There exist significant seasonal complementaries in electricity demand among Bangladesh, Bhutan, India and Nepal (BBIN). Electricity demand in the BBIN sub-region varies from season to season. Bhutan has high electricity demand in the winter months of December, January and February in contrast to low demand from June to September. Similarly, electricity demand is high in Nepal during these three winter months. As a result, both the Himalayan nations of Bhutan and Nepal, predominantly dependent on hydropower, encounter power shortages due to water scarcity in the lean season.
The power demand scenario in Bangladesh is quite the opposite since it has high demand from April to June and much less requirement from November to February. In India, some regions have high electricity demand from January to March or October to December. Therefore, the BBIN countries can complement each other and meet their respective electricity requirements based on their demand patterns and power system capabilities.
There is enough scope for developing intra-regional grid connectivity in South Asia. India already has extensive transmission networks in its border states with Nepal, Bhutan and Bangladesh. Cross-border electricity trade (CBET) among the BBIN countries exists at bilateral levels. Bangladesh, Bhutan and Nepal have bilateral power trading and cooperation arrangements with India.
The electricity trade among the BBIN countries has been growing over the years. Peak CBET, i.e. the amount of electricity traded, in South Asia rose from about 1,400 megawatt (MW) in 2012 to 3,760 MW in 2020. The total CBET in South Asia was 296 gigawatt hours (GWh) in 2000, which increased to 7,70 GHh in 2014, and further to 18,740 GWh in 2021.
A number of initiatives and measures undertaken by India in recent years to augment sub-regional power cooperation and trade among the BBIN countries have already begun to fetch dividends. India has been playing a pivotal role in policymaking, and developing legal, regulatory and commercial frameworks for enhancing CBET.
In December 2018, India’s Ministry of Power notified “Guidelines for the import and export of cross-border electricity”. The guidelines seek to lay down an institutional framework and aim to improve the transparency, consistency and predictability in the policy and regulatory framework governing CBET.
Under these guidelines, the Central Electricity Authority (CEA) has been identified as the designated authority (DA) for grant of approval for cross-border transmissions and other functions. These guidelines have also created a framework for the participation of electricity traders from neighbouring Nepal, Bhutan and Bangladesh to trade through the Indian Energy Exchange (IEX). The IEX is India’s leading energy market, providing a nationwide automated trading platform for the physical delivery of electricity renewable and certificates.
Subsequently, in March 2019, corresponding “Cross-Border Trade of Electricity Regulations” were notified by the Central Electricity Regulatory Commission (CERC). These regulations cover the roles and responsibilities of various stakeholders, requirements and procedures for market access, transmission network planning, system operation, and dispatch and dispute resolution.
Finally, in February 2021, the CEA in its role as the DA issued the procedures governing approval and facilitation of CBET. Other enabling rules and regulations to facilitate Indian domestic stakeholders to participate in CBET have also been addressed systematically.
The IEX seeks to expand India’s power market beyond the country’s border in an effort to develop an integrated South Asian power market. The other BBIN countries now may initiate measures to expand sub-regional power trade and cooperation. Nepal became the first BBIN country to import electricity from India through the IEX in April 2021.
After the successful import, Nepal exported 493 GWh of electricity to India under the CBET arrangement in 2022. Bhutan also purchased about 240 GWh of electricity from the IEX in 2022. Energy experts say such imports and exports of electricity between the BBIN countries using the IEX are not only unprecedented in South Asia, but possibly the first of their kind across various sub-regions of Asia.
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Bangladesh is also expected to trade through India’s power exchange platform soon. For the last two years, Bangladesh has been experiencing a sharp rise in electricity generation costs due to the growing price of fossil fuels in the international market.
Reports say average power generation costs rose from Tk 6.61/kilowatt hour (KWh) to Tk 8.84/KWh between the fiscal year (FY) 2020-21 and FY 2021-22. The average cost from independent power producers (IPPs) was as high as Tk 11.55/KWh during FY 2021-22.
In India, the average electricity prices for May and December 2022 were Rs 6.76/KWh and Rs 5.23/KWh, respectively on the IEX. Hence, Bangladesh could acquire cheaper electricity from the day-ahead market through the IEX, thereby facilitating power purchases at a much lower cost.
Nepal and Bhutan could also adopt a similar approach of procuring power from the day-ahead market since their electricity demands are likely to increase considerably in the future.
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