Regional Energy Cooperation in South Asia: Scope, potential impact and Challenges of Cross Border Electricity Trade

NCAER organized an in-person lecture on ‘Regional Energy Cooperation in South Asia: Scope, potential impact and Challenges of Cross Border Electricity Trade’, by Dr. Saswata Choudhury, Fellow, TERI on Wednesday, 15 May 2024, 3:00 pm, as part of its Dialogue Room Seminar Series.

Details of the paper being presented and bios of the Speaker, Chair and the Discussants are shared below.

Abstract

South Asian countries, except Nepal and Bhutan, are primarily dependent on imported fossil fuels to meet their increasing energy demand. However, due to lack of domestic reserves, intra-regional trade in conventional energy is limited. At the same time, cross border electricity trade (CBET) has huge potential within South Asian countries especially among Bangladesh-Bhutan-India and Nepal (BBIN) countries. Electrification of end use activities is an important component of decarbonization only when electricity is generated from renewable sources. However, due to inherent nature of intermittency in generation, complete reliability on renewable is a major challenge. Generation variability can lead to grid imbalance, which can be addressed though incorporation of relatively expensive energy storage in the energy supply system. CBET is an effective alternative to address this issue. Moreover, CBET also provides economic benefits to the exporting partner to utilize scale benefit and facilitates the importing country to meet their demand-supply gap without much investment in capacity development. In case of green electricity trade, CBET helps to meet the decarbonization targets in importing countries as well. In the presence of demand-supply complementarity across countries in terms of diversified source of power generation and demand pattern, CBET could be very effective in South Asia. This study has measured the impact of CBET on individual economy and South Asian region in terms of GDP and welfare using GTAP database. The study found that CBET can lead to economic benefits to both trading partners, but level of benefits depends on scale of trade and nature of trading partners. The spillover effect also provides economic benefits to the entire region. The study also found that multilateral engagement is more beneficial than bilateral trade. However, there are several barriers (regulatory, political and infrastructural) which poses obstacles to realize the potential of CBET in South Asia. Regional cooperation in those sectors is required to overcome these challenges and reap the full benefits of CBET in the South Asian region.

Speaker

Saswata Chaudhury is a Fellow and Area Convener of Integrated Assessment and Modelling Area at The Energy and Resources Institute (TERI), New Delhi. He received his MPhil and master’s degree in Economics from Jawaharlal Nehru University, New Delhi. With a rich background in impactful research, Dr. Chaudhury has honed his skills at renowned institutions like ICRIER and NIPFP. His expertise spans across energy, trade, and development, with a focus on CGE analysis and NSS data decoding. He also has wide experience in primary survey and multi-stakeholder approaches to research including working with local communities, private sector, and government officials at all levels including the district and block levels. With numerous publications in prestigious national and international journals, he is at the forefront of cutting-edge research. Currently, he leads projects at TERI, delving into energy demand forecasting and CGE modeling in the energy sector.

 Moderator

Chetana Chaudhuri is a Fellow at NCAER. She has a doctorate degree from Jawaharlal Nehru University (JNU), New Delhi. She is a distinguished researcher, whose expertise spans across a multitude of critical areas. Her research areas include Energy, Environment, Macroeconomics, Employment, and Health Economics. Previously, she has been associated with the National Institute of Public Finance and Policy (NIPFP), Public Health Foundation of India (PHFI) and Institute of Economic Growth (IEG). She has worked on a wide variety of studies pertaining to macro-economic analysis, input-output modelling, social accounting matrix, health financing, labor market analysis, energy analysis of industries and the household sector, analyses of large sample surveys, qualitative and quantitative assessment of government schemes like ESI, PMJAY, PMMVY, and RKVY, etc.; benefit cost analysis, and benefit incidence analysis, among others.

Discussant

Arpita Mukherjee is Professor in Indian Council for Research on International Economic Relations. (ICRIER), Delhi. She is a member of government committees and policy panels and also a member of the editorial board of several international journals. She worked closely with the governments and multilateral organizations across multiple geographies such as India, United Kingdom (UK), Australia, European Union (EU) and its member states, ASEAN, and the United States (US). Her expertise spans across Sustainable trade and investment; retail, logistics and food supply chains; nutrition; trade infrastructure including economic corridors and SEZs; services; start-ups and entrepreneurs; e-commerce. She has over 25 years of experience in large project and leadership roles and also has over 75 publications including books, refereed journals, newsletters, government reports.