Regional Regulatory Guidelines for promoting Cross Border Electricity Trade in South Asia Region Workshop on Sustainable Development of Power Sector and Enhancement of Electricity Trade in the South Asian Region: Policy, Regulatory Issues/Challenges and the way forward 15th January, 2016, Hotel Shangri- La’s – Eros (Connaught Place) New Delhi, India 1 RRGs and RRIM /SARI/EI/RAJIV/IRADe/15th January,2016/Delhi/SAFIR Workshop
Table of Content Overview of SARI/EI Program 1 Background and Approach--Regional 2 Regulatory Guidelines Key Challenges & Risks for CBET 3 Overall CBET Framework 4 Brief of Regional Regulatory 5 Guidelines( RRGs) 2 RRGs and RRIM /SARI/EI/RAJIV/IRADe/15th January,2016/Delhi/SAFIR Workshop
South Asia Regional Initiative for Energy Integration (SARI/EI) 1. SARI/E is a long standing program of USAID started in the year 2000 . 2. Program has consistently strived to address 8 SAARC COUNTRIES Afghanistan energy security in South Asia by focusing 1) Cross Border Energy Trade Nepal 2) Energy Market Formation and Pakistan Bhutan 3) Regional Clean Energy Development. 3. SARI/EI – Phase IV (2012-2017): Key Outcomes. India Three Key Development Outcomes: 1. Coordinate policy, legal and regulatory issues. Bangladesh 2. Advance transmission interconnections. 3. Establish South Asia Regional Electricity Markets. First Three Year of the Program is Completed. Demand Driven ‘Bottom Up’ Approach Maldives IRADe, a regional organization, is implementing partner Sri Lanka 3 RRGs and RRIM /SARI/EI/RAJIV/IRADe/15th January,2016/Delhi/SAFIR Workshop
SARI/EI Framework • Project Steering Committee (PSC) is Project Steering Committee the apex body of the program and provides overall strategic directions. Highly Consultative and Participative • PSC members consist of government Approach nominated Senior level officials from the country governments, SAARC, TF-1-Coordination of TF-2-Advancement of TF-3-South Asian Policy, Legal and transmission system Regional Electricity ADB, Independent Energy Regulatory Issues interconnection Market Experts/Diplomats. TF1: Coordination of Policy, Legal and Regulatory issues • Task Force Members are represented TF-2: Advancement of transmission by government nominated members system interconnection from Regulatory Technical , market related institution of each SA TF 3: South Asian Regional Electricity countries. Market 4 RRGs and RRIM /SARI/EI/RAJIV/IRADe/15th January,2016/Delhi/SAFIR Workshop
Background & Approach of RRGs 5 RRGs and RRIM /SARI/EI/RAJIV/IRADe/15th January,2016/Delhi/SAFIR Workshop
Background of the Regional Regulatory Guidelines Background - Regional Regulatory Guidelines is one of the outcome of the TF-1 study on Review of Electricity Laws, Policies and Regulatory framework of SAC to identify critical requirements of CBET and recommend changes/amendments therein for consideration of the SA countries Recommend changes/ Recommendations for amendments in the 4 SAC based on best EL&R&P of SAC to 6 practices identified & promote CBET Steps for the Study Risk Analysis 2 5 1 3 Review & 7 Review of Analysis of Development Roadmap for International Review of EL&R&P in Power Pools development of Regional Existing SAC and and of a Studies/ Regulatory identification Identification harmonized Literature/ Guidelines for of key of Best framework for Reports ingredients of practices wr.t CBET CBET 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) 6 RRGs and RRIM /SARI/EI/RAJIV/IRADe/15th January,2016/Delhi/SAFIR Workshop
International Review : Key Challenges and risk for CBET Key Challenges Motivation behind these challenge is to address the typical Risks in Cross- 1. Political Conesus : Regional Cooperation Border Projects. and Recognition of CBET/Trade in the National Regional What are the Risk? Policy, Law Power 2. Government Commitment & Policy Planning & System/ Commercial Coordination Security Risk Construction at Risk 3. Financial Challenges, Investment , Financial Risk Initial Viability Stages Expropriation 4. Mechanism of Inter-connection Country Supply Risk and Breach of Risks Contract 5. Market form of Trade Pricing and 6. Regional Cooperation on Regulatory and Regulatory Risk Political and Legal & Payment Risk Contractual Aspects Cross Regulatory Border Regional 7. Open Access in Transmission Risk Electricity Power Financing Trade System at 8. Transmission Charges/Pricing Risk Dispute in Resolution Transition 9. Transmission Plan Risk Exchange and Mature Rate Risk Stages 10.Commercial Mechanisms to Settle Currency Imbalances Transfer Financial Risk Restriction Funding Risk 11. Dispute Resolution Risk 7 RRGs and RRIM /SARI/EI/RAJIV/IRADe/15th January,2016/Delhi/SAFIR Workshop
Overall CBET Framework 8 RRGs and RRIM /SARI/EI/RAJIV/IRADe/15th January,2016/Delhi/SAFIR Workshop
Overall Framework for development of CBET in South Asia Inter-Governmental Framework Agreement (IGFA) CBET facilitation through Institutional Mechanism Coordinated Standard Investment Regional Transmission Transmission Framework and Harmonization Contracts Regulatory Pricing rules & Planning Investment Policy of Grid Codes (Bankable Guidelines methodology eventually regional Guidelines PPAs/TSAs) Master Plan Undertaken as part of the TF-1 Changes in EL&R&P Framework study 9 RRGs and RRIM /SARI/EI/RAJIV/IRADe/15th January,2016/Delhi/SAFIR Workshop
Regional Regulatory Guidelines Preamble Context Purpose of Guidelines Summary of Guidelines • G1: Licensing for cross border trading • G2: Open access to transmission network • G3: Transmission pricing regime • G4: Transmission planning • G5: Imbalance settlement mechanism • G6: Harmonization of Codes • G7: Dispute Resolution • G8: Duties and tax regimes Implementation of Guidelines 10 RRGs and RRIM /SARI/EI/RAJIV/IRADe/15th January,2016/Delhi/SAFIR Workshop
P Preamble to the Guidelines 1 11 RRGs and RRIM /SARI/EI/RAJIV/IRADe/15th January,2016/Delhi/SAFIR Workshop
Preamble to the Guidelines These regulatory guidelines apply to CBET among the South Asian countries. These guidelines are non-binding in nature and are aimed to provide national regulators of SAC with a consistent set of guidelines applicable to CBET The guidelines deal only with limited areas where need for such common guidelines has been felt by the SAC and are not meant to be comprehensively dealing with all matters related to CBET. For all other purpose, respective national regulations, rules and guidelines shall apply . Appropriate Institutional Mechanism is required for facilitating and working towards enabling the guidelines and facilitating the required changes to be made in the national regulatory framework. Such entity shall work in close coordination with the National Energy/Electricity Regulators and SAARC for the same. Study has proposed a Forum i.e South Asia Forum of Electricity SAFER for the Coordination, and facilitate the implementation of the RRGs. In countries where regulators do not exist, the responsibilities shall rest with relevant ministry and/or empowered entity . 12 RRGs and RRIM /SARI/EI/RAJIV/IRADe/15th January,2016/Delhi/SAFIR Workshop
2 Context and Purpose of the Guidelines 13 RRGs and RRIM /SARI/EI/RAJIV/IRADe/15th January,2016/Delhi/SAFIR Workshop
Regional Regulatory Guidelines Context of the guidelines Existence of political will and consensus is evident from the IGFA CBET in the region is largely on bilateral basis and is limited The SAARC Inter-Governmental Framework Agreement (IGFA) for Energy Cooperation , This is set to change with several signed by Foreign Ministers of the eight member states provides a strong basis for ensuring new transmission interconnections consistency in certain identified areas of trade being proposed that will enable as follows greater integration of power systems • Article 4 (Duties & Taxes) in member countries • Article11 (System Operation and Settlement Mechanism) Harmonization/coordination of • Article 12 (Transmission Access) EL&R&P framework is a critical • Article 15 (Regulatory Mechanisms) requirement The agreements/guidelines needs to It is important to provide actionability to the recognize the diversity in countries Articles by defining them into operating rules and common guidelines w.r.t CBET Be compatible with respective transactions country’s EL&P&R framework The guidelines are based on the review of the existing CBET transactions and the existing laws, policies and regulations and review of international experience of various power pools 14 RRGs and RRIM /SARI/EI/RAJIV/IRADe/15th January,2016/Delhi/SAFIR Workshop
3 Purpose of the Guidelines 15 RRGs and RRIM /SARI/EI/RAJIV/IRADe/15th January,2016/Delhi/SAFIR Workshop
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