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Future of Power: How does international electricity sharing solve more than one problem?

Future of Power: With more than 80% of electricity being generated using natural resources in the world and an increase in the sale of electric cars by 60% according to a report by the World Economic Forum, we see a major shift towards resolve for sustainability.

With the constantly growing Electric Vehicle (EV) segment and an increase in electricity consumption, several nations have started to follow suit with the suggestions that researchers have long been making.
Countries are exploring sharing of electricity with their counterparts and those who already had created a sharing grid, are further consolidating the paraphernalia. This, not only helps countries with lower power generation, to meet their needs, but those with excessive production can monetize it. Besides, the process has several benefits for the environment and is a step in the direction of sustainability. India is exploring options for sharing electricity with off-shore countries like Saudi Arabia and UAE through under-sea cable networks.

So is it really worth it and does it solve the environmental problems?

Power sharing to political stability

The United Nations in one of its published papers titled, Political Aspects of Grid Interconnection, advocates power grid interconnections between countries offer more than just economic benefits. According to the paper, such countries can also foster political stability and cooperation. When countries become dependent on each other for their energy needs, they are more likely to work out any disagreements through diplomatic means, rather than military action. The sharing of resources reduces the likelihood of conflict and creates incentives for countries to resolve differences peacefully.

Moreover, when more than two countries are involved in the interconnection, each party has an incentive to assure that differences between other parties are settled amicably. This fosters a sense of cooperation and collaboration among the interconnected nations.

Interconnected power grids can also help in promoting democratization. By creating economic interdependence, it is more likely that countries will work together to establish democratic institutions and practices that promote political stability. This can have long-lasting positive effects on the societies of these countries.

Diverse power needs of South Asian countries

According to Integrating South Asia’s Power Grid for a Sustainable and Low Carbon Future published by United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP), South Asia’s energy consumption and distribution are highly diverse, with both renewable and fossil energy sources unevenly distributed across the region. The pressing issue of electricity shortages and growing demand requires energy policymakers to develop affordable and rapid solutions to meet the needs of their respective countries. One such solution is cross-border energy trade (CBET), which can offer more viable alternatives than developing domestic generation capacity.

The benefits of grid interconnection in South Asia are clear. Power exports and imports can generate direct economic benefits for all participating countries. For the hydropower-rich least-developed countries, power exports can generate stable long-term export revenue and fast-track their graduation from the least-developed country status. Larger countries such as India and Pakistan can diversify their generation base and lower overall power costs by utilizing cross-border generation. These countries can also benefit from interconnection that allows optimal exploitation of their wind and solar potential through energy balancing.

Challenges in power-sharing among South Asian countries

The way to sharing power among countries, especially in the South Asian region is, however, paved with certain challenges. This is despite the fact that three countries in the region, India, Bangladesh and Nepal are exploring opportunities to exchange power. India’s grid is being considered for Nepal to supply electricity to Bangladesh in a one-of-a-kind agreement. Still, there are some factors that need to be considered. Vijay Kumar Kharbanda, in his paper, Strategies to Promote Regional Power Grid Connectivity and CBET in SSWA, explores these challenges. He writes that the South and South West Asia (SSWA) subregion has a rich history of power trade and grid interconnection between its countries. With India located at the centre and sharing land borders with almost all of its neighbouring countries, it presents many power interconnection opportunities as an importer, exporter, or transit country. However, cross-border projects can be risky due to various factors such as political and regulatory risks, financial risks, and commercial risks.

Political uncertainty and lack of stable government and trust among the member countries in the SSWA subregion have impacted energy cooperation and grid connectivity. Moreover, intraregional geographical boundary disputes and ethnic conflicts have created further challenges. Some countries in the subregion have experienced political and security threats in the recent past. The relationship between India and Pakistan, in particular, has been under stress due to a lack of mutual trust, writes Kharbanda.

Despite these challenges, the benefits of power interconnection and trade are significant. Interconnected power grids can generate direct economic benefits for all participating countries through both exporting and importing electricity. For the least developed countries such as Bhutan and Nepal, power exports to their neighbours can generate stable long-term export revenue as well as fast-track their graduation from the least developed country status. Larger countries such as India and Pakistan can diversify their generation base and lower overall power costs by utilizing cross-border generation.

To overcome the risks and challenges, the participating countries must work towards building trust and cooperation by addressing political, regulatory, and financial concerns. Investment in infrastructure and technology can help mitigate commercial risks. A transparent and accountable system for power trade can provide the necessary regulatory framework to ensure fair play. Additionally, cooperation in the research and development of clean and renewable energy sources can help the subregion move towards a more sustainable and low-carbon future.

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