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#AEBF25 | Day 1 - APG Implementation Pathways | ASEAN Centre for Energy | YouTubeToText
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Summary
Core Theme
The discussion centers on the vision and practical steps for developing a fully integrated regional power market within ASEAN, emphasizing the transition from bilateral to multilateral power trade and the establishment of a robust regional power grid.
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Center for Energy to please make a way
Thank you so much um for this
opportunity. Can I have my slides up please?
Yes. Um thank you very much for the
opportunity and perhaps before we start
the discussions I'd like to con
contextualize what the discussions that
is um we are going to have in terms of
uh markets. So I think we've heard a lot
of APG in terms of technicality today
but um this discussions will focus more
on how we should trade um with each
Yeah. So I think the focus of the
cooperations that we have under the
ASEAN power grid is to um encourage more
infrastructure building of the
interconnections project. And the second
is how we utilize this um
interconnections to trade with each
other and as a regional institutions
that we are trying to help the asan
member states to look at how this
infrastructure will evolve um through
the years and basically how we can
utilize that in in terms of um doing
crossber trading with each other. So we
did um uh in collaborations with um ETP
UNOPS case and um escap UNS cup we do uh
uh a study called the roadmap for MPT in
ASEAN. So basically what we do under
this study is to look at how possible
the infrastructure will develop in ASEAN
uh up to 2040. Um and basically from
those interconnectivity that we'll gain
in the regions how the sort of like
trade or like a market potential that we
could unlock using the existing and also
the um um future infrastructure. So here
is um uh I'm showing you part of the um
report. Basically this how uh we
envisions uh on how the infrastructure
development in Assad and how the trade
could evolve like currently um a lot of
this um infrastructure um which is
existing and also a future development
is is based on bilateral um uh cooperations
cooperations
uh and also bilateral trade as well with
the exceptions of um LTMSPIP which is
the first multilateral power trade that
we have in the regions. So um we are we
want to look a bit further on how we
could um push this and escalate um
expand this bilateral cooperations and
bilateral bilateral trading to more like
multilateral power trade and also with
the ambitions of having a a regional
power market that Asan can trade uh with
Next slide please.
Yeah. So in doing this study as well
we've a lot uh doing a lot of
consultations with the countries uh and
the member states and it's interesting
to see that there are still a lot of
misconceptions um regarding the regional
uh market um because like currently in
the asan regions it's uh itself a lot of
countries most of the countries has like
a ver vertically integrated um uh power
market with the exceptions of Singapore,
Vietnam and Philippines which has its
own uh liberalized power market. So I
think there are big misconceptions as
well that we are trying to address. Uh
what does it mean to have a regional uh
power market and how basically the the
interactions um of the national market
and uh regional uh markets um would look
like if we want to pursue an a regional
uh uh exchange platform in the regions.
And I think this is some uh that will be
interesting to hear from different um
experts from different regions uh to
debunk of some of these misconceptions
especially because of the difference
power market that we have. Um for some
countries which is like vertically
integrated there is also a reluctancy or
hesitancy to to pursue a regional market
because they are not very familiar um on
the concept of market itself and also um
uh there is often misconceptions whether
if they if you want uh as a regions
pursue a regional market then nationally
that you need to also uh liberalize your
um national power market. So I think it
will be interesting discussions today
that we'll hear from different experts
uh whether this is true or not. Um and I
think that would be an interesting
discussions on actually what are the
benefits of having regional power
market. Um seeing that now we are in
some of the Assean regions APG has
intercon uh has interconnect different
countries as well.
Next slide please. So I think uh follow
up to the study on the road map for MPT
that we do. Uh we do also have the
assign interconnections master plan
study 3 phase three which uh basically
this aim study is a reference technical
reference for the regions to look on how
the APG will develop and the phase three
study is really focusing on how we
should what are the building blocks
basically to have a multilateral power
trade or or having a regional um uh
trade in the regions and I think this is
some of the assean sort of like um
takeaways as well as in a cooperations
wise we are very different um with the
other regions uh we have this our
uniqueness on how we cooperate in ASEAN.
Uh so from this study basically we have
one sort of like key takeaways that in
in order for ASEAN to reach out that
sort of like uh uh uh envisions of
having regional power market that we
need to do it stepwise and we need to
also consider like the differences of
the markets um of the uh of the member
states that we have. So uh we need to
look at those what are the building
blocks basically to achieve those and I
think um in this panel we'll talk more
uh about that as well. So I think I'll
end my context setting for the next
presentations and looking forward for
the discussions. Thank you very much.
>> Thank you so much Miss Nadila for
framing the discussion for all of us.
And with that, ladies and gentlemen, we
move on to our plenary session six panel
discussion. So, how do we draw on global
essence to turn ASEAN's APG vision into
real investments? I'd like to invite Mr.
Yua Mahoro, lead energy specialist for
East Asia and the Pacific at the World
Bank tomorrow at this session. Over to you,
Thank you so much. Um, distinguished
delegates, ladies and gentlemen, uh,
good afternoon.
Like, uh, the moderator said, my name is
Yu Wamuro and I'm lead energy specialist
at the World Bank. I'm based in
Singapore. It is really my great
pleasure and honor to moderate this
>> Yeah.
>> Okay. Thanks. Well, allow me to begin
with a few slides highlighting the
vision of APG World Bank experience in
supporting regional power and market
integration with a few specific examples
where the World Bank has been
intervening and lessons learned from
that experience. After short
presentation, I will then call on stage
our guest speakers to share their
experiences from their respective market.
It's taking time. Okay. So
the AAN power grid vision 2045 is very
ambitious and but achievable. It is
about building a fully integrated
regional grid across all 10 countries by
2045, leading to a more resilient and
sustainable power system that would
allow to scale up renewable energy,
strengthen energy security and support
decarbonization path towards net zero by midentury.
midentury.
So what is the status today? Today 25 27
years after the adoption of the Assean
power grid uh by the ministers of energy
in 1998
nine of 18 identified priority projects
have been completed providing about 7.7
gigawatt of crossber capacity. The
commencement of Lao Pedr uh Thailand,
Malaysia and Singapore in June 2022 was
a major milestone demonstrating that
multilateral power trade is in action.
So despite that progress, only less than
5% of AAN electricity generation is
traded regionally and that shows that
significant untaped potential for integration.
integration.
Lao Pedr has been so far uh exporter of
in the region with Cambodia and Thailand
being traditionally importers of power.
Cambodia imports from Thai and Vietnam.
So Singapore is importing around 100
megawatt through willing arrangements
and has a plan to increase that uh
capacity to 300. So what has been major challenges?
There are a number of challenges that I
would highlight uh including
infrastructure that remain very limited
with bilateral links as I mentioned but
with LTMS PIP being the sole
multilateral connection. So there has
been a financing as key barrier when
ASEAN power grid would require at least
$248 billion calling for a new BL
blended financing solutions. There has
been issues with political commitment
and regulatory alignment which vary from
country to country slowing cooperation.
Digital planning and investment remain a
bit fragmented while technical standards
like grid codes and data sharing are not
yet harmonized. Power trade is still
relies mainly on bilateral deals and
Azan lacks a bit of strong institutional
uh institution regional institution to
coordinate, regulate and drive
implementation forward. Now I want to
share with you key drivers from our
global experience. We have learned that
there are three uh main drivers as shown
on the slide including economic
efficiency, economic energy security and
clean transition. clean energy
transition. So from economic perspective,
perspective,
regional power trade allows country with
abundant and lowcost resources to export
electricity while others gain access to
affordable electricity supply.
The shared markets boost overall
efficiency and reduces generation costs
across the region. World Bank conducted
a study in Latin America that showed
that the regional power trade could
deliver up to two billion per year in
terms of savings even without new
generation. So for Azan deeper
integration through APG could unlock
similar economic gains or even more with advancing
advancing
secure lowcarbon energy future for
energy security. Interconnections as you
know provide backup supplies
uh in time in times of shortage when
each country has a shortage you can get
access electricity from another another
country and you get more reliable and uh
and resilient power system as a whole.
No country stands alone when region is
connected. In terms of clean energy as I
mentioned which is now the most driving
force integrated power system make it
possible to scale up variable renewables
like solar and wind to allow the region
now let me share uh the World Bank
experience. The World Bank has a
longstanding history in supporting
regional integration across the world,
you know, including Africa, Asia,
Europe, and Middle East. Over the past
10 10 years alone, the World Bank has
funded 40 plus projects related to
crossber interconnections and regional
market development with a total
investment of 7 billion. Uh this funding
has been accompanied by advisory
services and and analytics amounting to
So in a word bank approach investment
projects are always paired with
technical assistance aimed at
establishing or strengthening policy
legal and regulatory framework to really
make the market work. This support also
extends to institutional development and
capacity building. Those elements that
we often call soft infrastructure are
essential prerequisites for enabling
trade. Without them, physical
infrastructure alone cannot deliver
The World Bank I just want to highlight
a few a few examples that gave good
results. The World Bank engagement in
the south southern African power pool
focused on long-term institutional
capacity building. It combined financing
and key of key crossber lines like
Tanzania, Zambia, Mozambi, Malawi with
support for regional planning. This
included creating a dedicated regional
team, funding a master plan and
interconnection studies and preparing
regional transmission infrastructure
financing facility to advance the energy
integration. So as a result of such
long-term financing or support, nine of
12 countries in southern African have
been interconnected and southern African
power pool is today the more advanced
pool in Africa with uh a market with
actually a number of multiple products
of that of that market. Second
engagement in pan panarab energy market. Sorry
in 2016 I'll continue the slide will
come later. In 2016, the World Bank and
the League Arab States launched a
cooperation program to support
foundation buildings for establishing
pan Arab electricity market PM in five
phases to reach ultimate goal of fully
integrated market in 2038. So a
memorandum of understanding was signed
with the 16 countries in 2017 and today
PM is actually uh a good well
established though it remains a bit at
early stage of market integration. It is
at phase three which establish which is
establishing a wholesale competition.
And a third engagement which was key was
engagement with central Asia where we
financed a regional market to showcase
benefits and build confidence. So the
word bank supported effort to pilot a
day ahead market
and designed a prototype of a future
permanent regional trade platform. In
2023, the World Bank will hosted a high
level investment forum where the that's
pilot concept was presented to four
countries and both of the countries
those countries actually adopted that
deeper energy cooperation. It should be
the way way way forward. So that type of
piloting a prototype actually made uh
political buying and that's pushed for
the central Asia market to to really to
boost to move ahead to another stage. So
what do we learn from those specific
examples that I mentioned? What we have
learned as word bank is that crossber
infrastructure itself is is not uh
sufficient. Grid market integration
would rest on five blocks. One, in
addition to infrastructure, we need to
have you know harmonization or
coordination of planning and investment
ensuring that the countries align
generation and transm transmission plans
so crossber project are timely and cost effective.
effective. Two,
Two,
technical and operational coordination
is very important. Harmonization of grid
codes, dispatch rules, realtime
operations to maintain stability,
commercial arrangement and market
design, creating a fair pricing, trading
and settlement mechanism that make the
power trade financially viable. And
finally, institutional architecture,
establishing regional governance and
regulatory framework to build trust,
manage dispute and ensure that effective
coordination is in place. together those
pillars from those are actually good
pillars from back for a backbone and
that's would that's those two those
actually what you call building blocks
those are the one that's actually are
key in term in addition to
infrastructure to make the regional
now I also want to share our experience
in terms of how the regional market
develops of uh as a stepbystep step as
Sunny was highlighting we have seen that
there is it's a process that's evolved
in three stages mainly we have an early
stage which begins with the limited
cross border links and little
coordination electricity trade is mainly
through bilateral power purchase
agreements as we saw in La Pedia in
Thailand or La Pedia in China where
powerful uh flows would depend on the
seasonal surpluses. So AAN power grid is
in this category of early stage
integration. We have a second
integration category or stage that we
show we call shallow integration. This
stage is where most of uh in countries
are interconnected. You have basic
trading rules. You have short-term
wholesale market and you but the
coordination enforcement remains
slightly uh weak. This is in this
category we find most of the African
power pools including southern African
power pool, west African power pool,
eastern African powerpool and pan Arab
energy market.
Finally, there is another category which
actually is always aim uh end aim is
deep integration which represent a
mature market where countries can openly
have access open access transmission
networks harmonized rules, coordinated
planning and strong institution that
govern the market that operate on
transparency and cost effective pricing.
The AU market and Central American
market capac are really leading examples
of a deep integration.
Now I have a question here. How do we
move Assean? How do we facilitate really
asan to move from the current early
stage market to deep integration? So I
will leave that answer to our
distinguished speakers at the
experience. they will try to respond to
those those questions. Um with those few
words allow me to invite the uh speakers
of today. I will start with Martin
Martin Herot from the Nodpool.
Nodpool as I mentioned is one of the
mature and integrated electricity market
in the world. Martin started at Nodpool
six years ago. He started in the market
operations team working on a market and
market coupling design. He since moved
to Nodpool Consulting where he has been
a key expert in market development
project all over the world including
Central Asia, Georgia, Iceland, Brazil,
China and Bosnia. So welcome M Martin
Thank you Yu and uh hopefully this works
now. So uh good afternoon everyone. Um
my name is uh Martin um and I work as a
senior consultant at uh Nurpool which
basically just means that I am
responsible for the things we do outside
of our core markets in Europe. Now uh
before I continue I would just like to
uh share with you all that even though I
am here representing an exchange uh I am
a power systems engineer at heart uh and
by education. So please remember that
while I talk about all this market stuff.
stuff.
How does this work?
Green. Perfect. So um who is Nport
really? Um we consider ourselves to be
the world's first power exchange and we
know for sure that we are the world's
first multinational power exchange. Um
right now we are the leading power
exchange in the European integrated
market which is the market that uh
connects the entirety of Europe plus uh
Norway into one big integrated market.
So Liverpool we ourselves we uh we we uh
operate in 16 of these uh countries. uh
our total traded volume per year is
about 1,300 terowatt hours between our
markets. So quite a significant amount.
Um and since we were the first of our
kind, I uh have been asked to talk a bit
about the history and uh how it all
started. So this all started in Norway
in the end of the 80s.
And the situation we had in Norway at
the time was that we had had a lot of uh
a lot of investment in hydro power
through the 60s and 80s. Uh and at the
same time we had every single
municipality in Norway being responsible
for their own power balance. So
basically we had 435
small small power companies responsible
for their own inhabitants. Uh this led
to superior overinvestment since no one
really saw any holistic view on all of this.
this.
Um and that meant since we had the
hydropower based system that meant
basically that we wasted a lot of water
uh when we had rainy season and we just
had to let it all out to sea and uh we
could have really really high prices of
course still in the in the in the dry seasons.
seasons.
So at the same time we were also
connected to Sweden uh via
interconnection and we didn't really
have any good system at the time to uh
to really um price that interconnection
with Sweden. So we had the classic
situation where kind of Sweden would buy
power from Norway at a lower price than
actually Norwegians paid for that same
power. So then what happened was that
some very very clever people realized
this industry is not based on economic
uh foundationally basic terms. So the
question then is how do you take this
very inefficient business and how do you
make a market-based approach for a
commodity that has to be used and
produced at exactly the same time and
the uh the resulting solution that they
found was the day ahead spot market
which we introduced in Norway at the time.
time. So
So
to go a bit through the timeline on how
this actually worked in our case. So the
law that actually deregulated the market
in Norway that came in 1991. Then in
1993 we had the power exchange being
established. Then three years later the
power exchange uh also added Sweden and
that made us the first multinational
power exchange. So that's when Moodool
came into being. Now gradually we
developed and added more and more
countries. So in 98 we had Finland and
in 2000 we had the full Nordics
basically combined into one big market.
So it grew gradually. Uh by the time of
2013 we had also added all of the
Baltics to this market. Now this
development here
that also happened at the same time in
the rest of Europe. So you had an
exchange in the Iberian Peninsula with
Portugal and Spain. Uh you had exchange
covering uh France and the Benelux
region and all of these different
exchanges they were connecting with each
other and they tried to connect with
each other and Nur was part of the price
coupling of regions project in 2014 to
connect all these exchanges. But we
didn't have one unified European market
until 2015 when we also got the EU
regulation actually covering this.
So after 2015 we have had one unified
European market that covers all of the continents.
continents.
In these first years
there was no
there was no legislation mandating that
we couple these countries together and
actually there was also no regulation
over like super national regulation
stating the market rules or the market
design. This was done by no poolool by
the exchange themselves and we made the
market and designed the market as we saw
convenient to increase liquidity and
increase trading. The unified design of
the market and the unified rules of the
market that has only really come
afterwards. So now after 2015 we have
European legislation for this. But
before that is this is really governed
by the by the market operator by us and
uh the transmission system operators
kind of setting the boundary around what
and to to continue on that
used to be a fully stateowned company.
We used to be owned by the transmission
system operator in the countries where
we operated. Actually now what's
happened is that the majority stake of
the company has been sold out and
privatized to a large exchange group.
And why would you do that? Um the reason
for that is that Europe has actually now
also gone the next step and we have uh
introduced competition between power
exchanges. So that basically means that
we cannot have the states uh owning a
majority share of a competing business.
So now we have partly privatized it. But
of course, we still have a minority uh
stake from the transmission system
operators. So they can kind of keep us
in check a bit. So that's the long-term development.
So
why uh did actually this uh market
expand as it did?
There was no over supernatural
regulation covering this. the Nordic
countries started cooperating because
they saw a clear benefit uh in
cooperating and that's simply it. So
Norway and uh Sweden, Denmark, Finland,
we have very very complimentary power
systems and actually I saw the previous
panel here they brought this up. So
Norway has a lot of hydropower. Uh
Denmark has a lot of wind power and some
thermal power. And then Sweden and
Finland both have nuclear and thermal
and they've built quite a lot of wind
recently. And this means basically in
dry years uh Norway can import from the
other countries. In wet years we can
export. Denmark as they just said here
uh they basically rely on the
surrounding synchronized countries to
balance out their very very big uh wind
power uh industry. And that is why
Denmark has been a at the forefront of
wind power development for as long as
wind power has been a thing because they
saw that they didn't have the natural
resources to balance this out
themselves. But cooperating with their
neighbors has made a power system that
is just way better for all parties involved.
So
a bit on where this market has has evolved.
evolved.
Europe is what we call a primary market.
So that means that Europe we do not have
a national market and then the EU
market. We have just the EU market.
That means that you do not trade on
transmission capacity between say France
and Germany. If you are in France then
you trade in France. If you're in
Germany you trade in Germany. And then
if there is available transmission
capacity between the countries then the
power will flow between those two countries.
countries.
uh so this whole system is optimized as
one big market and the socioeconomic
surplus of this market is calculated in
one big go. Now this is of course the
very very end of an integrated market
and it's also a level of integration
that is likely not possible without
having something like the European Union
and I also don't think it necessarily
should be a goal but it is where where
we have ended up uh in Europe and to
follow on that
that
was it basically worth it and the answer
is yes
the EU market has had huge benefits for
the European countries uh combined. We
had a bit of a high price year uh 2021
2022 due to some uh external reasons. Uh
and uh just in that year uh 2021 the
estimate was that the savings from EU
market coupling uh were around 34
billion euros that's billion with a B
just in that year which is an immense
saving and this is the saving that has
come from not building any additional uh
infrastructure. It is just the simple
fact that if generation is cheaper in
one country, then you produce it there
and you export it to where it's most needed.
needed.
At the same time, there has been huge
uh benefits from this market. Uh as you
can see just with a very basic graph
here, correlation of net imports to
Belgium at the same time as generation
outages. So this is increased security
of supply for all the countries involved
and it means that frankly they do not
need to build out as much capacity
because the whole union is much stronger
together. This is not just outages, it's
also weather. Uh maybe the wind isn't
blowing in Belgium, but the wind may be
blowing in Finland at the same time. And
the fact that we can combine all these
systems into one has just had huge huge
benefits for the total system.
So that's the short summary of NPU. And
Thank you so much Martin. Please join me
here. It is now my great pleasure to
welcome uh Miss Carla Hernandez
to come and share experience of the
Central American market. Madame Carla is
an electrical engineer and attorney with
a master's in business law and advanced
studies in electricity market
regulation. She has 35 years of
experience in Central American power
sector. She's a business development and
regulation manager at EPR,
a regional private
public partnership, SPV, special purpose
vehicle, which is responsible for
financing, building and operating and
even expanding the Central American
electrical interconnector known as CPAC.
Please join me to welcome uh Mrs. Carla
Hernandez to make presentation.
Hi, thank you Ysef. Hi, good afternoon.
It's a pleasure for me be here and share
with you our experience in the Central
America regional electricity market. Um
we are going to see oh my god
yes uh the interconnections
between the the countries in central
America by bilateral interconnections
began in 1976
and between 1976 and 1986 all the six
countries was interconnected by bateral
interconnections and with that the
region began to work coordinated.
That means uh the operators exchange
information about their power systems
analyzing security and jointly planning
expansion inclusive all of them use the
ma the same software to that uh works.
So technical studies made and later
confirmed that increase for profit sorry
for take advantage of of the benefits of
the interconnection. It was not enough
increased capacity lines. It was
necessary create a
a
a regional electricity market with his
own institutions and a super national
regulatory framework.
In this stage of coordination
it was so natural give the next step
that means interconnection then
coordination and finally the
integration. So in 197 in 1996 the
country signed the framework treaty to
the central American electricity market
establishing the legal institutional and
regulatory foundation for the regional integration
integration between
between
h the next the beginning of the seven
I'm going to erh
the region start to consolidate the
market regulation and then they note it
was necessary make some h performance to
the treaty. So in 200 in 2000 sorry
seven the a protocol to the treaty was
signed for strengthening institutional
commitments and consolidating the
operation of the regional electricity
market. At the same time the
construction of the CPAC transmission
line start and you can see on the map
the line cross all the six countries and
is connected to the grid of each h
country. The line has two circuits. The
first one is totally in operation and
the second one is almost 40 for 40 40%
in operation
with the
the treaty also create three main
regional institutions
to ensure the effective governance
balance and transparency of the systems.
The regional electricity market board is
the policy and integration body is
composed of one representative from each
country is the highest political level
body and adopts its decisions by unanimity
unanimity
reflecting the collective commitments of
the countries to move forward jointly on
a strategic integrations matter. The
other one is ka is the regional
commission of electric interconnection
is our regional regulator is based in
Guatemala and it's composed for one
commissioner per country uh so different
to the politics body the decisions are
taken for sample or qualifier majority
depending the subject of the matter and
the 01 is the regional operating entity
EO is based in El Salvador and is
responsible for coordinate the technical
operation of the regional system and the
economic administration of the market.
It's composed by two directors per
country usually one of them from the
national operator and the other from the
market players and like ka adopt his
decisions by majority vote ensuring both
efficiency and balanced representation.
As you can see, this institutional
framework guarantees neutrality,
transparency, and equitable piticipation,
piticipation,
giving to each country an equal voice
regarding the size or install capacity.
Also, the
the treaty establish the principles and
objectives of this regional market. The
first one is competition understood as
the freedom to the all market players to
participate in the market under the same
objectives and non-discriminatory rules.
The next one may be in my opinion the
most important is the graduality
allowing progressive development of
through the incorporation of new agents,
the expansion of the transmissions
network and the strengthening of
regional institutions. And the last one,
reciprocity, meaning that each country
has the right to apply to another the
same rules and standards that it
temporarily applies consistent with the
principle of graduality.
The mayor has a lot of objectives, but
we can resume in promote the efficiency
development of the regional power
sector, attract private investment,
strengthen transmission infrastructure,
improve the quality and reliability of
supply and ensure that the benefits of
integration reach all the people across
the region. Erh
how it works this uh market uh as you
can see for us the regional market is a
seventh market that means six national
market plus the regional market it's
equal to seven in our dreams one day six
plus one will be equal to one but right now
now
comfort with this gradality principle
is that's the situation the all the
national markets coexist with the
regional market that mean is don't
replace the regional market don't
replace the those domestic markets but
complementing offering a common space
where countries can exchange surplus
energy under uniform regional rules for
all participants
each national operator perform its
dispatch under the local regulations s
and make available to the EO the
operator the regional operator any
surplus capacity that's an obligation
the optimize this surplus at the
regional level and communicate back this
information to the countries and they
once again adjust their operation
according these results this mechanism
enables country to take advantage of the
diverse generation resource reducing
cost improving rehability
and promoting efficient use of regional
infrastructure while fury respect the
natural sovereignty in any energy plan
any policy or any decision that takes in
every country.
Uh the treaty also create the regional
transmission company EPR.
This h is a panameanian com is private
company created under panameanian law
with office in all six countries and his
his headquarters are in Costa Rica. As
you can see the regulator is in
Guatemala operator is in El Salvador
the regional transmission company is a
panameanian with their office in Costa
Rica. That's decision was taken for the
all six together for the all six country
togethers. Erh
the company has nine shareholders. The
six are the national utilities that were
designed in each for each government and
we have three extra regional companies.
One of them is public and the other two
are private. or shareholders make equal
capital contribution and participate in
loans under equal terms regardless of
the length of the line within each
country. With this the participation and
the profile distribution are based in
equality not in proportion of the
territorial investment.
uh also the governance structure
guarantees the neutrality and
transparency because no one can hold
controlling position from the company.
The total investment uh as you can see
is for the first circuit it's around
511 millions. Uh 89%
is was financed through loans. The other
11% is equity from the shareholders
and the 50% was provided for the
interamerican development bank with
sovereignty guaranteed. This was a very
very important h for the region because
that gives a trust and confidence to the
investment. And finally I am going to
talk about remuneration.
The model of base in regulator regional
transmission tariff is approved by the
regional regulator and ensure the full
recovery of the cost for administration
operation and maintenance costs as well
as dev service a reasonable return on
equity and taxes. Uh one important is
the taxes are not socialized within the
regional tariff. Each country assumed
the taxes generated in within its
territory meaning that if a country
grants tax benefits the positive impacts
as directly reflected in the regional
transmission in that country. Uh other
issue is the this scam has proved to be
effective to financing future expansions and
and
the market participants gives guarantees
to participate in this electricity
market so that
thank you to the structure of this uh
tariff the Eper has operated in a stable
and transparent manner. He repaid the
most of the debt almost the 70% of the
debt is now is paid and it has
distribute this dividend since 2012.
2012. Well,
Well,
as you can see CF PAC project and the
regional electricity market is a proof
that energy integration is possible when
the political will with political will,
clear rules and solid institutional foundations.
foundations.
So thank you very much and I hope we can
continue talking in the in the continuum
of the session. Thank you.
>> Thank you so much. Uh Mala
uh let me invite Mr. Pankage uh to come
and share the Indian experience. As you
know India has managed to attract
private investments in transmission line
and Mr. Pankage has been the man behind
what we call tariff based uh competitive
selection. So I will invite him to share
that good experience as Asian uh
countries will really need that to
develop uh transmission infrastructure
cross border especially. Welcome sir.
>> Thank you Mr. Ysef and uh good afternoon
to all of you. It's a great privilege to
be to be here and make presentation
about the electricity reforms of India
and how we have opened up and how we are
progressing how we have created a great
market for not only electricity trade
and how we have created bilateral links
with various countries and how we are
contributing to OSO also I'm going to
make a presentation on that and more
importantly how we have brought
competition in our transmission sector.
That's very interesting. And over last
few years
uh we have created
uh a system wherein private sector has
come and they are infusing their capital
So a brief about India's journey as on
date we have a installed capacity of
generation it is 490 gawatt and we have
the peak demand it is 250 gawatt and uh
we are very happy to say that we have
reached our target of 50% generation by
uh and non-fossil fuel which we had
thought that we'll be reaching by 2030
but we have achieved this target and our
present generation is 50% from non
fossil and uh sources and India is a
very complex system uh the electricity
it is a concurrent subject both center
and state can legislate on the matter
and prior to
1999 uh the states were basically making
the generation transmission and
distribution it was totally vertical integration
integration
But states were not in good shape and
there were inefficiencies because of
providing uh electricity to the
agriculture and theft and all those
things subsidies. But later on uh India
brought reforms in 1991 wherein we
brought globalization, privatization and
liberalization and we opened our sectors
uh for uh delicensing and uh invited
private players from all over the globe
and uh private generation it came and uh
it was totally delicensed
and major reform in India came about
electricity sector in 2003 when our
electricity act 2003 came and uh it not
Not only debundled the vertical
integrated electricity sector but it
also provided open access to whosoever
wanted to access the network
transmission network uh uh by the
generator or by the load centers and uh
it also opened the way for power trading
and we could establish great uh national
power markets and it also allowed
participation of by private parties
through competitive route.
And you can see that as on date there is
great participation in generation some
55% generation is coming through private
sector and as far as transmission sector
is concerned some 82% share is owned by
power grid uh in the central sector and
some 18% share is owned by the private sector
and if we talk about how the private
public partnership took place in India
uh till 200
We were having all financing through
ourselves whatever acuras we had we were
putting as equity and we were arranging
uh debt from the market. So this was the
method. The government was there, the
public sector enterprises were there in
central sector or the state sector and
there was no private investment. But
later on the government came with the
policy that uh the state electric state
transmission utilities or power grid
they can have joint ventures with
various geneting companies or some
private entity and they can they can
bring or they can construct transmission
line through JV routt. So power grid
evacuated various power generations
within India or from Bhutan also and
through JB routt we constructed
transmission lines in India. So it was
JB routt kind of thing. But major
drastic change came in year 2011 when uh
government decided that no all transmission
transmission
uh business has to be done in India
through competitive route and we were
obligated to participate in tendering
process to secure the project. So there
are certain uh functionalities or
government instrumentalities
and we have just uh I have just listed
them here. First and foremost it is the
ministry of power which came with the
guidelines for increasing competition in
development of transmission projects in
India. So it has come on many occasions
and the latest one is of August 2021. It
is just like a standard
procurement guidelines of the World
Bank. If I just compare and uh MOP's
guideline for TBC terbased competitive
bidding and ministry has also come with
the standard bidding document
and uh the national planner is our
central transmission utility central
electricity authority
and grid India which is the operator. So
these are the main agencies which look
at the planning of the transmission
business in India and how we could
attract private sector participation
because we have a standard building
document and standard standard method of
planning and uh there is no uh risk to
the developer because uh transmission
charges in India they are not dependent
on any power flow or any uh distance
direction related.
flow of power it is basically pure
annual charges and uh secondly there
could be default by the loads interest
that they do not pay for that also India
has a great mechanism of sharing of
transmission charges and losses so based
on the different formula whatever
charges are accured to different discoms
or long-term transmission customers they
are built on behalf of the transmission
companies which are private companies by
a com by uh billing collection and
distribution department of central
transmission utility. So the
transmission service providers they are
not to be worried that they have to
build every month. It will be built on
their behalf by the C2 and the bill will
be raised to all the long-term
transmission customers and all
collections will be distributed to these
transmission service providers. So there
is no payment security risk and uh by
this method we have attracted a lot a
lot of private participation in our
>> I'm reminded that we have only one
minute left.
>> So these are the key players in TBCB in
India. Uh there is a national committee
on transmission which I said and uh
there is a bid process coordinator. So
the government also appoints two
entities for fair and transparent
bidding process and uh they conduct the
entire bidding process for transmission
system projects. Trans central
transmission utility, central
electricity authority they are in the
planning of the project part and there
is electricity regulatory commission
which regulates the tariff. Whatever
tariff is determined through the
competitive bidding process, the CRC
adopts that tariff. So regulator has
also a role and in case of any dispute
or any cost claim or any force measure
claims, the transmission service
provider has to approach regulator for
resolution of the matter which relates
to the force measure or change in law or
in dispute.
so as of now what happens that uh in
last uh 14 or 15 years some 179 projects
have been floated under bidding route
and uh our company which is uh the
public sector enterprise owned by the
government of India it could some 80
projects and uh the private sector
players they have also won nearly the
same number of projects and our market
share is 50/50%.
And uh recent four projects in recent uh
in recent four years most of the
projects have taken place the bidding
has taken place and you can see from the
slide some 24 US billion projects have
been bid out and each of us either power
grid or the competitors they have got a
share of $12 billion
as far as financing of the project is
concerned. Uh if you can maybe wind up
because we only have one last one. Yeah. >> Okay.
So if if we talk about the
uh financing the private players they're
also using the root of monetization
whatever projects they have constructed
they are going for secretization so that
they can get their money back and they
can reuse that money in subsequent
projects or they're also going for uh
I think it is not uh it is working a
little bit. So at the end I am saying
that uh uh the best way to construct
transmission projects because it's very
uh capital intensive and it is uh prone
to so many risk and if we can avoid the
risk and uh make proper document uh
transmission service agreement proper
framework in the country or on the
regional level we can attract private
investment and uh we can make uh
national grid uh regional grid and we
can also fulfill the dream of all the
nations of OSOG. One world, one grid,
one sun. Thank you.
Thank you so much. Uh Mr. Pankage, maybe
I would invite Shani to come and then we
conclude together. Uh I understand there
is a session that will follow. Maybe
we'll not have time for specific
questions as I as we have wanted. I just
wanted to I mean to share what I have
one I noted that fairness fairness must
be at the heart of AAN regional power
market design that every country whether
small or big as an an exporter or
importer should feel that participation
brings equitable benefits. That is one
fun first thing I noted. Number two, I
noted that integration is not one-time
efforts that it is a journey that
starting small with bilateral exchanges
or pilot subreional market help
countries build confidence, demonstrate
real benefits and progressively expand cooperation.
cooperation.
So AAN maybe should start you know uh
consider starting with maybe two to
three willing countries and then grow
step by step until the ambition of
achieving a full integration of APG
would come uh step by step. The third
thing that I noted from the presenters
is a strong commitment at all levels.
This is really very essential especially
in the early stage of of the market to
sustain momentum align national
priorities and overcome the challenges
of of of coordination. The fourth thing
the fourth thing that I've noted is that
there is a need especially uh from CA
Park example that there is a need to
have specific trade agreement to support
electric trade. What we've learned
actually that is that the World Trade
Organization rules do not apply for
electricity market because it combines goods and services like production and
goods and services like production and transmission but it also involves other
transmission but it also involves other policy objectives such as environ
policy objectives such as environ environment and energy security. So
environment and energy security. So there should be a trade uh it's not
there should be a trade uh it's not really marketdriven. Fifth I note that
really marketdriven. Fifth I note that full harmonization of regression is not
full harmonization of regression is not immediately necessary. That's what
immediately necessary. That's what matters really is meeting minimum common
matters really is meeting minimum common requirement that's allow trade to happen
requirement that's allow trade to happen while preserving national uh
while preserving national uh flexibility.
flexibility. The other point maybe which is also
The other point maybe which is also equally important is institutional and
equally important is institutional and human capacity that must grow in
human capacity that must grow in parallel as national at national and
parallel as national at national and regional level because strong
regional level because strong institutions are really backbone for
institutions are really backbone for sustainable regional cooperation.
sustainable regional cooperation. original market that succeeded had
original market that succeeded had regional uh market development
regional uh market development institution had a regional system and
institution had a regional system and market operator. So asan could either
market operator. So asan could either strengthen that role and through SEO.
Yes. So that is actually good things that I I've noted that we should take
that I I've noted that we should take home and I with this uh I wish to thank
home and I with this uh I wish to thank uh the presenters for very very good
uh the presenters for very very good presentation and I invite participants
presentation and I invite participants really to continue socializing with
really to continue socializing with them. the speakers will be here with us
them. the speakers will be here with us tomorrow and tonight. So, please feel
tomorrow and tonight. So, please feel free to learn from them. Thank you so
free to learn from them. Thank you so much all of the participants for your
much all of the participants for your attention. Thank you so much.
attention. Thank you so much. >> Thank you so much, Mr. Ysef. And thank
>> Thank you so much, Mr. Ysef. And thank you once again to all our esteemed
you once again to all our esteemed speakers and panelists. Kindly make your
speakers and panelists. Kindly make your way and be seated as we announce the
way and be seated as we announce the arrival of our
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