By Pankaj Batra, Senior Advisor, IRADe & Ex-Chairperson & Member (Planning), Central Electricity Authority
Energy is essential for the survival of human beings, and energy security is what every nation strives towards, especially in view of the energy crisis stemming from the Russia-Ukraine conflict at the beginning of 2022. As a result, several nations, including countries in Europe, faced severe hardships. In the wake of Russia’s invasion of Ukraine and a surge in energy prices, natural gas demand in the European Union fell in 2022 by 55 bcm, or 13 per cent – the steepest drop in history. The decline is equivalent to the amount of gas needed to supply over 40 million homes, with imported coal prices doubling and natural gas prices tripling. Closer to home, electricity prices in India shot up due to the fact that approximately 15 per cent of power is generated from imported coal and gas. State discoms stopped requisitioning power from imported coal and imported gas (LNG)-based power plants, resulting in shortages in India. In order to tackle the crisis, the Ministry of Power issued a directive in April 2022 to import 10 per cent of the coal requirement of all domestic coal-based generating stations, which was later reduced to 6 per cent in January 2023. Additionally, these power stations were instructed to run all imported coal-based generating capacity at full capacity, while ensuring that they would receive compensation for the same. Bangladesh had to carry out daily load shedding for about 2 hours during the crisis. However, the most adversely affected country in the South Asia Region was Sri Lanka, which had power cuts exceeding 12 hours per day. This was due to an economic crisis after major revenue losses attributed to the adverse impacts on tourism during the Covid-19 pandemic. Sri Lanka’s power sector suffered significant disruptions. Besides hydro and renewable power (which constitute less than 50 per cent of power generation), all other power generation plants depend on imported oil and coal, the prices for which shot up. Since Sri Lanka’s grid is not connected to any other country, it was unable to import power like some other South Asian countries, which were allowed access to available electricity at certain times of the day and at a relatively more reasonable price.
Increasing share of electricity in the energy basket
According to Enerdata’s World Energy & Climate Statistics – Yearbook 2023, in 2022, the share of electricity in the global final consumption remained stable at over 20 per cent, an increase of 3 per cent from 2010 (17 per cent). This rise can be attributed to the increasing utilisation of electricity across industry, residential and services sectors, as well as in the road transport sector with the development of electric vehicles (EVs). According to IEA’s World Energy Outlook 2022, electricity accounts for about 20 per cent of the world’s total final consumption of energy, but its share of energy services is higher due to its efficiency. Electricity is central to many aspects of daily life and becomes more so as it spreads to new end-uses, such as EVs and heat pumps. In 2021, the electricity sector accounted for 59 per cent of the total global coal consumption, with natural gas at 34 per cent, oil at 4 per cent, renewables at 52 per cent and nuclear power at almost 100 per cent. It also accounted for over one-third of all energy-related CO2 emissions in 2021. Low-emission sources of electricity, led by renewables, are poised to overtake fossil fuels by 2030 in IEA’s Stated Policies Scenario (STEPS) and Announced Pledges Scenario (APS), ending decades of growth for coal. According to the IEA Report, global electricity demand is expected to rise by 25-30 per cent in 2030 due to an increase in electric motors, EVs, heat pumps and hydrogen. In the STEPS and APS scenarios, the share of electricity in the energy basket will continue to rise, and in the Net Zero Emissions by 2050 scenario, electricity would constitute 50 per cent of the energy basket by 2050.
Interconnections: The route to energy access and reduced cost
The reason for the increased share of electricity in the energy basket is that it is easy to transport and use, and electricity can be generated easily through renewable energy sources. The infrastructure for the transportation of electricity already exists to a large extent. It would, therefore, significantly help in reducing emissions with the increase in sourcing of electricity from renewables. Interconnecting the grids of countries will enable the seamless transfer of power from surplus areas to deficit areas. Interconnections will facilitate improved utilisation of power resources in the region, including renewable energy sources, much like the Uber model in public transportation. There would be a reduced chance of curtailing renewable energy in an interconnected region compared to countries operating on a standalone basis. The geographical dispersions of the interconnecting countries would also help them significantly self-balance the diversities of renewable generation. This would result in the effective delivery of power to the point of need, faster and cheaper.
The India-Sri Lanka interconnection
Having found that grid interconnections are one of the cheapest and fastest ways of electricity access for all nations, resulting in a reduced cost of electricity supply, there is a flurry of ongoing initiatives across the world for grid interconnections to ensure energy security. The discussions of Sri Lanka’s interconnection, an island country, with India, have been ongoing for over 20 years, but is yet to be implemented, primarily due to the cost issues. The previous study envisaged an overhead-cum-under sea high-voltage direct current (HDVC) interconnection with options of various lengths of submarine cables. HVDC connections are crucial for long interconnections, with a high load at the end of the interconnection in terms of voltage stability and angular stability. In recent times, it was discovered that a total overhead HVDC interconnection is possible, owing to shallow waters in a particular sea route. The cost of this interconnection was approximately 30 per cent lesser than the part overhead, part undersea interconnection. We, at Integrated Research and Action for Development (IRADe), conducted a study on the economics of interconnecting Sri Lanka with India through both these options and found that even with the costlier method (part overhead, part undersea interconnection), Sri Lanka saved 32 per cent on electricity costs by importing power instead of importing oil and diesel, after factoring in the cost of the interconnector and transmission charges for both the Indian side and the Sri Lanka side. The amortisation of the cost of the interconnector was considered for a life span of 25 years, whereas the life span of a submarine cable is typically 30-40 years. Additionally, the line was considered to be loaded to an average capacity of 25 per cent over the year, which is quite conservative. In the case of the cheaper alternative of a total overhead line, the savings amounted to 38 per cent. These savings do not take into account the benefits of Sri Lanka gaining access to the South Asian power market to source cheaper power from the power exchange, depending on the time of day. Moreover, it does not include the savings in balancing costs due to the expansion of balancing areas arising from demand diversities and variations in the intermittencies of renewable sources of energy. Further, it does not factor in the added advantage of a more reliable grid and the reduction of the reserve requirement.
The India-Maldives interconnection
At present, the majority of the electricity generation in the Maldives relies on diesel generating sets. Electricity is generated and distributed via a patchwork of independent, isolated island-based grid systems. Each island has their own powerhouse and distribution facility, effectively operating as single, isolated island power grids. The Maldives aims to achieve the net zero emission target by 2030. It lacks sufficient land area to house solar power installations capable of meeting the entire demand, necessary for replacing diesel-based generation with renewable power. Moreover, the feasibility of floating solar would have to be explored on rough seas. Therefore, importing renewable power from another country was explored as an alternative solution. In April 2022, India and the Maldives proposed to establish a transmission interconnection for renewable power transfer as part of the One Sun, One World & One Grid initiative. The length of the undersea cable would be about 700 Km. The domestic tariff in the Maldives ranges from Rf 1.5 to 4 per unit (equivalent to Rs 8-21), even after subsidy from the Maldivian Government. The landed tariff (after considering the transmission charges for the cable) for the import of power from India will approximately be Rs 13-15 per unit. The cost of diesel per litre in the Maldives is around Rs 80 per litre. Assuming the norm of generating 3 units of electricity per litre, the actual fuel charge comes to Rs 27 per unit. Consequently, the Maldives could achieve substantial savings, which could then be deployed for other developmental works. If only renewable power is imported, the diesel-generating sets could be operated during periods of insufficient renewable power. However, in the case of importing a mix of renewable and fossil fuel-based power, the diesel generating sets can be kept as standby generating sets, ensuring energy security in case of non-availability of power due to a fault in the undersea cable, or other factors.
Looking east: The India-Myanmar interconnection
India also plans to interconnect with South-East Asia through its Look-East policy, as part of the One Sun, One World & One Grid initiative. It currently exports 3 MW of power radially from Moreh in Manipur to Tamu, a bordering area of Myanmar. Further, there are plans to increase trade with Myanmar and Thailand. These two nations, along with Bangladesh, Bhutan, India, Nepal and Sri Lanka (referred to as the BBINS nations), are members of the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation. A strong interconnection with Myanmar would make the nation the gateway for power trade with South Eastern nations. Doubtless, it would be a great support for Myanmar, which barely has 50 per cent of the population with access to grid-based electricity, with the remaining using small gen-sets and burning costly diesel. Myanmar has a huge potential for harnessing hydropower and other renewables, which could optimally be used for their own benefit, as well as that for the region. Myanmar could also start exporting hydro and renewable power at a later stage.
Strengthening other interconnections
The BBIN nations are already interconnected, with long-term plans to strengthen these interconnections. Nepal and Bhutan have huge un-utilised hydropower potential and can be developed only if they have access to the remaining South Asian market. The first trilateral contract for the sale of power from Nepal to Bangladesh through India has been principally agreed between the three governments, as well as a 765 kV interconnection that goes from the eastern part of India through Bangladesh to the north-eastern part of India agreed between the two respective nations. This would lead to reduced power transmission costs for Bangladesh since power can be bought by Bangladesh from both the eastern region and the north-eastern region, where huge hydro potential exists. The interconnection with Sri Lanka is at the conceptual stage. These interconnections will increase the depth of the power market, leading to faster and cheaper energy access, particularly in areas where access is an issue, and more reliable electricity for all the interconnecting countries.
Issues with submarine cables
For nations interconnecting globally, the sea route is the shortest route. Examples of such interconnections include those between India and the Maldives, India and the Middle East, England and Germany, France and Spain, and Denmark and the UK. This has resulted in a shortage in manufacturing capacity for submarine cables. The planned 700-km NeuConnect electricity cable on the seabed between the Isle of Grain, south-east England and Fedderwarden, north-west Germany will enable the two G7 economies to trade electricity directly for the first time. A link between Denmark and Britain has been delayed by several problems, including “unforeseeable cable market congestion” issues. Similarly, a cable linking France and Spain across the Bay of Biscay is also running one year behind. The demand for interconnectors and other energy infrastructure, such as wind turbines, is growing rapidly, placing an unprecedented strain on supply chains for electricity cable and the converter stations needed for grid connection. Supplies of both resources are concentrated within relatively few companies, with high barriers to entry. It is expected that with the sustained demand, the number of manufacturers of cables and converter stations, as well as the manufacturing capacity of each manufacturer, will increase. This growth, along with AC interconnections, will increase interconnections within South Asia and the world at large, leading to enhanced energy security, energy transition to renewables, cheaper cost of supply and reduced carbon emissions.