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Cross-Border Infrastructure: A Toolkit Sector Planning & Policy Issues: The Energy Sector Session on Planning & Policy Rita Nangia Asian Development Bank.

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Presentation on theme: "Cross-Border Infrastructure: A Toolkit Sector Planning & Policy Issues: The Energy Sector Session on Planning & Policy Rita Nangia Asian Development Bank."— Presentation transcript:

1 Cross-Border Infrastructure: A Toolkit Sector Planning & Policy Issues: The Energy Sector Session on Planning & Policy Rita Nangia Asian Development Bank The views expressed here are those of the presenter and do not necessarily reflect the views or policies of the Asian Development Bank (ADB), or its Board of Directors, or the governments they represent.

2 Cross-Border Infrastructure: A Toolkit Session Description The session will cover -  Major energy trends in Asia  Sector planning and policy issues  Challenges and opportunities to integrated energy markets

3 Cross-Border Infrastructure: A Toolkit Overview of the Session Part I  The GMS energy scene  Sector planning issues Part II  Interactive session

4 Cross-Border Infrastructure: A Toolkit Access to Electricity Varies... Source: World Development Indicators 2004 & World Energy Outlook 2002

5 Cross-Border Infrastructure: A Toolkit Access to Electricity Varies... Source: Key Energy Statistics, 2005, International Energy Agency & World Development Indicators Online

6 Cross-Border Infrastructure: A Toolkit Source: The Global Competitiveness Report Overall Quality of Electricity Supply Varies...

7 Cross-Border Infrastructure: A Toolkit The Greater Mekong Subregion Land area 2.5 million km 2 Population Million

8 Cross-Border Infrastructure: A Toolkit Thailand Land area: 513,000 km 2 Population: M GDP per capita: US$ 2,727 Myanmar Land area: 677,000 km2 Population: 55.4 M GDP per capita: US$ 176 Yunnan & Guangxi, PRC Land area: 624,000 km 2 Population: 93.8 M GDP per capita: US$ 842 Viet Nam Land area: 332,000 km 2 Population: 83.1 M GDP per capita: US$ 622 Lao PDR Land area: 237,000 km 2 Population: 5.6 M GDP per capita: US$ 491 Cambodia Land area: 181,000 km 2 Population: 13.8 M GDP per capita: US$ 393 The GMS Economic Conditions Source: Beyond Borders – Regional Cooperation Strategy & Program Update, ; Asian Development Outlook, 2006; ADB Key Indicators, 2006; FAO/People’s Govt. of Yunnan Province;

9 Cross-Border Infrastructure: A Toolkit The GMS Energy Scene Hydro: 333,700 mega watts Coal: 59,340 million tons Gas: 1,378 billion cubic meters Oil: 478 million tons Source: GMS Energy Strategy July 2006 Proceedings, work in progress

10 Cross-Border Infrastructure: A Toolkit Thailand Hydro: 12,700 MW Coal: 2,400 MT Gas: 943 BCM Oil: 124 MT Cambodia Hydro: 15,000 MW Gas: BCM Oil: MT Myanmar Hydro: 100,000 MW Coal: MT Gas: 160 BCM Oil: 32 MT Yunnan, PRC Hydro: 150,000 MW Coal: 23,580 MT Gas: 32 BCM Oil: 226 MT Viet Nam Hydro: 30,000 MW Coal: 32,250 MT Gas: 144 BCM Oil: 82 MT Lao PDR Hydro: 26,000 MW Coal: 910 MT Energy Resources Source: GMS Energy Strategy July 2006 Proceedings, work in progress

11 Cross-Border Infrastructure: A Toolkit Challenges and Opportunities Big disparity in the size of the countries’ markets. Four countries (PRC, Thailand, Vietnam and Myanmar) have transmission systems that interconnect most of their internal demand centres. Two countries currently have no nationwide transmission systems (Lao PDR and Cambodia).

12 Cross-Border Infrastructure: A Toolkit Challenges and Opportunities ( continued ) Three countries (Myanmar, Lao PDR and Cambodia) have internal demand levels that do not allow for the development of large-scale generation projects that are only based on internal load. Therefore the possibilities of obtaining energy at low (competitive) prices are linked to cross-border trading. Constraints to develop new hydro power in Thailand and there is a growing concern that natural gas reserves are not sufficient to satisfy future load growth. Coal resources are also limited to lignite, which has historically been associated with significant environmental problems.

13 Cross-Border Infrastructure: A Toolkit Historical Growth Rates for Electricity… Sources: *ADB Key Indicators, 2005 **RPTCC Presentation ***Viet Nam Master Plan VI Essentials ****ADB, MKOC Study on Electricity Production **** *** * * * **

14 Cross-Border Infrastructure: A Toolkit Source: Country Presentations RPTCC Meeting, Myanmar 2006 Item Ave. Growth (%) Peak Demand, MW Cambodia Lao PDR Myanmar 1,425 2,012 7,35753 Thailand 19,326 29,808 40,9787 Viet Nam 8,253 19,000 32,00014 People's Republic of China 62, , ,3107 Total GMS 92, , ,8109 National Electricity Forecasts in GMS -

15 Cross-Border Infrastructure: A Toolkit Source: Country Presentations RPTCC Meeting, Myanmar 2006 Item Ave. Growth (%) Generation Capacity, MW Cambodia ,19417 Lao PDR6602,305 6,97140 Myanmar1,7253,416 9,94638 Thailand26,44334,668 47,8988 Viet Nam11,19724,447 36,52010 People's Republic of China80,154136, ,3487 Total GMS146,764202, ,8778 National Electricity Forecasts in GMS -

16 Cross-Border Infrastructure: A Toolkit Source: Country Presentations RPTCC Meeting, Myanmar 2006 Item Ave. Growth (%) Load/Demand, GWh Cambodia 625 1,793 3,80022 Lao PDR 1,220 2,721 3,6107 Myanmar5,402 21,288 64,36440 Thailand 127, , ,7887 Viet Nam 46,240 97, ,96114 People's Republic of China 386, , ,8006 Total GMS 567, ,443 1,318,3238 National Electricity Forecasts In GMS -

17 Cross-Border Infrastructure: A Toolkit GMS Energy Strategy Policy & Planning Issues Energy demand, access, and quality of supplies Energy security Expanding private sector participation Energy and environment

18 Cross-Border Infrastructure: A Toolkit Energy Demand, Access, and Quality of Supplies Most country level forecasts see energy demand growth between 8% to 16%. Demand has to be met to ensure that adequate energy at reasonable price is not a constraint to economic growth. Uneven access across countries in the region and even within country - rural energy access at affordable prices is important. Quality, reliability, and security, important challenge

19 Cross-Border Infrastructure: A Toolkit Energy Security Rapid motorization and a vehicle boom increases the region’s oil dependence dramatically in the next two decades. Poor production prospects, weak demand management, insignificant penetration rates for alternative energy sources, and high global oil prices make the region insecure and vulnerable. In addition, there are no institutional mechanisms to deal with energy disruptions arising out of emergency or supply shocks.

20 Cross-Border Infrastructure: A Toolkit Expanding Private Sector Participation Presently, most energy entities are owned through public sector. Isolated regional private projects such as Nam Theun 2. Large investment needs for energy: Country level resources are inadequate. More attractive to harness private sector investments through regional approach. Need to attract private initiatives also in the area of energy efficiency. Need cost recovery, sector reforms, and greater competition to improve efficiency for energy.

21 Cross-Border Infrastructure: A Toolkit Energy and Environment Integrating environmental concerns at planning stage is usually a better alternative than clean up at later. Cross-border environment impacts need to be integrated at planning stage. Often environmental issues require cross-sectoral policy action - e.g., urban transport and air pollution as a result of energy use pattern. Awareness and public education Higher share of renewables and alternative energy

22 Cross-Border Infrastructure: A Toolkit Sector Planning Basics Part II: Interactive Session - Identify step-by-step approach to sector planning

23 Cross-Border Infrastructure: A Toolkit Developing the GMS Energy Strategy Use the energy strategy model MESSAGE to develop a regional energy sector strategy. MESSAGE utilizes existing domestic and internationally available information to formulate alternative energy supply strategies, each of them optimized under different sets of assumptions (“scenarios”) reflecting future uncertainties. These strategies will be assessed for robustness of policy options, and policy recommendations will be based on these analyses. The advantages of expanded cooperation among the GMS countries will be assessed by comparing country strategies with integrated strategies for the GMS.

24 Cross-Border Infrastructure: A Toolkit Formulating Energy Strategies Using MESSAGE MESSAGE identifies a flow of energy from primary- energy resources to useful-energy demands that  Is feasible in a mathematical and an engineering sense, and at the same time  Represents the investment choices that lead to the least cost of all feasible energy supply mixes to meet the given (expected) energy demand. Feasibility is defined by constraints imposed, for example, by the environment, energy resources, and technology build-up.

25 Cross-Border Infrastructure: A Toolkit MESSAGE Model for Energy Supply System Alternatives and their General Environmental Impacts Input Energy system structure (including vintage of plant and equipment) Base year energy flows and prices Energy demand projections (MAED) Technology and resource options & their techno- economic performance profiles Technical and policy constraints Output Primary and final energy mix Emissions and waste streams Health and environmental impacts (externalities) Resource use Land use Import dependence Investment requirements MESSAGE

26 Cross-Border Infrastructure: A Toolkit Formulating Least-Cost Strategies Formulating strategies from model solutions requires the assessment of political feasibility including possible implementation barriers such as the unavailability of investment financing. A crucial aspect of strategies will therefore be the possible involvement of the private sector. The most important strategy will describe a maximum of GMS-wide integration of the individual energy systems.

27 Cross-Border Infrastructure: A Toolkit Key Messages Need an integrated approach both across sectors and across regions. Need to mainstream cross-border public goods such as network expansion of markets and resulting efficiency, reliability, and security gains, as well as public bads - cross-border pollution, downstream impacts, haze, etc. Need attention on harmonization of policies as also institutions. Need comprehensive capacity building plans.


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