The Energy Crisis: why green grids and cross border trade in renewables could be the answer

In nations with a rising population and growing energy consumption, it is essential to employ modern clean energy sources to reduce harmful emissions from the power sector and to attain a low-carbon economy. Although the costs of renewable technology generation are falling at a fast pace, many countries still face challenges taking up this option. For example, how can countries with restricted access to renewable energy sources hope to power themselves sustainably, and how can the intermittent nature of wind and solar energy be resolved?

Green grids as a solution

Cross-border energy trade is one approach that enables regions to integrate their power demands in a way that helps meet some of these challenges. This works by offering access to a broader mix and more stable supply of renewable energy resources over a wider geographic area. The larger an interconnected area, the more likely the wind is blowing or the sun shining in some part. In addition, the bigger an interconnected region is along the East / West axis, the more opportunity there is to exploit time differences and, in essence, extend the solar generation day. With the help of technological advances, long-distance connections between centres of high renewable energy generation potential and areas of high electricity demand can be made possible.

The research

South Asia and Southern Africa are examples of regions that have abundant clean, renewable energy resources, but where several countries (e.g., India, Bangladesh, and South Africa) remain reliant on domestic resources such as coal or natural gas for most of their power generation. This dependence on fossil fuels risks lock-in to technologies that are likely to become redundant as the world strives to meet climate goals. For robust economic growth, these regions require competitive supplies of clean energy on a long-term basis.

Our Applied Research Programme on Energy and Economic Growth (EEG) has commissioned research on ‘green grids’ and cross-border trade in electricity. The focus of this research has been on using modelling to explore the potential for such trade between four countries in South Asia (Bangladesh, Bhutan, Nepal and India) and between the 12 nations of the South African Power Pool¹. In addition, we looked at the feasibility of an interconnector between potential solar farms in the Gulf States and centres of demand in India.

Key findings from these research projects indicate:

• Regional trade in electricity has the potential to significantly reduce system costs by exploiting regional resources (or inter-regional resources) optimally rather than relying on a limited set of resources in each country. If solar and wind technologies continue to fall in cost at a relatively high rate, the four South Asia nations studied could save between 227 and 312 billion USD on total discounted systems costs between 2015 – 2050, at 2015 prices.

• Coal is not cost competitive in the two regions across all scenarios examined where cross border trade is allowed. The one exception to this was one modelling scenario in South Asia where it was assumed there is no further fall in the cost of renewables (a scenario unlikely to occur in practice).

• Bi-directional trade between India and Gulf countries can reduce costs and emissions across a range of scenarios and increase energy security by exploiting different time zones and varying times of peak demand.

• Increased regional transmission capacity reduces annual CO2 emissions by making renewables more widely accessible.

What next?

The technology needed is already available and, although investment would be required in electricity interconnectors between countries, recent research in South Asia and Southern Africa has shown that even with these costs this approach could save billions of dollars on developing electricity infrastructure across those regions over the coming 25 years, potentially helping to accelerate progress towards the goal of universal access to clean, modern energy services (SDG7). It could also significantly reduce CO2 emissions compared to developing the same level of access to electricity through countries just relying on energy resources available in-country.

There are of course other factors to consider to make this a reality: Not all renewables make economic sense, and planning at a regional level is essential if cost benefits are to be realised – for example, almost half of hydro planned in Southern Africa does not make economic sense under any scenario. Moreover, biodiversity and social goals also need to be factored into regional planning (though EEG research for Southern Africa shows that this is possible without having huge impacts on final costs).

Perhaps the largest barriers to trade between countries are political - something that is increasingly prominent on a global stage at the moment. The enormity of the challenges, however, shouldn’t stop us from trying to find a solution to the energy crisis and all policy makers have a responsibility to work together on a global stage to make this a reality.

For further information please see: Cross-border electricity trade and the potential for green grids in South Asia and Southern Africa: a synthesis of EEG-funded research

1 SAPP member countries: Angola, Botswana, Democratic Republic of the Congo, Eswatini, Lesotho, Mozambique, Malawi, Namibia, South Africa, Tanzania, Zambia, and Zimbabwe

About the author:

Simon Trace is our Principal Consultant, Natural Resources and Energy and has over 35 years experience working in international development.