Amjad Hafeez

Interconnection of South Asian Region Electricity Grid as a Leverage Point for Sustainable Development

This paper investigates the possibility of CO₂ emissions reduction from the electricity grid of the South Asian Region (SAR) by leveraging interconnection between the national electricity grids of the region. To achieve this, CO₂ emissions from the SAR electricity sector between 2020 and 2050 are quantified, and changes in CO₂ emissions are measured in line with changes in cross-border electricity trade between countries, with and without CO₂ pricing. The paper further calculates the financial gains to the regional countries from these interconnections and discusses the implications for the sustainable development of the region.

The SAR has eight countries and is inhabited by 1.8 billion people. The average per capita electricity consumption is ~760 kWh, which is expected to rise to ~4000 kWh by 2050. Fossil fuel-based electricity is ~80% of the total, with an average grid emission factor (GEF) of ~0.7 tCO₂/MWh. In this context, it is necessary that the GEF of the region be reduced drastically by 2050 in order to reduce overall CO₂ emissions.

To determine CO₂ emissions changes and financial gains, this paper uses a modelling methodology. This modelling projects national electricity consumption at 6% compound annual growth rate (CAGR) from 2020 to 2050, based on analysing annual demand growth for the region between 2004 and 2018. The GEFs of regional countries are then calculated, on a year-on-year basis, from their projected installed capacity each year. Based on these GEFs, the CO₂ emissions reduction in electricity-countries is calculated under different scenarios. Furthermore, this modelling framework also calculates the cumulative financial benefits for electricity-trading countries based on the difference in their electricity tariffs, capacity payments and reductions in investment in new power plants.

Modelling results suggest that, in the SAR, the quantity of cross-border electricity trade and CO₂ emissions are inversely proportional to each other between 2020 and 2050. The CO₂ emissions reduction is higher in a Free Electricity Market scenario in the region than under Bilateral Power Purchase Agreements between the regional countries. It has been further established that, at 10% cross-border electricity trade in the region in a Free Electricity Market scenario and $30/tonCO₂ pricing, cumulative CO₂ emissions from the SAR electricity grid can be reduced by 45% between 2020 and 2050. This is in addition to ~$1.7 trillion in cumulative financial gains to the region.

This research identifies quantitative gains and presents concrete opportunities for regional policy makers to overcome possible barriers in the way of regional electricity trade. Further research may focus on the technical and political feasibility of a regional power pool in the SAR. Researchers may wish to consider political and climate change risk reduction analysis associated with an extension of the SAR power pool.