Power System Implications of Subsidy Removal,

Transcript:Power System Implications of Subsidy Removal,:
Power System Implications of Subsidy Removal, Regional Electricity Trade and Carbon Constraints in MENA Economies Govinda Timilsina Sr. Research Economist, DECRG, World Bank 1 MENA SEMINAR SERIES HOSTED BY World Bank Middle East and North Africa Chief Economist Office September 17, 2020 2 Acknowledgments Energy GP led study - Pan-Arab Regional Energy Market Initiative (TTL -- Waleed Alsuraih) Ilka F. D. Curiel, co-author, ‘Power System Implications of Subsidy Removal, Regional Electricity Trade, and Carbon Constraints in MENA Economies, World Bank Policy Research Paper, #9297, World Bank, Washington, DC Outline Introduction, Context and Objective Methodology Data and Assumptions Results Conclusions Discussions 3 Introduction (1/2) Regional (cross-border /across-grids) electricity trade reduces the overall cost of electricity supply through multiple channels: - Avoiding additional investments in meeting peak load - Higher utilization of existing capacity through infra-marginal (short-term) trade - Avoiding reserve capacity through sharing reserve margins - Reducing environmental compliance costs through clean energy exchange 4 Introduction (2/2) Many countries/regions have exercised regional electricity trade in different level of trading – single regional market, multi-lateral trade, bi-lateral trade - European Network of Transmission Operators for Electricity - Interconnection between Canadian and US electricity grids - Brazil-Uruguay-Argentina cross-border interconnected system - Greater Mekong Sub-regional interconnection - Central American Electrical Interconnection System - Five sub-regional power pools in Africa (Southern, Eastern, Central, Western and Northern) 5 Regional Electricity Trade in MENA (1/2) In MENA, cross-border electricity transmission interconnections already exists at sub-regional and bi-lateral levels. However, for several reasons (absence of trading rules and regulations, prevailing subsidies), only about 2% of the annual regional generation is currently traded. 6 Regional Electricity Trade in MENA (2/2) Maghreb sub-region (Morocco, Algeria, and Tunisia): - Limited cross-border interconnection exist since 1950s - Connected to the European Network in 1997 via the interconnection between Spain and Morocco. Gulf Cooperation Council (Kuwait, Saudi Arabia, Bahrain, Qatar, UAE and Oman): - Started since the GCC Interconnection Authority was established in 2001 and developed in three phases - 1st phase (2009) - GCC northern grid connecting Kuwait, Saudi Arabia, Bahrain, and Qatar - 2nd phase (2011) - GCC southern grid by connecting UAE and Oman - 3rd phase (2013) – interconnection between the north and south GCC grids Recently Iraq also joined EIJLLPST (Egypt, Iraq, Jordan, Libya, Lebanon, West Bank & Gaza, Syria and Turkey) - Established in 1988 7 Objectives Quantification of the gains from the utilization of the existing