The potential for renewable energy interconnections in South Asia

On February 22, the Climate Parliament hosted a virtual parliamentary roundtable with MPs from Bangladesh, Bhutan, India and Nepal, in collaboration with Oxford Policy Management (OPM), in the context of the Energy for Economic Growth (EEG) research programme. The discussion focused on the potential for renewable energy interconnections in South Asia. Our MPs were joined by Dr Jyoti Parikh, Executive Director of Integrated Research and Action for Development (IRADe) since 2002 and former member of the Prime Minister’s Council on Climate Change in India, and by Pankaj Batra, Project Director of the USAID-funded programme on South Asia Regional Initiative for Energy Integration at IRADe and former CEO of the Central Electricity Authority of India. Nick Dunlop, the Secretary General of the Climate Parliament, interviewed both experts before opening the floor to MPs to comment and share their own experiences. 

Nick started off by emphasizing the reason regional supergrids are key to ensuring the transition to clean energy: the wider the area over which you harness renewable energy, the cheaper and the more reliable the energy becomes. Since 2014, Climate Parliament MPs (particularly in India) have played a key role in encouraging the Indian government to take international leadership on regional and continental energy interconnections. The Green Grids Initiative that was announced in Glasgow by the UK COP26 Presidency in partnership with India’s One Sun One World One Grid project has now been endorsed by more than 90 countries. Linking up the South Asian countries to set up a continental grid and a single electricity market is a very concrete project that would allow energy trade energy across borders and reduce the cost of electricity.

Bangladesh, Bhutan, India and Nepal all have low per capita emissions and low electricity access. Affordable energy is urgently needed to increase energy access and reach the Sustainable Development Goals (SDGs). Fortunately, these countries have abundant resources of renewable energy, including solar and hydroelectricity in the mountains of Nepal, Bhutan and India. With the right grids, these countries would be able to trade their hydroelectricity to respond to peak demand when solar or wind is not available. Hydro can also be used for pumped storage.

The experts argued that building the right grid infrastructure would enable a better optimization of power resources and therefore would reduce the price of energy. There is great disparity in energy demand between the four countries; linking up the national grids would balance out supply with demand and reduce the need for storage to cover peak demand. Interconnecting the different countries would also balance the intermittency which is inherent to renewable energy sources. A recent IRADe modelling study calculated the price of electricity considering the cost of building the right infrastructure. The study concludes that renewable energy sources will remain much cheaper than fossil fuels. In addition to lowering the price of electricity, interconnecting the energy systems would also have important macro-economic benefits for development and GDP. For example, Nepal’s GDP would increase by 40% by 2045 due to trading its electricity with neighbouring countries. To these economic benefits one can add fewer CO2 emissions and lower health and environmental costs.

MPs asked about the role they can play to raise their country’s climate ambition and promote the transition to a greener economy. Enhancing regional cooperation is key to building consensus around the construction of regional grids. MPs discussed the creation of a regional institution that could be entrusted with research and finding investment opportunities, and that could advise governments on trade policy, following the model of the Gulf Cooperation Council (GCC). Based on recent research, the two experts advised the MPs to start by building informal integrated fora, bringing together all relevant stakeholders from governments to grid operators to first build knowledge and trust around renewable energy and energy interconnections.