Time to shift to cross-border energy trade to harness regional resources

Despite being connected with a single basin, the Ganges, Bangladesh, Bhutan, India and Nepal, also known as the BBIN countries, have quite different patterns of energy sources and demand variation.

If one country's energy generation resources are dominated by coal, the others are rich in natural gas or renewable resources, such as hydropower and solar.   

Variation in primary energy generation resources has also created a production variation among the nations; for example, when India and Bangladesh face the highest demand of electricity, Nepal and Bhutan struggle with surplus generation capacity.

These nations can thus benefit from mutual cross-border energy trade for the best use of their regional resources.

Bangladesh and India can import the excess power of Nepal and Bhutan to meet peak demand and also can export to the Himalayan nations when demand falls during the winter.

Generally, as temperature rises in summer, Bangladesh faces high demand of electricity during April-September due to high usage of air conditioners, with demand reaching around 14 gigawatts (GW).

In the winter, demand falls to almost half of the summer's consumption to around 7-8GW during peak hours in the evening.

Due to this seasonal demand variation, Bangladesh faces a huge overcapacity of around 37%.  The coastal nation has no option but to keep this excess capacity on standby during four-five months of winter and pay capacity charges to the power plants' owners.

This problem has been in the system for several years, and the Bangladesh Power Development Board's (BDDB) annual capacity payment reached around $1547.57 million in FY2021.

However, the idle or unused capacity will increase further in the future to  37,731MW in 2025 and 49,392MW in 2030 against a demand of 19,900MW and 27,400MW respectively.

Therefore, the BPDB will have to bear the cost of 17,831MW and 21,992MW of unused power.

On the other hand, when Bangladesh struggles with its surplus generation capacity, Nepal faces shortages of electricity because of low water levels in the rivers that obstruct it from producing hydropower.

Similarly, Nepal produces surplus electricity during summer and monsoon periods that lasts from April to September when power demand in Bangladesh surges.

According to Nepal Invests and Nepal Live today's reports, the Himalayan country now has facilities to produce 2,000MW of electricity per day, while the peak hour demand remains at 1,500MW.

Therefore, the country at present wastes a capacity of 500MW surplus power in the monsoon period when the production exceeds the country's energy demand.

Energy experts in Nepal claimed that the waste capacity of electricity is worth Rs5 billion. But the amount of such opportunity loss will be bigger in the future as the hydropower potential country targets to generate 10,000MW of electricity by 2026.

However, capitalising on the seasonal variation of energy demand in BBIN countries, Nepal can minimise this waste of capacity in the wet-season by exporting the surplus electricity to India and Bangladesh through an active cross-border energy trade initiative.

Similarly, Bangladesh and India can also export their surplus electricity when their power generation exceeds in the winter.

The largest economy of the BBIN, India, is endowed with a huge potential of harnessing solar energy from its open and unused land. Various estimations say that about 5000 trillion kWh of solar electricity is available in India's land every year.

As of February, India has an installed capacity of 50GW solar electricity, reports The Hindu.

However, countries like Bangladesh that have land scarcity can benefit from India's renewable potential both in meeting energy demand and reducing dependency on fossil fuel, if they are given the opportunity to invest in solar projects over there.

Over the years, the opportunity of harnessing regional resources through cross-border trade has started separately and partially. As of now, the initiative has remained limited to the bilateral boundaries, such as India-Nepal or India-Bhutan.  

For a few years, India has been importing hydropower from Bhutan, and in recent times, it has also started to import electricity from Nepal. Likewise, Bangladesh has been importing Indian electricity since 2013 though it struggles heavily with its surplus electricity in the monsoon season.

Due to the lack of a combined initiative for the cross-border energy trade, none of the countries can ensure the best usage of their resources.

In the current scenario, the surplus power is neither consumed in Nepal, Bangladesh nor have the governments been able to export the electricity to potential buyers.

Energy economists and experts in these countries are optimistic that BBIN nations can get rid of the burden of seasonal overcapacity and demand deficit if the resources are shared through a regional grid with an interactive cross-border energy trade initiative.  

[This article has been prepared as part of a BEI media fellowship with support of SARI/El Project Secretariat under IRADe and USAID]