responsibilities is one way to encourage all of the AMS to participate in the development of full multilateral trading, even if they do not expect to see an immediate benefit from it. Finally, the LTMS–PIP development process included the establishment of a detailed timeline for development with concrete deliverables and milestones. Having this in place gave all stakeholders a clear view of their respective roles, and made it easier to judge overall progress.

GMS

The GMS includes six countries. Five are AMS, while the sixth is the People’s Republic of China (specifically, southern China). Efforts to integrate the power systems of these six countries have been ongoing since the early 1990s, and the GMS effort as a whole has existed in parallel to the development of the APG.

Establishing multilateral power trading in the GMS is one of the outstanding goals of the region. As with the APG effort, however, progress to date has been limited mainly to the establishment of various bilateral trading arrangements. Notable progress has been made, however, in a variety of technical and procedural areas, all of which offer lessons for efforts to establish multilateral trading among the AMS.

In terms of technical requirements, for example, the GMS effort has led to the development of draft harmonised grid codes and a draft wheeling methodology. While these have not been formally implemented, the development process did include five of the ten AMS, suggesting that these could provide a good starting point to developing a more general set of harmonised grid codes for the region as a whole.

The process of developing the GMS also has a number of positive lessons for the APG. In particular, progress has been made in a GMS context in large part because of the regular sharing of relevant information among the participating countries, such as grid plans.

At the same time, some of the challenges the GMS effort has faced offer lessons for ASEAN as well. For example, the GMS effort includes a proposal to develop a regional control centre. This effort has stalled, however, in no small part due to disagreements over where the institution should be located. The GMS effort also demonstrates the challenges, but also potential benefits, of including non-AMS in the process.

Proposed trade models for ASEAN

Once the minimum requirements are met, it will be possible to establish multilateral power trading in ASEAN. To do so, three trade models are proposed. These are meant to enable the development of multilateral trading while respecting ASEAN principles such as stepwise and voluntary development.

There is no requirement that each individual AMS participate in all of the various trade models, if and when they are developed.

These models are also designed to be compatible with one another, so that it will be possible for more than one model to exist simultaneously.

The proposed models are as follows. As a near-term step, it is recommended that ASEAN establish a framework to support harmonised bilateral trading. Then, as a medium-term step, the AMS should establish a secondary trading model. This would enable true multilateral,

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multidirectional power trading for the first time in the region. Finally, as a longer-term step, ASEAN should consider establishing a primary trading model, which would enable deeper integration and power trade among the participating countries.

Here is how these models would work in practice.

Harmonised bilateral trading

In the harmonised bilateral trading model, the AMS would develop a common framework for entering into and managing cross-border bilateral contracts. In essence, this model builds upon existing bilateral arrangements in such a way as to improve the efficiency of the process, and to allow any two interconnected AMS to trade with each other, regardless of whether they share a border.

To do this, the harmonised bilateral model introduces three key elements.

First, the AMS would develop a set of standardised bilateral contract templates. These would be relatively flexible contract templates that would provide a common starting point for any two countries (or market participants) to enter into a bilateral agreement. Second, the AMS would introduce guidelines for wheeling methodologies, as described above. This would allow any two AMS to trade with each other by ensuring that “transit” countries are compensated for the use of their grid.

Finally, this model would introduce the option for a “regional co-ordinator” institution, which would act as an enabler of bilateral trading. The regional co-ordinator would, in essence, only collect and share information, such as available transmission capacity, willingness among participants to trade and relevant information on signed bilateral contracts. It would not be directly involved in the transactions themselves.

While harmonised bilateral trading is not equivalent to full multilateral trading, with these elements in place it would be possible for the AMS to enter into a more flexible and diverse set of bilateral trading arrangements. At the same time, having the key elements of the harmonised bilateral trading model in place would set the stage for more formal multilateral arrangements.

Secondary trading model

A secondary trading model is, at its core, a regional power market that individual AMS (and other relevant market participants) can use in addition to domestic system operations or markets. Under the proposed model, only excess generation or supply gaps would be traded. Domestic markets or power systems would clear first, and the secondary market would be used only if and when doing so adds value to participating AMS.

Establishing a secondary trading model would enable full multilateral, multidirectional power trading among the AMS, while remaining fully compatible with harmonised bilateral trading. This would require the introduction of a number of new elements, some of which build upon the harmonised bilateral model, and some of which are unique to this model.

As a starting point, some of the core elements required to establish harmonised bilateral trading are relevant in a secondary trading model context as well. In particular, the wheeling model introduced as part of the harmonised bilateral model would also enable wheeling in the secondary model.

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