Cross-border electricity trading in South Asia, Myanmar, and Southeast Asia – 2017

12 December 2017 (Last Updated December 12th, 2017 16:39)

Cross-border electricity trading (CBET) can therefore solve the power shortage of the region by effectively catering to growing energy demand by providing reliable, affordable, and clean power across the region through a common regional grid.

Cross-border electricity trading in South Asia, Myanmar, and Southeast Asia – 2017

The South Asian economy continues its optimistic growth trend projected at 6.8% in 2017 and an average growth of 7.2% in 2018–2019 which is likely to increase the power demand of the region in the coming years (World Bank, 2017). But lack of adequate and reliable energy, seasonal hydro availability, stagnant natural gas production, and expensive oil imports act as roadblocks in the region’s economic growth. Furthermore, the power demand in the region is expected to rise from 1,111 terawatt hours (TWh) in 2017 to 3,012 TWh in 2030 at a compound annual growth rate (CAGR) of 8%; in India alone, demand is expected to reach 2,765 TWh by 2030.

Myanmar, after its historic transition to civilian rule in 2016, is experiencing exceptional growth with a gross domestic product (GDP) of 7.7% in 2017, estimated to be 8% in 2018 (Asian Development Outlook, 2017). The country’s power demand is expected to increase from 15,363 gigawatt hours (GWh) in 2017 to 51,208 GWh by 2030 at a CAGR of 9.7%. This increase in power demand will necessitate large-scale capacity addition which might be a challenge as the country’s power sector suffers from complex legislations and excessive government interference.

Association of Southeast Asian Nations (ASEAN) countries are expected to witness robust economic growth of 6.2% on average for the period 2017–2021, compared to 6.5% in 2016 (OECD, 2017). The cumulative power demand in the region is projected to increase at a CAGR of 6.1% until 2030 with Cambodia (9.7%), Myanmar (9.7%), and Vietnam (8.5%) taking the lead. Though capacity addition, infrastructure building, and fuel supply projects are already in the pipeline, financial and technical challenges, along with weak institutional framework and limited market openness, are delaying ongoing projects.

Cross-border electricity trading (CBET) can therefore solve the power shortage of the region by effectively catering to growing energy demand by providing reliable, affordable, and clean power across the region through a common regional grid. In this context the SAARC Framework Agreement for Energy Cooperation (2014) followed by the issuance of guidelines on the cross-border trade of electricity by the Government of India in December 2016 is a big step toward boosting inter-country electricity trading in the region, resulting in shared economic prosperity through reliable and affordable power.