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South Asia Regional Initiative for Energy Integration

Nepal starts export of Surplus Electricity to Indian Energy Exchange

Author: Mr. Pankaj Batra
Designation: Project Director, SARI/EI, IRADe & Ex-Chairperson, Central Electricity Authority, India

In a significant milestone towards enhancing energy security in South Asia region, Nepal started selling its surplus electricity to Indian Energy Exchange at a competitive rate since November 2021, after getting approval of the Designated Authority, as per Guidelines of the Government of India. Earlier, in April 2021, Nepal Electricity Authority, the country’s production, transmission and distribution monopoly, joined the energy exchange market for buying power through India’s power trader NTPC Vidyut Vyapar Nigam Limited. This power trading is a significant step towards utilizing the immense potential of cross border electricity trading in South Asia, and helping the countries harness greener sources of energy.

These milestone initiatives for cross-border trade follow the notification of Procedure for approval and facilitating Import/Export (Cross Border) of Electricity) by the Designated Authority in February’ 21 by the Central Electricity Authority (CEA) India.

Gradually recovering from the aftermath of the COVID pandemic, South Asia is slated to play a vital role in building a more sustainable future with greater access to affordable, reliable and clean energy. The region will also be instrumental in contributing to the United Nations’ Sustainable Development Goals. Regional energy cooperation will be a key pillar in facilitating this transition.

South Asia currently trades around 3,900 megawatt of power. However, this is a just fraction of the vast potential that the region has to offer. As per a study by South Asia Regional Initiative for Energy Integration (SARI/EI), the potential of cross border electricity trade in the South-Asia region is upto 60,000 MW through 2045.

The Trishuli hydropower and Devighat power house started supplying 39MW power through the Indian Energy Exchange. Power is being exported through the 400- kV Dhalkebar-Muzaffarpur inter-country transmission line, through which Nepal was importing power from Indian Energy Exchange since April 2021.

This power trade will reduce the strain on India’s coal-based generation during September and October, when the wind generation season gets over and India’s own hydro generation also comes down. The clean hydropower from Nepal will fill in this gap, and move the country closer to its goal of achieving 50 per cent share of energy from renewable energy sources by 2030. Discussions are now underway to have Bangladesh and Bhutan take part in trading on the Indian power exchanges as well, to help in optimal utilization of the Region’s power resources. This will be a significant step towards the development of regional markets in South Asia.

Similarly, India and Bhutan have been developing sustainable hydropower projects through mutual cooperation and partnership and the electricity generated from these projects is being traded across the border. India is importing a maximum of about 2000 MW power from Bhutan.

All these developments are important building blocks towards forming an integrated South Asian regional power market, including through exchange-led CBET.

Since 2000, United States Agency of International Development through its South Asia Regional Initiative for Energy (SARI/E) program has strived to lead the enhance energy security by promoting a regional energy cooperation. In its current phase, the program, called South Asia Regional Initiative for Energy Integration implemented by Integrated Research Action and Development, aims to promote regional energy integration through increased cross border electricity trade and formation of a regional power market.
Consistent efforts under USAID’s SARI/EI program towards capacity-building, knowledge-sharing, and consensus building with various stakeholders of the region will help achieve the vision of an energy secure and prosperous South Asia.

Ushering in an Energy Security Region through a South Asian Regional Power Exchange

Author: Mr. Pankaj Batra
Designation: Project Director, SARI/EI, IRADe & Ex-Chairperson, Central Electricity Authority, India

The date of 14th April, considered to be auspicious in many regions across South Asia, also heralded the beginning of a new era for the region’s power market. Nepal Electricity Authority electricity, the country’s production and distribution monopoly, joined the energy exchange market through India’s power trader NTPC Vidyut Vyapar Nigam Limited (NVVN). This is a significant step towards utilizing the immense potential of cross border electricity trading in South Asia.

Till now, NEA was purchasing power from NVVNL, Power Trade Company and distribution companies under Bihar, Uttar Pradesh and Uttarakhand state governments. With it joining India’s energy exchange, it can purchase electricity directly at a competitive price.

This started after the first such approval for another country was given by the Designated Authority, Member (Power System), CEA, in accordance with the Procedure for approval by Designated Authority, was notified by the Government of India, on 26th February, 2021. The first transaction took place on Saturday, the 17th April, and was for about one million units, which more than doubled in the next day to 2.9 million units. This is a milestone event for both Nepal’s energy development, as well as creating a vibrant regional power market, envisioned by South Asia Regional Initiative for Energy Integration (SARI/EI) since 2016.

Since 2016, the SARI/EI program has been working closely with all South Asian countries, including the Ministry of Power, Government of India, the Central Electricity Regulatory Commission of India, Ministry of Energy, Water Resources and Irrigation, Government of Nepal, Nepal Electricity Authority (NEA), Indian Energy Exchange and NVVN for a Regional Power Market & power exchange based trade in South Asia. A mock exercise of the Day Ahead Market (which is what Nepal is presently taking part in) through a South Asia Regional Power Exchange was also carried out by SARI/EI, along with participants from Bhutan, Bangladesh and Nepal, where these countries along with India took part. A total surplus of INR 323.63 billion was seen to be generated in the BBIN (Bangladesh, Bhutan, India Nepal) Region by the addition of these three countries in the Indian Power Exchange, consisting of both producer surplus and consumer surplus.

The team held several workshops on Power Market and Power Trade through Power Exchange in Bangladesh, Bhutan and Nepal. In November 2019, a workshop was held for South Asian countries on Power System Operation, Trading & Exchange Platform, New Delhi, along with a site visit to a Power Trader, a Power Exchange and the Northern Regional System Operator in India.

It’s heartening to see these efforts fructifying in the form of NEA finally trading in electricity in India’s energy exchange market. This would likely lead to trading by other South Asian countries in an energy exchange for South Asia.

A regional power market and power exchange based trade is key to develop and sustain power integration of South Asian countries. Harmonising market rules across the countries through an appropriate market design will likely lead to efficient utilization of available resources and infrastructure in South Asia. SARI/EI will continue to work closely with Ministries and policy makers to operationalise a vibrant regional power market.