hydro resources to manage the intermittency of renewable energy sources, points out Pankaj Batra, Project Director, SARI/EI/IRADe. South Asia Regional Initiative for Energy Integration (SARI/EI) is an initiative by USAID to strengthen energy security in South Asia.
What are some of the benefits that will accrue to India as well as the South Asian region from cross-border electricity trading?
Our studies have shown that there is economic value to such trading between India and Nepal and India and Bangladesh. Nepal would gain from the sale of its hydropower to India, while Bangladesh would gain from buying power from India. India would gain from flexible hydro resources to manage the intermittency of renewable energy sources. All nations would gain from interconnections because of the diversity in the type of supply sources and peak demand occurring at different times during the day as well as diversity of peak demands over the year, since the peak demands in different South Asian countries would occur in different seasons.Normally,a countryplans its generating capacity to meet its peak demand, even if it comes for a short time. With an interconnected grid and cross-border trading of electricity, each country need not have individual generating capacity to meet its own peak, as the peak demands are staggered. With the transfer of electricity, each countrycan plan for lesser capacity, as well as lesser reserves that may be required when tripping happens. It is always economically beneficial to interconnect and share resources. We will additionally be doing a detailed study for South Asia to determine how much the average tariff of each country will get reduced through such trading.
Yes, as per your preliminary calculations, the trade will also help in reducing the cost of electricity that is going to be one of the key drivers of Industry 4.0.
Of the consumer tariff, generation itself accounts for 70 per cent of the cost while the remainder is on account of transmission & distribution. So, if the generation costs come down for a country say by 10 per cent, it will lead to a reduction of around 7 per cent on the overall tariff. Although we have not yet concluded on the total reduction, from the principles it is clear that it will bring down tariffs. We are doing this study for the South Asia Forum for Infrastructure Regulation (SAFIR), and will get to know by how much it will reduce the tariff for a country and consumers.
One of the points that you made was about the trade helping improve synergies like in improving peak and baseload requirements between India and Nepal. Would you like to elaborate on this point?
Due to the diversities in peak demand on account of different timings and seasons, there is the scope of a lot of synergies in terms of grid integration and trading of power in South Asia. With improvement in interconnections over the years between these countries, they have already seen the gains obtained by forming a South Asian grid. Once the grid is interconnected, it will be one of the largest in the world. This will benefit all the countries, including India, especially in the area of hydropower, as it is becoming increasingly difficult to construct such projects here, primarily due high cost of land and rehabilitation issues. Moreover, this will also help to address intermittency concerns that one encounters with renewable sources of energy, like solar and wind power, because of the huge hydro potential that we will get connected to. Hydropower, being very flexible, doesn't lose efficiency at higher or lesser generation and can be ramped up or down fairly quickly. This is not possible with thermal plantsthat have a lot of inertia. This will help in the proliferation of renewable sources of energy in the future. Countries like Bangladesh that don't have land to set up renewable energy facilities, can enter into contracts to buy renewable power from India. This will also help them in meeting their commitment to cut down on carbon emissions.
But is the basic infrastructure to facilitate such trading in place?
The infrastructure is mostly there in the countries in the region, and there are plans to expand it further. We are connected by a 400 kV double circuit line to Nepal, though it is charged at 220 kV, because not so much power is flowing presently. There is a plan to upgrade it to 400 kV by this year. Once that happens, much more power can flow to Nepal. The constraint in more power flowing was mainly because of the Common Minimum Grid Code not being there and also because the internal transmission connections within Nepal were not strong enough to facilitate the export of more power. They are doing that now by strengthening the internal systems as well as constructing new internal lines within Nepal. This will help more power to flow to Nepal, thereby allowing more people to gain access to electricity in the country. In Bangladesh too, the present inter-country infrastructure is being fully utilisedthrough 1160 MW power flowing to Bangladesh. In the future, there are plans to establish interconnections through AC lines with India. For Bangladesh, it is cheaper for them to have an AC connection, than High Voltage Direct Current (HVDC) connection. There are only a couple of feasible points that they have proposed. A final call on this will be taken shortly. With Bhutan, we already have strong AC interconnections. Sri Lanka is also interested in connecting, and they have more or less finalised on the interconnection front. It may bepartly undersea cable and partly overhead line or totally overhead line. Now they feel that they can have an overhead line, as that is possible owing to the shallow waters of Palk Strait. And that will work out to be much cheaper. Once a decision is taken, it will take about three years to construct the line.
What are some of the regional level challenges that might arise and is there sufficient political will to meet them?
Yes, there is political will and that's how things have finally started moving. There might be questions raisedon whether we, in India, have enough surplus power to supply to all those countries. But that is a generic issue because even now we have got about 30-40,000 MW of stranded generating capacity. Such issues arise, because distribution companies avoid feeding low tariff consumers or consumers who get free electricity, because that can add on to their losses. However, even if you feed them, their consumption would be less than the consumption of households in cities. So, their demand is not likely to put any significant pressure on the overall capacity. There won't be much increase in load even if that last-mile connectivity is provided to states through the Sahaj Bijli Har Ghar Yojana (Saubhagya) scheme of the central government. Similarly, Nepal has benefited immensely due to this import from India. At the same time, several of their hydropower plants, with a consolidated capacity of around 1000 MW are currently under construction. The country's whole load is around 1300 MW. Those plants are likely to be commissioned within a year. Now, when that happens, they will also need to export that excess electricity. Bangladesh is tying up to import electricity from Nepal through India, which is now allowed under the trilateral agreementthat the new Government of India policy now allows. It's a win-win situation for everyone. Like, whenever there is a low inflow season in the case of Nepal and Bhutan, they can import electricity from India. And during the high hydro season, they can export to India, under barter or banking of power arrangements. This was an area, that was hitherto not tapped much, but now it is allowed. In another two years, even without the interconnection with Sri Lanka, quite a lot of power will start getting traded. It is something akin to what happened in India, when we started interconnecting states with regions and regions with the rest of the country. As a result, you now enjoy uninterrupted power in at least the cities.
Last year India's Central Electricity Regulatory Commission (CERC) had notified new regulations for CBET. Does that mean we now have an effective and proactive regulatory mechanism in place or does it need to be evolved further? Those are general regulationsthat allow for the trading of electricity. But on the technical side, the grid code or the rules that need to be followed, to ensure stable operation, need to be complied with. These need to be also adopted by all South Asian nations, in addition to the trading regulation of the CERC. That is what is happeningnow and South Asian electricity regulators are also waiting for these to get rolled out, so that power can flow freely and securely.
-- MANISH PANT