Establishing Multilateral Power Trade in ASEAN |
Findings and recommendations |
Two of the case studies fall into the category of secondary trading arrangements. The Southern African Power Pool (SAPP) allows for multilateral trading among multiple countries in southern Africa, while SIEPAC does the same (albeit in a structurally different fashion) for six countries in Central America. Both exist as separate market arrangements that sit above (or separately from) local, in-country power market arrangements.
Finally, two nascent efforts were analysed: the Gulf Cooperation Council Interconnection Authority (GCC IA), and the South Asia Regional Initiative for Energy Integration (SARI/EI).
Though these examples are all quite different, a number of lessons relevant to an ASEAN context emerged from the analysis.
First, in all cases integration supported by multilateral trading was found to bring both economic and security benefits. Economic benefits derive, for example, from the more optimal utilisation of local and regional resources. This can lower operating costs, and can also support the development of larger (and therefore more economically efficient) power plants. Energy security benefits come in part from increased system diversity (in particular supply diversity, though demand diversity also brings benefits), and in part from increased visibility into other, interconnected systems. Physical integration among multiple jurisdictions without the presence of trading arrangements increases exposure to external influences while limiting the ability for local system operators to respond to those influences.
Second, each case demonstrated that it is possible to participate in multilateral trading arrangements while maintaining local sovereignty. It is also possible to develop trading arrangements that ensure an equitable sharing of benefits. All of the various international examples analysed in the context of this study respected the ASEAN principles for multilateral power trading. However, it is also clear that increased integration requires increased levels of cross-border collaboration and harmonisation.
Finally, in each of the regions studied, integration and the establishment of multilateral trading was supported by the presence of various regional institutions. The exact roles and responsibilities of these institutions varied across regions, but in each case the institutions had critical roles to play.
Minimum requirements for establishing multilateral power trading
Reviewing international experiences also brought to light a set of common elements that could be considered “minimum requirements” for establishing multilateral trading in a region. In an ASEAN context in particular, these requirements would need to be met first before it would be possible to establish a full multilateral, multidirectional trading framework.
These minimum requirements can be grouped into three categories: political, technical and institutional.
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Establishing Multilateral Power Trade in ASEAN |
Findings and recommendations |
Figure 2. Minimum requirements for establishing multilateral power trade
Political
Political will
Intergovernmental agreement(s)
Common working language
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Harmonised technical |
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Institutional |
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standards (grid codes) |
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arrangements |
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Harmonised wheeling |
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Settlement and payment |
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charge methodology |
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mechanism |
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Technical |
Third-party access for |
Institutional |
Dispute resolution |
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external resources |
mechanism |
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Data and information |
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sharing |
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Interconnector |
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capacity calculation |
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methodology |
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IEA 2019. All rights reserved. |
Political requirements
Political requirements include relevant intergovernmental agreements, and agreement on certain fundamental, but non-technical, issues such as a common working language. Analysis of or recommendations related to specific intergovernmental agreements is beyond the scope of this study, but for example, agreements may be needed to establish and/or designate specific authorities to relevant regional institutions. Another key political requirement is political will. Though difficult to define precisely, political will to support integration is nevertheless a crucial element, as it is one of the elements that differentiate cross-border integration from power system development within a single jurisdiction. Without political support across the relevant jurisdictions, no amount of technical work will be sufficient for integration to fully succeed.
Technical requirements
Technical requirements cover a broad range of topics, but in essence this category refers to the rules and procedures required to ensure that cross-border trade can function in a secure and efficient manner. For example, harmonised grid codes help to ensure that power system operations across interconnected systems are not in conflict with one another. Similarly, a harmonised wheeling charge methodology is necessary to allow trading between any combinations of AMS regardless of whether they share a border.
Dataand information-sharing agreements are even more fundamentally important, as without a clear agreement on which data to share and which data should be kept private, trading is not possible. In practice, data and information will fall into different categories of sensitivity. Information about existing contracts or critical infrastructure can and should remain private at the national or jurisdictional level. Some data, such as dispatch schedules and generatorspecific bids and offers, will need to be shared regionally, but access to that data can be limited to regional market participants only. There are clear benefits, however, to making some data publicly available on a regional basis, including, for example, available transmission and generating capacity, historical information on cross-border power flows, and average clearing prices for regional trades.
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