USAID
SARI Energu
IRADe

South Asia Regional Initiative for Energy Integration

Studies

The macroeconomic studies aim to provide a basis to discuss with the beneficiaries from CBET both in terms of power received (i.e. importing countries) and export revenue generated and its impact on growth and development. The study is building evidence for the decision makers for consensus building between countries and within countries through informed dialogues and negotiations to support creation and implementation of the CBET.

Reference Energy System (RES) of Nepal and India in the Answer-TIMES model

  • Initial Nepal results were generated at various export prices with standalone Nepal Model without considering the absorption capacity of India. The model accounted for the entire 42 GW capacity hydro potential in Nepal. The modelling timeframe was 2047. It also accounted for NEA plans, the expected timelines for installation of various IPP projects including the export oriented projects till 2027.
  • The model results indicated that capacity additions increased rapidly at power export prices over 8.00 NR per kWh for the storage type hydropower project beyond 2022. The rate of capacity additions was much higher at higher prices. There was a similar trend for ROR projects beyond 2027 over 4.00 NR per kWh. The modelling results depicted how electricity trade could be done under various scenarios while capturing the availability and demand for power in both India and Nepal.
  • The Social Accounting Matrix for the year 2007-08 for Nepal was analyzed. The information from the SAM for Nepal was used to assess the potential of the electricity sector vis-a-vis the other sectors of Nepal to induce economic growth through backward and forward linkages. The results showed nearly 6.3% additional GDP gain due to power trade by 2030.
  • A presentation to SARI/EI PSC members conducted showed that the SAM multiplier accounted for the backward linkages but the developmental future role of power sector needs to be captured through a dynamic future forecasting model.

Key outcomes expected in the first phase of the Macroeconomic study

The Macroeconomic modelling will cover a range of demand growth, renewable development, interconnection scenarios and other scenarios to properly assess the scenarios for economic impact of CBET. Adoption of interdisciplinary research by considering technology, economy, environment and social aspects in long-term is being deployed. Following results are anticipated:

  • Long term electricity demand-supply scenarios for Nepal and India.
  • Demand-supply gap on annual basis, with seasonal gaps increasing gross power transfers.
  • Prioritization of transmission lines.
  • Macroeconomic feedback on the economy.

The outcome of the studies will rigorously form estimates of benefits to inform the discussion by all three Task Forces of the SARI/EI and pave the path to prepare and develop regional energy markets and make them sustainable in order to foster economic growth of this region.

Modelling work of Nepal and India Answer-TIMES.

  • The India’s TIMES model was enhanced and refined and incorporating all power generating technologies including all solar and wind technologies with storage, nuclear and other clean coal power generating technologies. The model now has to capability to capture the INDC scenario and cost reduction capabilities of new and emerging technologies. The model is now being run as a standalone and allowing for import of power from Nepal. Preliminary results indicate that power imports increases considerably at 3 NR per kWh, especially in the later years. At 7.50 NR per kWh the imports are negligible.
  • The Nepal model was updated and further refined after receipt of disaggregated information of all the power projects with capacities, costs and date of commissioning and type of technology used for generation.
  • India and Nepal models are being integrated to capture the implications of the load curves of both the countries and the government policies. After integrating and running both country models together it is expected to capture the absorption capacity of India at various time-slices, which will provide the true potential of the power that can be export to India at different export prices.

Modelling work of Nepal SAM.

  • IRADe set up the activity analysis model for Nepal using the discussion with stakeholders in Nepal about various parametric assumptions.
  • The IRADe team established regular contact with the IIDS team and acquired information about House hold expenditure data in three living standards surveys to estimate an economic demand system for Nepal. The IRADe team also obtained from the Nepal partners data on disaggregated national accounts from 1989 to 2014. The team used this data to compute prices and quantities to estimate a complete demand system. The estimated demand system was used in the macro-economic model for Nepal. The SAM for 2007-08 was used as an input to set up the activity analysis based optimization model for Nepal. Power demand from the economic model was shared with the MARKAL model for India of this region.