Saarc silver lining for energy

The South Asian Association for Regional Cooperation (Saarc) recently celebrated 25 years of its establishment and came out with a fitting declaration titled "Towards a Green and Happy South Asia". Several exciting initiatives have been identified in this declaration, which also recognised the need to focus on people-centric development and the concept of Gross National Happiness, as opposed to Gross Domestic Product (GDP), which has been pursued by Bhutan. Framing this in the context of the fairly impressive rates of economic growth that several countries of the region have been experiencing, resulting in an attractive regional average growth rate, and the overall theme of the summit around climate change ensured that this silver jubilee edition of Saarc was truly reflective of the concept of sustainable development.

The Thimpu Statement on Climate Change recognised the need for formulating mitigation and adaptation strategies at various levels and also recognised the win-win opportunities that existed around cooperative regional initiatives to address the challenges of climate change. The summit declaration simultaneously recognised the need for enhanced cooperation in the energy sector in order to facilitate energy trade and the development of renewable energy sources (including hydropower) as well as conventional energy forms. So, how can this agenda be taken forward? Do we need to differentiate clearly between the opportunities for trade vis-a-vis the opportunities for cooperation?

Variations in resource endowment and energy consumption pattern among the Saarc member states theoretically create opportunities for energy trade among them. However, the only tradable resource surpluses that can be identified are the rich hydro resources in Nepal, Bhutan and the northeastern regions of India, which are somewhat isolated from the rest of India because of the geographical positioning of Bangladesh. Electricity generated from hydro sources is not only low-carbon but also relatively cheaper. The challenge, however, for regional cooperation around this resource would be the expectation of magnanimity on India's part -- to allow the use of its territory to wheel electricity from this source to other countries when India itself suffers from huge power shortages!

The other sources of low-carbon energy that may be abundant in the region would be primarily solar energy as well as biomass. While both these energy forms could meet local energy demands in a decentralised form, solar energy could also contribute to the centralised electricity grid through largescale capacities that can be developed, as is being planned in India under the National Solar Mission. However, it is difficult to visualise regional electricity trade centred around these resources in the short or medium term due to their higher costs. What may be an option is to set up an electricity-trading platform that would allow the countries of the region to trade in any surpluses that may exist during time of day or over the year (seasons).

With no other energy resource surpluses, Saarc may well have to limit itself to regional cooperation either in the form of sharing of non-energy resources (such as human, technical or financial resources), or a joint procurement of energy from outside the region -- all member states are either dependent on crude oil import or petroleum product import to meet their domestic demand! Such 'soft' opportunities too could go a long way in building the necessary environment of trust that is sorely needed among the countries of the Saarc region. Additionally, given the scale of differences that exist in the energy markets of the region, yet another set of opportunities for regional cooperation could exist around shared energy infrastructure - be they power plants, refineries or energy import infrastructure. Smaller member states could buy stakes in large energy generation/import facilities and earn proportional rights to the energy therefrom benefiting from economies of scale and technological progress.

Energy demand in the region is expected to grow at a rapid pace with substantial investments required in building requisite energy related infrastructure. According to an estimate, Bangladesh requires an investment in the range of $5-6 billion over the next 10 years for power sector development. The International Energy Agency estimates the investment cost of meeting the projected increase in generating capacity, transmission and distribution in India to be around $680 billion till 2030. Nepal's combined investment need for generation and transmission for the next 10 years is estimated at $1.22 billion. If the countries of the region are to develop along optimal low-carbon energy paths, and not lock themselves into soon-to-be-obsolete infrastructure, it is imperative that they take a long-term integrated view of energy cooperation development and exploit all possible opportunities for both trade and cooperation. Not the least of their challenges, and opportunities for cooperation, would be to provide clean energy access to the vast majority of their population!

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