Introduction
The development of electricity grids has revolutionized international collaboration by enabling integrated electricity systems, with approximately twenty regional grid integration initiatives at various stages worldwide. Shaped by political, economic, social, regulatory, and cultural factors, this enabled the creation of Regional Electricity Markets (REMs) through Cross-border Electricity Trade (CBET), allowing countries to navigate challenges and deepen grid integration.
In South Asia, where energy demand is rising, the push for reliable, affordable, and sustainable energy is crucial not only for economic growth but also for energy and climate security. South Asia, a region rich in hydro, solar, and wind energy potential, has made significant strides in economic growth and development indicators. However, only a small fraction of these vast energy resources has been utilized – for instance, only about 18% of its hydropower potential has been utilized so far.
Enhanced regional cooperation is essential for sustainable energy resource development, which can bring economies of scale, improve sector efficiency, and contribute to the greening of the South Asia Power Grid. This cooperation is critical for boosting energy security and climate resilience in the region. However, decisive action is needed across a variety of themes to unlock the full potential of CBET in South Asia. Spread across the domains of policy, regulatory, economic, technology and governance (refer to design below), focused engagement is necessary to achieve the goal.
Regional inter-governmental agreements have laid a strong foundation for electricity grid integration and Cross-border Electricity Trade (CBET) in South Asia. Due to the collective effort of South Asian countries, CBET has increased from 1400MW in 2010 to 5,273MW in 2024, a three-and-a-half-fold increase in less than fifteen years. In energy terms, CBET has reached 18 TWh in FY2024, a threefold increase from the 6 TWh of CBET in FY2010. FY2023, CBET reached 18.1 TWh, Primarily among Bangladesh, Bhutan, India, and Nepal and Myanmar (BBINM), this trend is expected to continue, as the power trade is projected to reach 43.8 GW by 2044, supported by initiatives like One Sun, One World, One Grid (OSOWOG). Recently India has signed agreements with Nepal to import 10,000MW of power from Nepal over the next twenty years.
The South Asia Regional Energy Partnership (SAREP), building on past USAID efforts, aims to further boost CBET by enhancing energy security, promoting clean energy, and fostering economic growth. SAREP is focused on developing regional power markets, improving coordination and planning, strengthening national and regional institutions, building consensus on power trade, and institutionalizing supporting frameworks and mechanisms. SAREP activities is accelerating cross-border power trade by supporting stakeholders to participate in trilateral, multilateral, and exchange-based markets.
USAID has been supporting a wide range of stakeholders across policy, regulatory, technical, aspects for advancing market form of CBET through High Level Program Steering Committee (PSC) for accelerating Regional Energy Integration and through three Task Forces (TFs) covering coordination of policies, legal and regulatory frameworks, advancement of transmission system interconnections and south Asia regional electricity market.
Program Steering Committee and Task Forces
Enhanced regional energy markets are guided by a high-level regional program steering committee (PSC), which provides overall strategic direction. Under the auspice of the PSC are three dedicated Task Forces (TF) that provide practical and concrete recommendations for expanding CBET in the region. PSC members include senior-level officials from country governments, regional multilateral institutions, development banks, independent energy experts and diplomats, while TF members include country government nominated members from SA countries.
TFs are central to SAREP’s CBET interventions, generating informed recommendations through technical assessments and building consensus. A focused, structured, consultative, and participative approach with continuous engagement is key to achieving the larger vision. Knowledge studies will develop regional frameworks to aid the regionalization of CBET in South Asia.
SAREP TASKFORCE
Key Interventions
Institutionalization of Regional Parliamentary Forum on Regional Energy Cooperation (SARPF-EC) – The forum is envisioned to advance regional energy cooperation and cross border electricity trade for an integrated, inclusive, resilient and sustainable energy future for South Asia. The Forum’s mission is to become the credible regional voice of Parliamentarians of South Asian countries for deepening regional energy integration for sustainable energy and climate prosperity for the people of South Asia.
South Asia Think Tank Forum (TTF) for Enhancing and Humanizing CBET and Regional Energy Cooperation for Societal Buy-in - Through the South Asia Think Tank Forum (TTF) for regional energy cooperation, SAREP is working to enable the required CBET-related outreach and dissemination that will catalyze engagement with policymakers, media, and parliamentarians, bureaucrats, civil society, and citizens for humanizing regional energy cooperation and cross border electricity trade.
Establishing regional investment facilitation platform - South Asia Forum for Energy Investments (SAFEI) SAFEI is envisioned to become the regional centre of excellence for creating an investor friendly ecosystem for the development of sustainable regional energy projects and advancing cross border energy trade in South Asia.
The institution has been derived from USAID's ‘Strategy Paper for Creation of South Asia Forum on Energy Investment (SAFEI)’ was launched by Nepal’s Prime Minister on April 18 at the Power Summit 2023 in Kathmandu. Earlier, the Task Force 1 study on “Regional Investment Framework and Guidelines for Promoting Investment in South Asian Power Sector and in Cross-Border Electricity Trade in South Asia” had recommended to create a Regional CBET Investment Facilitation Forum such as SAFEI.
Enhancing regional energy data ecosystem analysis through South Asia Energy Database (SAED) - SAREP is enhancing the South Asia Energy Database (SAED) by improving regional data systems through API Annual Data Book and providing technical assistance to Load Dispatch Centers (LDCs) for better data acquisition and real-time integration. This aims to boost safety, security, and efficiency in cross-border energy trade and data management.
Strategic advocacy for trilateral power trade (Nepal/Bhutan-India-Bangladesh)
Institutionalization of the South Asia Network for Integrated Power System Planning and Operation (SANIPO)/BIMSTEC Network for Integrated Power System Planning and Operation (BINIPO). SAREP is working to institutionalize the South Asia Network for Integrated Power System Planning and Operation (SANIPO) to facilitate CBET in South Asia/BIMSTEC Network for Integrated Power System Planning and Operation (BINIPO)/Capacity Building Network on Integrated Power System Planning and Operation of South Asia.
Short Term Intervention:
Software on Power market trading tool for Power Market-based CBET for Bhutan and Nepal- SAREP supported Bhutan and Nepal in undertaking optimal market based CBET from Indian power exchange platform through the Integrated Power Exchange Transaction Model Transaction Model for Dispatch, Scheduling and Bidding (IMDSB). IMDSB is a cloud-based tool to optimize supply-demand management and cross-border trading for Bhutan and Nepal. In this regard, SAREP also provided capacity building, trading and hand-holding support. . Building on the IMDSB Model, SAREP is supporting the development of web linked Python Based Power Exchange Transaction Model (PPTM). PPTM is a sophisticated decision support and analytic process automation model which will aid optimal CBET through Power Exchanges on a real time basis and is under advance stage of development.
Bangladesh Power Exchange Participation- SAREP is facilitating Bangladesh’s entry into the power exchange by establishing a core group and creating a roadmap, with the report released at the Climate Summit 2023.
Medium Term Intervention:
River Inflow Forecasting and Measurement System for Chhukha Hydropower Plant – SAREP is supporting the development of a Hydropower Forecasting System (HFS) Framework and test this framework through a Pilot inflow forecasting system and a hydro meteorological network that can be used to optimize power generation in Bhutan vis-a-vis participation in the day ahead power market as well as the generation of hydrological data for long term analysis.
Regulatory and Technical Support: SAREP provides technical support to SAFIR's Working Group for regulatory cooperation, including frameworks for ancillary services and energy regulation training, and assists the SAFIR Joint Working Group in developing a Common Minimum Grid Code for power trade in South Asia.
Institutional support to BIMSTEC Energy Center – SAREP is supporting BIMSTEC Energy Center (BEC) on building knowledge exchange, research studies, and outreach capabilities through the development of dissemination mechanisms. Some key avenues of institutional support are as follows:
- BIMSTEC Regional Energy Database
- BMSTEC Energy Perspective 2040
- BIMSTEC- comprehensive plan for regional energy cooperation (BIMSTEC-CPREC)
- BEC Website, BIMSTEC Energy newsletter, knowledge sharing library, joint workshops, etc
- Undertaken market assessment for Nepal Power trading entities.
- Stakeholder consultations with regional beneficiaries conducted and consensus building.
- Explore the creation of new power trading entity and strengthen power trading functions.
Supporting Sri Lanka in developing regulatory instruments such as:
- Regulatory framework guidelines for CBET
- Procedure for approval and facilitating import/export rules
- Open access and trading license regulations
In addition, SAREP is supporting PUCSL in preparing discussion papers and consensus-building to introduce and operationalize (1) open access in transmission and (2) wholesale electricity market including the development of appropriate rules and regulations in this regard.
- Joint Workshop on Prospects of Clean Energy Transformation and Role of Coordinated Generation and Transmission Planning for Optimal and Sustainable Cross Border Energy Trade in South Asia.
- Fostering Coordinated, Complementary Regional Generation and Transmission Planning for Optimal and Sustainable Cross Border Energy Trade (CBET) in South Asia.
- Coordinating national plans for power generation and transmission, along with developing regional infrastructure, will strengthen Regional Energy Cooperation (REC). This will bring cost savings, improve financing for the electricity sector, increase competition, and make the South Asia Power Grid (SAPG) greener. Overall, this will accelerate the shift to cleaner energy, enhance energy and climate security, and promote economic development in South Asia.
SAREP is partnering with the International Solar Alliance towards furthering the cause of cross border power system integration to achieve the objective of One Sun One World One Grid (OSOWOG) initiative. The partnership is focused on accelerating trans-regional electricity grid interconnections, advancing rapid large scale deployment of solar energy, enhancing regional power system planning and cross border clean energy trade, advancing high and ultra-high voltage electricity transmission system interconnection, creating regional clean energy markets/power pools, and mobilizing investment and financial models for trans-regional cross-border electricity grid interconnections.
- Peer Exchange Programs conducted for Cross Border Energy Trade and Powers Markets for stakeholders from Bhutan and Bangladesh.
- Conducted technical trainings and knowledge sharing workshops on power trade, markets (day ahead, real time market), DSM etc.
- International study tour for PSC and Task Force Members- “Developing Regional Power System, Electrical Integration and Regional Institutions in Central America: Strategic, Policy, Regulatory, Institutional, Technical, Operational and Market aspect of SIEPAC (Central American Electrical Interconnection System).
- International regulatory study tour on regional power market regulatory governance, market design and development – regional power markets/pools in North America.