India-Bangladesh Line Heralds Greater Regional Interconnection

BMI View : The completion of the 71km India-Bangladesh grid interconnection cross-border transmission line could help to alleviate the energy shortages in Bangladesh. We believe that India, despite its own power shortages, is able to export electricity to Bangladesh because of major variances in power supply across the various regions. We highlight that the current situation of a one-way electricity trade is likely to evolve into a two-way trade over the long-term, and that the Indian government remains keen on creating a regional grid.

On October 5, the governments of India and Bangladesh inaugurated the 71km India-Bangladesh grid interconnection cross-border transmission line at Bheramara. The line connects the eastern region of India and the western grid of Bangladesh, and will facilitate up to 500MW of cross-border electricity transfer from India to Bangladesh. Around 250MW of the 500MW will come from the Center's unallocated quota of power at the Central Electricity Regulatory Commission notified rates, while the remaining 250MW will be contracted by Bangladesh from the Indian electricity market. Capacity of the India- Bangladesh Grid interconnection can be increased to 1,000MW in due course.

We believe that this cross-border transmission line could help to alleviate the energy shortage in Bangladesh. In September, local media reports revealed that the country faced an energy shortage of around 1,500MW. While the country has sought out alternative forms of energy generation such as nuclear generation and renewables, progress still remains extremely slow ( see 'Bangladesh Renewables Tariffs: Step In The Right Direction', May 17). We highlight that only 42% of the country has access to electricity, and electricity consumption per capita is extremely low even when compared to other developing countries in South Asia.

Bangladesh - A Dire Situation
Asia - Electrification Rate and Consumption

In our opinion, India is able to export electricity to Bangladesh despite its own power shortages because of major variances in power supply across the various regions. As we have previously highlighted, state governments in India are given a high level of autonomy in approving and financing infrastructure projects ( see ' Gujarat: Setting The Standard For Offshore Wind', February 23 ). This has resulted in overcapacity in certain areas of the country, and shortages in others. For instance, India experienced a countrywide peak power deficit of 2.7% in August, according to the Central Electricity Authority (CEA). In contrast, the eastern region - comprising West Bengal, Bihar, Jharkhand, and Odisha - experienced a shortage of just 2.2%. This means that the eastern region of India closest to Bangladesh experiences the smaller peak power deficit (and probably a comfortable surplus during non-peak hours), giving the region the greatest flexibility in exporting electricity.

Fact Box: India - August Peak Power Deficit By Region
Region Cities Peak Power Deficit (%)
Source: CEA
East West Bengal, Bihar, Jharkhand, Odisha 2.20%
North Punjab, Haryana, Uttar Pradesh, Delhi 2.30%
South Tamil Nadu, Karnataka, Kerala, Andhra Pradesh 2.70%
North-east Assam, Meghalaya, Manipur, Tripura, Mizoram, Arunachal Pradesh and Nagaland 11%
West Chhattisgarh, Gujarat, Madhya Pradesh, Maharashtra 3%

We highlight that the current situation of a one-way electricity trade is likely to evolve into a two-way trade over the long-term. This is because Bangladesh is in the midst of developing new generation capacity that could push the country from facing an energy shortage to a surplus. Work has started on the first nuclear power plant in Bangladesh- the 2,000MW Rooppur plant in Ishwardi - which is set to come online in 2018, and there are also plans to develop another 3,000MW of nuclear energy by 2030 ( see 'Risks To Roppur Nucler Plant Still Pertinent', January 28). The country is also developing new thermal capacity - development of the 1,320MW Maitri coal-fired power plant began earlier this year jointly with India - which could help it to achieve an energy surplus and free up electricity for export. As the India-Bangladesh grid interconnection is a high-voltage direct current back-to-back asynchronous link, electricity transfers can be conducted in either direction depending upon the availability and demand from either country.

Besides an increasing involvement in Bangladesh's energy sector, India has also taken a more proactive role in engaging its other neighbours. The Indian federal government started discussions with Pakistan to build a trans-border power grid and a natural gas pipeline in July in a bid to alleviate the power shortages faced by Pakistan. Meanwhile, India is also pushing for the implementation of its first undersea power transmission project with Sri Lanka. Indian power transmission company, Power Grid Corporation of India, has finished a feasibility study for the interconnection of the India-Sri Lanka electricity grids using an under-sea transmission line, and the government has raised the possibility of purchasing wind energy from Sri Lanka.

We believe this indicates India's ongoing commitment in developing a regional grid, which could be a strategically sound move given the size of the country and the distance between major cities. Transmission of electricity over long distances still results in high electricity losses, making it extremely ineffective for cities in India to redistribute electricity across great distances. In contrast, several major Indian cities are relatively closely located to cities in Bangladesh, Sri Lanka, and Pakistan, and the interconnection of grids would create a larger electricity pool and possibly achieve greater grid stability.

This article is tagged to:
Sector: Power, Renewables
Geography: India, Bangladesh, Sri Lanka, Pakistan

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