Renewables based Electricity trade potential between BIMSTEC countries could surpass 95GW by 2045

India’s cross border electricity trade between South Asian and Southeast Asian countries could be a green alternative to China’s coal heavy BRI

30 May 2019: BIMSTEC countries gathered at Prime Minister Narendra Modi’s swearing in ceremony could benefit from India’s rapid renewable energy capacity increase. According to a new paper by CarbonCopy, annual electricity trade potential between South Asian and Southeast Asian countries could be between 65000MW to 95000MW by 2045.

The paper references estimates made by IRADe and World Bank. According to Integrated Research and Action for Development (IRADe), electricity trade between South Asian countries could reach 60,000MW by 2045 if South Asian economies continue to grow at 6.5 percent. Another World Bank study puts the figure to be over 95,000MW.

The report states Cross Border Electricity Trade (CBET) could be the vehicle through which India supplies 100% renewable energy to its neighbours. India has a target of installing 175 GW of wind and solar energy by 2022. If achieved, that would be close to 50% of India’s current total installed power capacity. And with more than 40GW worth of existing coal fired power plant under financial stress in India, the current fiscal year (FY19) has seen India’s renewable energy ambition increase even further to 275GW by 2027.

According to Global Energy Monitor (GEM), in 2018 India permitted less than 3GW of coal fired power plant for construction, compared to an annual average of 31GW from 2008 to 2012 and 13GW from 2013 to 2017. For the second year in a row, India added more solar and wind power capacity in 2018 than thermal power capacity.

India’s cross border electricity trade between south Asian and southeast Asian countries could be a green alternative to China’s coal heavy Belt and Road Initiative.

While there are other initiatives aimed at increasing connectivity and building energy infrastructure within the south Asian region, namely, China’s Belt and Road Initiative (BRI), these initiatives are not committed to 100% renewable energy and therefore not clearly aligned to Paris agreement or United nations sustainable development goals.

UN Chief, Antonio Guterres reportedly said he wants countries to build no new coal power plants after 2020. While Chinese leadership states that its intention is to be green, its investments speak otherwise. More than $20bn worth of coal projects have been lined up as part of BRI.

According to E3G opinion poll conducted across six BRI recipient countries, it was clear that majority of these countries prefer renewable energy over coal projects. Pakistan’s Prime Minister Imran Khan, for example, cancelled 1,320 MW Rahim Yar Khan power project as part of the BRI and is expected to announce its renewable energy policy soon. While China peddles coal power plant as part of its regional development initiative, India could be helping its neighbours develop sustainably using solar and wind.

South Asian countries have national electrification goals that need to align with responsible climate action. Bangladesh, for instance, has an RE target of 20GW by 2021. Maldives has a target of 60% solar power by 2020 as part of their carbon neutral plan and has signed an MoU with India. Sri Lanka has expressed keen interest in cleaner and cheaper energy cooperation with India.

Given that India has gone from being a net importer of electricity to a net in 2016-17 – with solar as the largest contributor to new power capacity addition – RE holds the greatest promise for cross-border electricity trade (CBET).

Tim Buckley Director Energy Finance Studies, IEEFA

“India is entering the centre stage of the world in terms of the critical global issues relating to energy-climate-decarbonisation policies. With Prime Minister Narendra Modi’s clearly articulated and highly ambitious vision of 275GW of renewables by 2027, India has emerged as a world leader in the renewable energy sector. Having seen cost deflation of well over 50% during Modi’s first term in office, both wind and solar are providing significant investment in domestic markets. Clean energy prices are now 20% below the electricity grid average.”

India has emerged as a world leader in the renewable energy sector.

Tim Buckley

“The energy security gains are substantial, while the reduced pressure on India’s current account are helping to drive stable, sustained economic growth for all. PM Modi’s second term should see India leverage this major competitive advantage of clean, deflationary domestic energy.”

“The development of a South Asia inter-connected electricity grid can be used to build grid stability and capacity, accelerating renewable energy investment and technology development, whilst further the aim of 100% electrification and the progressive eradication of energy poverty and the associated addiction to increasingly expensive fossil fuel imports. Highlighting and expanding international trade in zero emissions electricity would serve to accelerate this benefit while also serve a critical secondary benefit of starting to address the building air pollution pressures in the region.”

Kanika Chawla, Director, Energy Finance, Council on Energy, Environment and Water (CEEW):

”India has displayed an audacious and sustained commitment to a renewable energy led energy transition. Through it’s efforts at home, as well as through the continued commitment of working with emerging economies through the International Solar Alliance, India has established a seat for itself at the climate leadership headtable.”

India has established a seat for itself at the climate leadership headtable.

Kanika Chawla

“The energy transition in emerging economies around the world is unlikely to resemble the transitions we have seen in more developed economies, or the one in China. The growing energy demand in emerging economies in the BIMSTEC region, along with several competing uses of public money for advancing development, will need the energy transition to be resource efficient and timely. Keeping this in mind, India’s lessons on navigating through a complex power sector and the associated political economy will be critical in supporting its neighbours in developing domestic capacity that comes without strings attached.”

“The South Asian subcontinent will be the swing player in the global energy markets. By working together it can be a price maker, rather than just a price taker – establishing their own unique pathway to a cleaner energy system, and a more secure economy.”