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Regional integration and energy trade across Indo-Pacific region increased

Regional electricity and gas market integration offers substantial economic benefits and can unlock billions of dollars in the regional energy market. USAID helps develop legal and regulatory frameworks that enable power and gas trade and the development of power markets, including regional power exchanges. This effort builds on and leverage bilateral initiatives, including electricity market expansion, that strengthen and prepare individual countries for regional coordination and integration. It also focuses on expanding the downstream regional market for natural gas and Liquified Natural Gas (LNG) imports.

South Asian countries have a long history of cooperation with deep rooted social, cultural and economic ties. However, the region lacks energy cooperation. Global best practices and several studies have illustrated the benefits of interconnected power systems. Greater cross-border power trade and regional integration of energy markets will enhance regional grid stability, increase revenues, generate additional employment, advance economic growth and improve social services. The regional integration of energy markets will also support a higher collective penetration of renewable electricity in the region.

The regional integration of energy also applies to the natural gas market. On the power side, natural gas is a cleaner and more flexible source of generation that can help accommodate more renewable energy. It is also an efficient and cleaner fuel for cooking and road transportation. With about one third of the global population residing in South Asia but less endowed with domestic gas resources, the region is ripe with opportunities for global natural gas trade. The COVID-19 outbreak has further augmented the need for localization and regionalization.

The regional energy trade and integration pillar of the Asia EDGE initiative in South Asia builds upon the longstanding regional energy cooperation program that USAID has facilitated for almost two decades. The South Asia Regional Initiative for Energy Integration (SARI/EI) program, supported by USAID, helped the relevant ministries, departments, and regulatory agencies in South Asian countries to increase the cross-border electricity trade. The program helped frame and modify domestic policies and regulations with an objective of harmonization and standardization between countries. The program also supported mechanisms for development of generation capacity, development and interconnection of cross border transmission lines, with a view of regional harmonization. USAID activities under this pillar assist the various regional cooperation and collaboration mechanisms such as BIMSTEC and SAARC to strengthen institutional dialogue and cooperation and work to enhance the bilateral and multilateral ties between countries on energy trade.

USAID activities focus on the ongoing consensus building efforts to establish regional power trade and markets, technical and capacity building assistance to frame and update national and regional policies and regulations to support cross-border power trade, coordination on transmission planning and grid codes, establishment of a regional power market, support for the development of national and regional gas policies, and regulations and infrastructure for gas trade and LNG imports.