The South Asia region is confronting several challenges affecting national electricity systems in the region: rapidly growing demand; electricity supplies that have not kept pace with demand and are frequently interrupted; large but unevenly distributed electricity generation potential (across space and seasons); many electricity suppliers in moderate to severe financial distress; strong incentives for use of often-inefficient captive generation sources; and substantial environmental challenges associated with electricity production.
The availability and reliability of electricity supplies are macroeconomic issues, not just energy security issues. Responding effectively to these challenges will require concerted national-level efforts to increase generation capacity, improve its operating reliability and environmental performance, and strengthen transmission systems – including the achievement of fully national-scale grid inter-connections.
The overall objective of this project was to provide rigorous and practical analysis of opportunities and challenges for achieving these objectives, and disseminate analysis to inform decision makers about its implications for national policies, regional cooperation, and lending operations in SAR. The primary audience for the work includes policy analysts and advisors and sector specialists in SAR, the Bank, and development partners active in the energy and power sectors within the region.
The specific tasks undertaken by the consultant were:
- Review of available information. Collect and compactly summarize existing projections of electricity demand, capacity investment, and supply for the region. The review included projections made by governments themselves, other national and international energy organizations (e.g., IEA), research and academic institutions, and development organizations involved in work on the regions energy sector (SAARC, ADB, SARI-E, WB, DFID, JICA, etc.).
- Data collection, including: existing generation and transmission capacities plus investment costs ($/kW for generation and $/km for transmission lines) for committed and identified generation and transmission investments within individual countries; annual data on load forecasts by jurisdiction; details of cross-border generation and transmission projects currently underway, planned, or under discussion within the region; details of electricity and natural gas import projects currently underway, planned, or under discussion within the region.
- Development of a model able to jointly optimize generation and transmission investment for the region over a 25 year period. The capabilities of the developed model included: - applicability at the level of individual jurisdictions (5 regional grids in India and national grids in other countries) and different groupings of countries/jurisdictions; - production simulation (load dispatch modeling) and long-run generation capacity expansion planning, load-flow analysis and long-run transmission planning, thereby identifying locations of major transmission expansion and inter-connection, as well as future electricity generation plants, particularly hydroelectric plants; - incorporation of scenarios with different levels of extra-regional import of natural gas and power; - sensitivity analyses for different degrees of load growth, demand side management, environmental obligations, as well as changes in prices of domestic and imported fuels.
- Scenario analysis in a range of 25-year planning scenarios, including: a. Each individual jurisdiction (five Indian regional grids, India as a whole, and national grids of other countries) optimizing its generation and transmission assets. b. Sub-regional groupings for such optimization, including:
- (i) Bhutan – India – Nepal;
- (ii) Bangladesh – Bhutan – India – Nepal, with and without energy imports from Myanmar;
- (iii) Afghanistan – Pakistan, with and without energy imports from Central Asia;
- (iv) Bhutan – Bangladesh – India – Pakistan – Nepal;
- (v) Bhutan – Bangladesh – India – Pakistan – Nepal - Sri Lanka (full region). c. Sensitivity analysis with extra-regional energy imports and/or with low carbon economic growth, reduction of local air pollution, limits on hydro utilization.