South Asian countries benefit from a single interconnected electricity market
Data from the Asian Development Bank show that South Asian countries will benefit greatly from a single interconnected electricity market, which will also give India an opportunity to replace cleaner fossil fuels with fossil fuels in electricity generation from countries such as Bhutan and Nepal.
Priyantha Wijayatunga, Director, South Asia Division, ADB (Energy Sector), said that unexpected power shortages in a national grid could be addressed by importing electricity from neighboring power grids.
Wijayatunga pointed out that a single interconnected electricity market is a clear victory for the countries of South Asia's sub-region economic cooperation (SASEC) as all countries' power systems will be integrated through sufficient cross-border transmission capacity.
Under such a deployment, small countries like Nepal and Sri Lanka will rely on the market to provide backup generation capacity and reduce investment costs, while fossil fuel power generation in Bangladesh and India will be replaced by clean hydropower from Bhutan and Nepal.
Wijayatunga added that because of the peak power demand times of neighboring power grids, a grid does not need to produce full power to meet peak demand, but can buy some of the demand from another grid and vice versa. This "diversity of choice" reduces the overall investment needs of the national energy generation plan.
Grid-to-grid interconnections facilitate the transfer of electricity directly from one national grid to another, rather than from the power plant to the grid.
Wijayatunga said that with regard to the India-Bangladesh power trading agreement, according to a project backed by a $ 112 million ADB loan in 2013, Bangladesh could now import up to 500 megawatts of electricity from India.
This grid-to-grid interconnection significantly improves Bangladesh's electricity supply, cuts costs and reduces power disruptions. Now the two countries are seeking financial assistance through another $ 120 million ADB loan.
Wijayatunga further said that bilateral power trade agreements between the current SASEC countries need to gradually expand beyond the agreement between the two countries.
"Some examples of this are already clear, such as agreeing to deliver electricity from Nepal to Bangladesh via India's transmission grid and initially discussing Bangladesh's investment in a hydroelectric plant in Bhutan." Wijayatunga said, "We hope Bilateral power trade can further expand in the near future, and more bilateral and multilateral power trading can pave the way for a single interconnected electricity market in the SASEC region that benefits all nations. "