Energy interconnectivity key to sustainable growth
Is a grand electricity alliance achievable in a region beset with political tensions? Industry experts agree that India becoming a net exporter of power is a step in the right direction
South Asia is one of the fastest growing regions in the world with huge energy potential, yet it suffers from acute energy poverty.
Since the region’s demand for energy is likely to grow by 15-20 per cent by 2020, the news of India – the only regional nation to have developed a robust electricity market and simultaneously providing neighbors access to its national grid – turning into a net exporter of power allows regional policymakers to heave a sigh of relief.
After all, the World Bank predicts South Asia to grow by 7.3 per cent in 2017 and adequate supply of power is key to maintaining this momentum. As countries across South Asia fall back on imports to meet respective domiciliary and commercial demands, experts have started pushing for development of regional energy interconnectivity.
In fact, a framework agreement on energy cooperation, signed during the 2014 SAARC (South Asian Association for Regional Cooperation) summit, mandates that regional countries facilitate cross-border electricity trading. For that to happen, however, all regional states must be brought under a similar market structure, which will act as a springboard for migrating to a common energy market.
As eminent Sri Lankan energy expert and former chief engineer of the Ceylon Electricity Board, Tilak Siyambalapitiya, admits, “except for India, boasting a market-oriented power industry, most regional countries still carry forward the government-owned vertically integrated utility structure of the 1960s that discourages competition and structural reform.”
Therefore, is a grand energy alliance at all achievable in a region beset with intractable political tensions and misgivings? Despite disparities in technical systems across South Asia, it is a feasible proposition in the medium-term, says Arif Alauddin, former chief of Pakistan’s Alternative Energy Development Board.
“Liberalization of investment and trade policies to allow private sector play an unhindered role in generation and trading on market-determined terms is an essential pre-requisite for success,” says Alauddin.
And since India is out to aggressively harness its renewable energy potential in tune with the sustainable development goal, Alauddin senses immense scope for greater regional collaboration on clean energy, with neighbors benefiting not only from India’s advances in solar and wind power, but also energy-efficient utility scale boilers and unique coal development techniques employed in thermal electricity production.
However, Engineer Ravinder, an Indian energy expert specializing in intra-regional power trading in South Asia, says, “economic demand of electricity – quantity for which there is electrical infrastructure for delivery and buyers willing to pay – should not be mixed with planners’ targets or public aspirations.”
Moreover, as Alauddin asserts, disposing surplus power cannot be a long-term option in import-dependent South Asia. For Ravinder, “SAARC grid as a dedicated energy ring is a misconception emanating from a lack of understanding of the nature of the electricity grid.”
Since, Bangladesh, Bhutan, India and Nepal are already part of a common electricity grid, there is an imperative need for strengthening existing inter-connections, apart from diversifying the linkages to include more nations.
And all this has to be backed-up by political level agreements since development of cross-border trade cannot be divorced from political realities, according to Ravinder.
As civil society begins to recognize the significance of intra-regional electricity trade in fostering economic emancipation in a laggard region, developing the required mindset to take that crucial step of intertwining South Asian nations’ power infrastructure, thus making them shared stakeholders, is crucial for the younger generation to become socio-economically empowered.
It may indeed be a worth taking the leap of faith that will eventually alter South Asia in a positive way, by moderating longstanding hostilities.