South Asia needs hydroelectricity investment

More hydropower needed?

There are plans, spearheaded by India, for greater trade and investment in electricity in South Asia. Namely creating a South Asian regional energy grid, with focus on renewable sectors such as hydro, solar and wind.

Speaking at a seminar organised by the Asian Development Bank and the Delhi-based think-tank ICRIER, India's Joint Secretary for the Ministry of Commerce, Arvind Mehta said that there was more potential for trade in energy - especially in hydropower - than in goods.

Mehta cited Nepal as an example; a country with an installed hydropower capacity of just 636 MW against the potential of anywhere between 43,000 MW and 200,000 MW, he said. He also pointed out that India has a hydropower capacity of only 36,900 MW against the potential of 125,000 MW.

"There is a lot of ignorance about the hydropower sector. The general perception is that it has environmental effects. But run-of-the-river projects don't have any environmental issues as shown by Satluj Jal Vidyut Nigam (SJVN) and Nathpa Jhakri hydroelectric power plant. Besides, they have very good return on investments. But investors have not seriously looked at this so far," he said.

Mehta added that if hydroelectric projects were properly installed in the Himalayan region, South Asian countries such as Nepal, Bhutan, Pakistan and India would all benefit.

"Not utilising the region's hydroelectric potential is like watching oil flowing into the sea and not doing anything about it," he said.

He added that the need to trade in power rather than standard commodities came from the general lack of purchasing power and the near absence of comparative advantages in the region.

Future energy plans

Arvind Mehta is not alone in his assessment. Last month, the Commerce Ministry announced it was firming up plans for a US$1 billion sovereign-backed fund to boost trade and investment by domestic power utilities in South Asia.

The fund is aimed at developing a South Asian regional energy grid, with focus on renewable sectors such as hydro, solar and wind. Currently, India has plans to set up a pan-South Asia electricity ring that envisages interconnection with Bhutan entailing possible investment of US$850 million (3000 MW), a 400-kv transmission line at US$50 million with Nepal, a 1000 MW HVDC link with Sri Lanka costing US$415 million and a 1000 MW HVDC back-to-back link with Bangladesh at US$220 million.

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Three Gorges Dam at near capacity | The South-North Water Diversion Project | Asian energy consumption

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