CLEAN ENERGY IMPACT of SOUTH ASIA CROSS BORDER POWER TRADE

SAEN Asian Development Bank June 2012

Presentation Structure
SAARC Regional Energy Trade Strategy Focus

Regional power market expansion

Cross border interconnection benefits

Fuel cost savings

Concluding Remarks

SAARC Regional Energy Trade Study (SRETS) Focus

Key energy sector challenges Projected energy demand and supply constraints Current and proposed energy trade Accelerated intra/inter regional energy transfer Additional Energy transfer options Development of enabling framework

Key Energy Sector Challenges in SA

Increasing energy deficits Single fuel dominance in energy mix Limited exploitation of renewable energy resources High dependence on traditional fuels Rising import dependence Lack of requisite energy infrastructure

SAARC Member Energy Reserves - 2010 (Figures in parenthesis are mtoe equivalents)

Countries

Coal million tons 440 2 884 (294.8) (1.5) (592.3)

Oil million barrels NA 0 12 (1.6)

Natural Gas trillion cubic feet 15 (360) 0 8 (192)

Afghanistan Bhutan Bangladesh India Maldives Nepal Pakistan Sri Lanka TOTAL

90085 (60356.9) 0 NA 17550 (11758.5) NA 108961(73003.8)

5700 (775.2) 0 0 324 (44.1) 150 (20.4) 5906 (803.3)

39 (936) 0 0 33 (792) 0 95 (2280)

Hydro MW 25000 (18.9) 30000 (22.7) 330 (0.3) 150000 (113.7) 0 42000 (31.8) 45000 (34.1) 2000 (1.5) 294330 (223.0)

SAARC Energy Demand Estimates and Supply Constraints

Projected Energy Demand for 2015 (mtoe) Crude/Petroleum 233 (India 203) Coal 528 (India 504) Natural Gas 130 (India 60) Projected Energy Demand for 2020 (mtoe) Crude/Petroleum 306 (India 267) Coal 629 (India 600) Natural Gas 178 (India 82)

Domestic supply constraints are evident from the resource development pace and the rate of import growth apart from environmental concerns with coal

Current Energy Trade

Electricity Trade

Bhutan-India (about 5600 GWh) India- Nepal (about 600 GWh) Petroleum products Between India and Bangladesh, Bhutan, Nepal and Sri Lanka Inter-regional trade limited to Oil, coal and electricity (limited)

Proposed Intra/Inter Regional Transfer

India - Sri Lanka power transmission India Pakistan power transmission CASA 1000 Project for Central Asia

AfghanistanPakistan power transmission Additional power transmission links BhutanIndia, India-Nepal, Bangladesh-India Turkmen-Afghanistan-Pakistan-India pipeline Iran-Pakistan-India gas pipeline Myanmar-Bangladesh-India gas pipeline

ADDITIONAL ENERGY TRANSFER OPTIONS (clean energy/energy efficiency emphasis)

Regional Power Market Expansion
Regional Refinery and Product

Transport Expansion Regional LNG Terminal and Gas Transmission Expansion Regional Power Plant (s)

Regional Power Market Expansion

Optimal exploitation of energy resources

Reduction in generation reserve requirements

Reduction in overall cost of supply

Improved system reliability, energy security

Incentives to resource rich countries to accelerate power development Cross-border connectivity, a prerequisite

IND-BHU Power Interconnections

Proposed IND-SRI HVDC Power Link

SETTING OF CASA 1000 PROJECT

Kazakhstan
Existing Facilities
Toktogul HPP
Existing Surplus

Kyrgyzstan

Nurek HPP
Existing Surplus

Uzbekistan

Perspective Facilities
220/500 kV Uzbek by pass SS Datka (Kyrgyz) SS Hojent (Tajik) Cascade of Zarafshan HPPs (Yavan and Oburdon HPP)
Annual generation 1680 GWh

Tajikistan
Facilities Under Construction
500 kV OHL South-North
Financing: China Exim bank

Annual generation 13000 GWh

Rogun HPP Coal TPP

China

Annual generation 3900-6400 GWh

Sangtuda 1 HPP
Financing: Russia

500 kV OHL CASA 1000 Nurek HPP Kabul Peshawar

Sangtuda 2 HPP
Financing: Iran

220 kV OHL SS Sarban Tajik/Afghan border

Financing: ADB/IsDB

Pakistan

Kabul Peshawar

Afghanistan India

ADB SA Regional Power Exchange Study Interconnections Considered

No. 1 Interconnection India-Bhutan Description Grid reinforcement to evacuate power from Punatsangchhu I & II Capacity (MW) Cost (USD million) Total grid 140-160 (2010 estimate) reinforcement of 2,100 MW

India-Nepal

Dhalkebar-Muazaffarpur 400 kV 1,000 MW line HVDC line with sub-sea cable 500 MW in the shortterm

186 (2010 estimate) including internal transmission upgrade 339 (2006 estimate) 600 (Current)

India- Sri Lanka

India-Bangladesh

HVDC back-to-back asynchronous link 220 kV in the short term, 400 kV in the long term

500 MW

192-250 million (2011 estimate)

India-Pakistan

250-500 MW

50-150 million (2012 estimate)

CASA 1000 and IndiaPakistan interconnection

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HVDC and 500 kV HVAC for CASA

1300 MW

Approx 1 billion (2011 estimate)

Economic Analysis Methodology: Overview

Transmission Resources
Capex/Opex, MW, Location of Resources

Generators

Optimal Mix of Generation using Investment Optimisation with DC power flow constraints
Probability distribution of uncertain parameters Selected Generators given a transmission configuration

Performance of Selected Resources using Monte Carlo Simulation with DC-PF. Perform two runs with and without a transmission line to assess the benefit of the line

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Results: Benefit Estimates

Case study Key assumption Puttalam Stage 2 and 400 MW in new hydro is added by 2016. But Trinco (1,000 MW) coal station is not considered. Total and annualised cost of transmission USD million India-Sri Lanka HVDC link Total cost USD 339 million (2006 estimate) USD 186 million pa comprising 96 million in unserved energy reduction, Annualized cost USD 50 and 90 million in fuel/capacity million pa (2010 estimate) benefits. Annual benefit in 2016/17 (USD million)

India-Bangladesh Three scenarios HVDC link around demand growth in Bangladesh that range between 9.000 MW to 12,000 MW in 2016/17.
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Total cost range between USD 192 million to USD 250 million. Annualised cost of USD 25 million pa assumed for cost/benefit analysis.

Annual benefits range between USD 145 million to USD 389 million, depending upon demand-supply assumptions.

Results: Benefit Estimates

Case study Key assumption Total and annualised cost of transmission USD million India-Bhutan grid Puntsanchhu I & reinforcement II (2100 MW) Total cost USD 140-160 million. Annualized cost USD 1820 million pa. Nepal-Bihar 400 kV link Two scenarios: Total cost USD 63 million. Up to USD 1,954 million pa including USD 350 million in opex benefit and USD 1,604 million in unserved energy reduction benefit (a) Surplus state benefit of USD 105 million pa(71 million in unserved energy reduction and 34 million in opex benefits) (b) Deficit state benefit of USD 215 million (173 million in unserved energy reduction and 42 million in opex benefits) Annual benefit in 2016/17 (USD million)

Surplus state: Annualized cost USD 8 (2000MWadded) million pa Deficit state: 650 MW delayed

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Detailed Results: IND-SRI

Distribution of benefits
1200

Annual Benefit in USD million

1000 800 600 400 200

The link is likely to be beneficial with USD 186 million in annual benefit on average. This is likely to yield a benefit to cost ratio of over 3

0
1 23 45 67 89 111 133 155 177 199 221 243 265 287 309 331 353 375 397 419 441 463 485

Monte Carlo Samples 1-500

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Detailed Results: India-Bhutan

Distribution of fuel & opex benefits

1400

Fuel and non-fuel operating cost benefits (USD million)

1200
1000 800 600 400 200 0 -200
0% 5% 9% 14% 19% 23% 28% 32% 37% 42% 46% 51% 55% 60% 65% 69% 74% 78% 83% 88% 92% 97%

Probability Fuel Cost Savings

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Non-fuel Cost Savings

India-Pakistan Link (500 MW)

Potentially very high benefits due to a combination of USE and fuel cost savings
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Estimates of Fuel Cost Savings through Cross- Border Interconnection

Annual fuel cost savings in 2016/17 in 2011 dollars: India Bhutan: India Nepal: India Sri Lanka: USD 336 million USD 38 million USD 56 million

India Bangladesh:
India Pakistan:
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USD 225 million

USD 122 million (250 MW transfer)

Thermal Power Generation Displacement

India would be the biggest beneficiary with a significant reduction in peaking gas/liquid based power generation as well as reduction of generation from less efficient and expensive coal-fired power stations

Collective fuel cost savings in India from coal-based generation alone (with all interconnection cases) is close to USD 300 million through displacement of 10,000 GWh of coal-based generation in 2016/17

Displacement of Thermal Generation

The average emission intensity of less efficient coal plants in India is estimated at 1.35 tonne of CO2 per MWh The overall emissions reduction in India from a reduction in coalbased generation would be over 13 million tonne of CO2 in 2016/17 If the value of carbon credits is considered at USD 15 per tonne, the carbon reduction benefits would also be close to USD 200 million

The longer term savings through import of 40,000 GWh of hydro from Bhutan alone would be 3-4 times as high

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Displacement of Thermal Generation .

Apart from India, thermal generation reduction can also save significant costs in Pakistan, Bangladesh, and Sri Lanka

The fuel cost reduction potential in Pakistan is particularly noteworthy because of a low efficiency plant stock and high fuel cost (e.g., USD 11 per GJ for gas) fuel cost savings exceeding USD 100 million dollar is estimated in Pakistan
The following slide provides details on fuel cost savings POTENTIAL from 8 major thermal power stations in Pakistan

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Displacement of thermal generation (Pakistan)

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CONCLUDING REMARKS

Accelerated expansion of electricity trade in South Asia - a key recommendation of ADBs SAARC Regional Energy Trade Study Related economic analysis carried out so far establishes economic feasibility of all proposed interconnections Fuel savings from thermal energy displacement resulting mainly from expanded hydropower utilization has strong clean energy impact

THANK YOU VERY MUCH !