P. 1
Energy Trade in South Asia: Opportunities and Challenges

Energy Trade in South Asia: Opportunities and Challenges

|Views: 727|Likes:
The South Asia Regional Energy Study provides interventions to improve regional energy cooperation in different timescales, including specific infrastructure projects which can be implemented during these periods.
The South Asia Regional Energy Study provides interventions to improve regional energy cooperation in different timescales, including specific infrastructure projects which can be implemented during these periods.

More info:

Published by: Asian Development Bank on Apr 04, 2012
Copyright:Attribution Non-commercial


Read on Scribd mobile: iPhone, iPad and Android.
download as PDF or read online from Scribd
See more
See less



The modality of power interconnections required to transmit the power
generated at a regional power plant would depend on the quantity and
distance over which the power transmission is required and the need, if
any, to transfer the power through intermediate power systems. The extra
expenditure involved with a high voltage direct current (HVDC) power
interconnection is justified where the transmission distance involved is
large or where operational independence of the interconnected systems is
desired. The options available for the transmission system arrangements are
(i) implementation by an independent power transmission company, either
fully privately owned or as a joint venture with a public sector transmission
company; or (ii) implementation through the respective national transmission
utilities, with a jointly agreed design and construction plan. Both these
models are in operation in the region.


This equity holding could be based on the share of electricity for each country from the

power plant.

Energy Trade in South Asia_6th.indd 77

3/24/2012 6:14:18 PM


Chapter 9

Renewable Energy


Development of nonconventional renewable energy (NCRE) in the form of
electricity generation through small-scale hydropower, wind power, biomass
power, and solar photovoltaic power has grown steadily in the SAARC
member states (SMSs). The SMSs are also in the process of strengthening
the necessary institutional arrangements to more vigorously pursue NCRE
utilization and also train staff to a higher level of technical competence to
address the key barriers to NCRE projects. These barriers are (i) the high front-
end capital and project development costs per kilowatt (kW) of installed
electricity generating capacity, though operation and maintenance costs are
low; (ii) the difficulty of forecasting cash flows of NCRE projects because
electricity output from renewable energy projects is linked to availability
of natural resources, like water flow, wind speed or solar radiance, which
cannot be declared with high accuracy over the life of the project; and
(iii) grid intake tariffs for electricity being based on avoided costs of the
host grid system, which can also vary. These barriers are exacerbated when
other competing energy forms are subsidized, and regional cooperation is
most significant in the context of developing collaborative mechanisms to
overcome them.

Regional cooperation can be very significant in the context of developing
collaborative mechanisms to overcome the barriers to growth of NCRE.
In particular in biomass, there is little history of successful commercial
development. As noted in the Introduction section, biomass commercialization
through the manufacture of biodiesel has the potential for easing energy

Energy Trade in South Asia_6th.indd 78

3/24/2012 6:14:18 PM

Nonconventional Renewable Energy 79

security concerns through the use of domestic resources.28

However, much
research and trial-and-error experimentation is needed to set the stage for
widespread commercial applications. This work is rightfully a regional public
good and joint public sector projects to better understand the commercial
promise of biofuels would benefit all.

Outside of biomass, in wind, solar and related subsectors, there is also the
need for public sector efforts. In particular, it is crucial to understand the
institutions—legal, regulatory, and financial—that would be supportive of
private sector operations and to understand how these can be encouraged.
Cross-country consultations on the appropriate enabling environment are
important to provide confidence to each SMS on how to proceed.

Standardized modular approaches to project preparation, evaluation, due
diligence study, and preparation of specific financing packages can lower
the up-front costs and the annual electricity generation costs. There is also
now increasing emphasis being given to offering stable cost-based tariffs
for grid intake electricity to provide more incentives for NCRE development.
From a technical perspective, there is increased focus on developing NCRE-
fed smart local power grids with information and control technologies,
which facilitate the stability of NCRE-based electricity generation, and also on
achieving greater economies of scale, particularly with wind- and solar-based
electricity generation. In the case of small non-grid options such as micro-
hydropower, wind power, solar photovoltaic systems, or their hybrids with
battery or diesel back-up for individual consumers, cost control approaches
include: (i) leasing the systems to end users rather than selling them, in order
to overcome the problem of high front-end cost; (ii) financing vendor credit
programs, and providing targeted credits to local development financing
institutions to provide consumer credits as a part of an overall renewable
energy development program; and (iii) financing renewable energy service
companies that install and maintain renewable energy systems, taking a mini-
utility approach and collecting a monthly cost per kilowatt charges for use of
the facility. For the purpose of lengthening debt maturity, grant or concession
funds are accessible from the Global Environment Fund, through the clean
development mechanism (CDM), and from bilateral and multilateral donors.

You're Reading a Free Preview

/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->