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Workers at a 1 MW solar power station Delhi, India.

Project Details

Country Programme
Renewable Energy
Dr Jyoti K Parikh
India
Bangladesh
Nepal
Bhutan
Asia Centre for Sustainable Development, Integrated Research and Action for Development (IRADe)
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Dr Jyoti K Parikh

Dr Jyoti K Parikh

Principal Investigator

Declining renewable energy costs and regional power trade in South Asia

Implications of declining costs of solar, wind, and storage technologies on regional power trade in South Asia (BBIN countries)

 

Background, challenges and context

Bhutan and Nepal have high, untapped hydro potential compared to their own demand, and it was expected that they could dramatically change their economies by selling hydropower to India and Bangladesh. 

However, the price of renewable energy, particularly solar, is falling dramatically. In India, the solar PV levelized tariff dropped from INR 12 per unit in 2010 to INR 2.44 per unit in 2018, and the wind tariff reached lower than the solar tariff in 2017 i.e. INR 2.43 per unit. These are lower than the tariffs for coal-based thermal power plants seen in recent biddings (ranging between INR 4 to 5 per unit). This is expected to reduce the appetite for hydropower in South Asian countries such as India and Bangladesh – especially as in India the solar PV potential alone is around 749GW.

The implications of the rapidly falling costs of solar and wind have not yet been adequately considered on a regional scale. On the one hand, lower-cost domestic sources of renewable energy may reduce the need for cross-border power trade. On the other, South Asia’s abundant but variable solar and wind resources may be harnessed more easily in regional power grids that have flexible hydropower capacity.

The density and cost of power storage are also expected to improve. This has implications for power trade too – not only for supply and trade volume, but also for regulation, dispatching, and transmission infrastructure.

 

Research overview and objectives  

This project aims to capture the impacts of declining solar, wind, and storage technology costs on power trade in the South Asia region. It will address challenges and knowledge gaps surrounding renewable energy and storage technologies, asking:

  • How much renewable energy can be developed and absorbed by each country grid, and under what conditions?

  • Will hydropower at a levelized tariff of INR 5 per unit have a market when solar is available at INR 2.44 per unit and coal at a similar or slightly higher price range? Can hydropower play a new role as a balancing power for greening the grid in the region? What are the complications and challenges?

  • While government consent opens up trade, how can we speed up trade and markets following supply and demand logic?

The team will focus on Bangladesh, Bhutan, India, and Nepal (the BBIN region). While the South Asian Association for Regional Cooperation (SAARC) Framework Agreement for Energy Cooperation (Electricity) among the SAARC Member States has not led to any major cross-border trade in the western South Asia region, particularly due to political differences between India and Pakistan, this has not hindered trade in the eastern region, especially between Bangladesh, Bhutan, India, and Nepal.

A literature review of global trends and future scenarios in energy and storage technologies will be undertaken to ascertain the cost declines for solar, wind, and storage technologies expected in the short, medium, and long term. Based on this review, various cost decline scenarios will be developed in consultation with key agencies and experts in each country, keeping global trends in the backdrop.

Once finalised, the scenarios will be analysed through an Integrated South Asia Regional Electricity Model, which uses the bottom-up technology-based TIMES (The Integrated MARKAL-EFOM System) model generator. BBIN country models will be integrated to form the regional model, which will help the team to predict regional power trade among different trading partners at an hourly level and under different scenarios.

The scenario-based assessment will help to answer questions on the impact of the declining cost of solar, wind, and storage technologies on regional power trade; the implications for regional hydro potential; the impact on capacity requirements; the possible capacity mix in the region; and environmental benefits in terms of lower CO2 emissions. The findings of the study will be shared with policy makers, power system planners, and civil society through stakeholder meetings and workshops.