South Asia Regional Initiative for Energy Integration (SARI/EI) Theme Presentation Session-2 “Policies/Regulations and Institutional Mechanisms for Promoting Energy Cooperation & Cross Border Electricity Trade in South Asia” Presented by Rajiv Ratna Panda and V. K.Kharbanda Regional Conference on Energy cooperation & Integration in South Asia 30 th -31 st August’2018, Hotel Le Meridien, New Delhi Theme Presentation/Session- 2/ “Policies/Regulations and Institutional Mechanisms for Promoting Energy Cooperation & Cross Border Electricity Trade in South Asia”/ Regional Conference on Energy cooperation & Integration in South Asia -30th- 31st August’2018Ra jiv/Head-Technical/SARI/EI/IRADE
Outline ❑ Key Policy, Regulatory Challenges & Risks for CBET. ❑ Need for Policy, Regulatory Coordination /harmonisation. ❑ SARI/EI Work on Policy, Regulatory aspects of CBET. ❑ International experiences on regional electricity regulatory Agencies/Associations/Forums. ❑ Points for Discussions. Theme Presentation/Session- 2/ “Policies/Regulations and Institutional Mechanisms for Promoting Energy Cooperation & Cross Border Electricity Trade in South Asia”/ Regional Conference on Energy cooperation & Integration in South Asia -30th- 31st August’2018Ra jiv/Head-Technical/SARI/EI/IRADE
History of evolution of Energy Cooperation, CBET- Key Policy & Regulatory Development 52 Years 8 Years Above time line graphics has been developed based on the information available in public domain from various sources by Rajiv Panda Theme Presentation/Session- 2/ “Policies/Regulations and Institutional Mechanisms for Promoting Energy Cooperation & Cross Border Electricity Trade in South Asia”/ Regional Conference on Energy cooperation & Integration in South Asia -30th- 31st August’2018Ra jiv/Head-Technical/SARI/EI/IRADE
Key Risk/Perceived Risks of Cross Border Electricity Trade Projects Regulatory: What happens if the domestic Why Cross-border Electricity Trade are Risky Policy, regulatory framework changes which impacts CBETproject/Investment ? What is the ▪ Project risks in general tend to be high without protection available to buyers/sellers/Investor ? a comprehensive Policy, Regulatory framework Socio Political: What happens if for socio- for large CBET project development. political reasons the flow is prevented in the exporting, intermediary (if relevant) or importing country ? ▪ Cross-border element greatly amplifies the risks due to geopolitical, economic and trade Economic: What happens if the economic assumptions on the project changes? What is related factors. the protection available to buyers and sellers ? ▪ Even projects that appear to have feasible , Trade Barrier: What happens if a tax or duty that affects the economic fundamentals is rationale, economical in practice struggle to imposed ? get it financed and built. Infrastructure: What happens if the ▪ Project risks in general tend to be high in infrastructure to transfer the energy is not built countries without wide experience on large or is not available when needed ? project development. Theme Presentation/Session- 2/ “Policies/Regulations and Institutional Mechanisms for Promoting Energy Cooperation & Cross Border Electricity Trade in South Asia”/ Regional Conference on Energy cooperation & Integration in South Asia -30th- 31st August’2018Ra jiv/Head-Technical/SARI/EI/IRADE
SARI Assessment -Key Policy ,Regulatory Challenges & Risks for CBET Motivation behind these Challenges are the 1. Political Conesus: Need of Bilateral Treaties, Regional typical Risks in Cross-Border Projects. Cooperation Treaties/Agreements and Recognition of CBET/Trade in the National Policy, Law etc. Challenges at Planning & Commercial 2. Government Commitment & Policy Coordination Initial Security Risk Construction Risk Stages Country Risks Risk 3. Financial Challenges, Investment, Technical and Financial Viability Expropriation Supply Risk and Breach of Contract 4. Mechanism of Inter-connection Pricing and Regulatory Risk 5. Market form of Trade Political and Legal & Payment Risk Cross Policy Regulatory Border 6. Regional Cooperation on Regulatory and Contractual Aspects Challenges & Risk Electricity Regul during the Financing Trade 7. Open Access in Transmission atory Transition Risk Dispute Risk towards higher Resolution 8. Transmission Charges/Pricing level of CBET Risk Exchange and when it Rate Risk 9. Transmission Plan reaches the Currency Mature Transfer 10.Commercial Mechanisms to Settle Imbalances Stages Financial Risk Restriction Funding Risk Risk 11. Dispute Resolution Theme Presentation/Session- 2/ “Policies/Regulations and Institutional Mechanisms for Promoting Energy Cooperation & Cross Border Electricity Trade in South Asia”/ Regional Conference on Energy cooperation & Integration in South Asia -30th- 31st August’2018Ra jiv/Head-Technical/SARI/EI/IRADE
Why the Need for Policy & Regulatory Coordination/Harmonization ? ❖ Power and energy sector are highly regulated in South Asia. ❖ SA countries have different stage of evolution in terms of legal, regulatory and Policy Framework. SAARC Framework ❖ Strong Political – Economy of the Power/Energy Sector, Strategic nature. agreement for energy cooperation (Electricity)and CBTE ❖ Development of Cross border projects ,mitigation of Investment risks requires guidelines issued by a robust legal, regulatory and Policy Framework. MoP, GoI recognizes the need to ❖ While each country is sovereign by itself, there is a need to coordinate/ harmonize regulations/rules harmonise the laws/ rules/ regulations related to Cross-Border Electricity Trade governing CBET (CBET) in order to facilitate Power Trade. ❖ Harmonised policy and regulatory framework for CBET brings consistency , predictability and Minimise perception of regulatory and Policy risks. CBTE: Cross Border Trade of Electricity Theme Presentation/Session- 2/ “Policies/Regulations and Institutional Mechanisms for Promoting Energy Cooperation & Cross Border Electricity Trade in South Asia”/ Regional Conference on Energy cooperation & Integration in South Asia -30th- 31st August’2018Ra jiv/Head-Technical/SARI/EI/IRADE
SARI-EI Work on Policy, Regulatory Coordination & Harmonization Regional Regulatory Guidelines and Suggested Changes, amendments in electricity laws, regulations and policies are the outcome of the TF -1 study on Review of Electricity Laws, Regulation and Policies (ELRP) framework of SAC for CBET Recommend clause/section Recommendations for changes/ amendments in the SAC based on best 4 EL&R&P of SAC to promote CBET 6 practices identified & Steps for the Study Risk Analysis 2 5 1 3 Review & 7 Review of Development Analysis of International Review of Country Wise Roadmap EL&R&P in Power Pools of Regional Existing for development of a SAC and and Studies/ harmonized framework Regulatory identification Identification Literature/ for CBET , Regional Guidelines for of key of Best Reports Regulatory Institutional ingredients of CBET practices w.r.t Mechanism CBET CBET Europe, Nord Pool,SAAP, West Current status in member Africa, GCC, Georgia-Turkey, countries w.r.t identified SEIPAC,GMS, Central Asia- ingredients South Asia( CASA) EL&R&P- Electricity Laws, Regulations and Policies Theme Presentation/Session- 2/ “Policies/Regulations and Institutional Mechanisms for Promoting Energy Cooperation & Cross Border Electricity Trade in South Asia”/ Regional Conference on Energy cooperation & Integration in South Asia -30th- 31st August’2018Ra jiv/Head-Technical/SARI/EI/IRADE
Brief Regional Regulatory Guidelines (RRGs) RRG provides Regulatory measures in 8 areas required for Purpose of the guidelines Harmonization/Coordination for Facilitating CBET Regional Regulatory 1. Licensing for cross border trading (important regulatory Guidelines tool for trading) Provides consistency in Establish clear CBET regulatory 2. Open access to Tx network (for competitive power market) environment for transactions and certainty cross-border to stakeholders trading 3. Transmission pricing regime (cost reflective & efficient) Provide roadmap for action and 4. Transmission planning (coordinated regional planning) decision making in respective country 5. Imbalance settlement mechanism (transparent common procedure) The flexible nature of the guidelines and focus 6. Harmonization of Codes (safe, secure system integration) on specific aspects of CBET, would permit 7. Dispute Resolution (transparent and fair legal framework) both the guidelines and the national regulatory framework to co-exist for a reasonable period 8. Duties and tax regimes ( zero tax, no tariff & non tariff of time . barriers ) Theme Presentation/Session- 2/ “Policies/Regulations and Institutional Mechanisms for Promoting Energy Cooperation & Cross Border Electricity Trade in South Asia”/ Regional Conference on Energy cooperation & Integration in South Asia -30th- 31st August’2018Ra jiv/Head-Technical/SARI/EI/IRADE
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