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Regional Electricity Cooperation and Integration (RECI) coop erat ion, inte grat E7 Guidelines Regional Electricity Cooperation for the pooling of resources and the interconnection and Integration (RECI) of electric power systems coop erat ion, inte grat ion. Foreword he E7 was born in April 1992 when the chairpersons and chief executive Tofficers of some of the largest electric utilities in the Group of Seven (G7) industrialized nations agreed to meet once a year at an E7 Annual Summit to discuss major global issues related to the electric utility industry.Their common goal: “to play an active role in protecting the global environment and in pro- moting efficient generation and use of electricity.” To that end, they created the E7 Network of Expertise for the Global Environment to act as a pro bono environmental, technical and industrial advisory group for electric utilities and governments in developing and Eastern European countries. The E7 Network has already provided in-kind services in more than thirty projects in Asia, Latin America, Africa, and Eastern Europe. Furthermore, E7 Working Groups are mandated on an ad hoc basis to examine specific policy issues relevant for the global electricity industry and develop E7 proposals, position papers and policy statements to bring the E7’s voice to the international community and facilitate exchanges with international organizations and electric utilities in developing countries. One of the E7’s active Working Groups took an in-depth look at the issue of regional electricity cooperation and integration (RECI), both as a specific tool for the development of the electricity supply industry in developing countries, and as an effective means of enhancing the industry’s contribution to the sus- tainable development of those countries. Developing countries are specifically targeted here, considering the relatively low level of power system integration between those countries and the large potential offered by RECI to optimize their development in a more profitable manner. This document and its accompanying CD-ROM provide a comprehensive examination of the conditions necessary to the successful implementation of regional electricity cooperation and integration, through the pooling of resources and the interconnection of electric power systems. It draws largely on the expertise and experience of E7 members, and on practical examples from both developed and developing nations. The E7 and the E7 Network of Expertise for the Global Environment are confident that the information, ideas and guidelines put together by the RECI Working Group will contribute in a timely and practical manner to the full realization of the benefits – political, social, economic and environmental – which can accrue from sharing electric power resources. RECI An Introduction World Regional Indicators of Electricity Consumption Growth 1995-2020 Capacity GDP Electricity Additional (GW) growth growth capacity (1995) (%) (%) (GW) OECD 1,814 2.0 1.9 1,295 China 227 5.5 5.4 550 East Asia 126 4.5 5.0 321 South Asia 106 4.2 4.5 218 Middle East 89 2.7 4.0 127 Latin America 187 3.3 3.4 325 Africa 97 2.5 4.1 118 Source: IEA,World Energy Outlook, 1998 he development of electric power systems is The actual implementation of such resource pooling is Tan essential component of a country's sus- made possible by the interconnection of electric power tainable development. Indeed, the state of develop- systems. Interconnecting isolated electric power sys- ment of electric power systems is often considered tems also offers unique, value-added advantages. It: to be an indicator of a country’s overall develop- • allows sharing power generation sources throughout ment. a larger area, • brings forth new revenue opportunities, and In developing countries around the world, this varies • reduces the risks of power shortages. widely; nonetheless, several countries share some specific features which are important when consider- The interconnection of electric power systems however ing the opportunity and feasibility of furthering may likely bring forth new constraints in planning, the development of regional electric power systems and increase the complexity of operations. The devel- and, hence, the countries’ overall development. opment of regional electricity cooperation and These are: integration (RECI),through the implementation of a • a high actual or potential growth rate of consump- RECI organization on a regional (bi- or multinational) tion of electric power; basis, will help circumvent these difficulties and will • significant unexploited hydroelectric resources; be instrumental in fulfilling the necessary conditions • complementary forms of primary energy; and for the pooling of resources and the interconnection • a lack of national financial resources to develop of electric power systems. the electric power system. Regional electricity cooperation and integration Furthermore, given that most electric utilities in involves: developing countries are state-owned monopolies, • partnerships between electric utilities; they have been assigned ambitious electrification • the concerted implementation of interconnections; objectives, particularly for rural areas. Considering • harmonized regional design and operation criteria; that many customers are subsidized by national and, in the long term, governments through lower rates, however, electric • the concerted operation of electric power systems; utilities in developing countries are faced with deteri- • a regional approach to resource planning. orating financial performances due to their incapac- ity to fully recover the costs they incur. In turn, this Above and beyond the physical pooling of resources impedes their investment capacity and their efforts and interconnection of electric power systems, region- to provide the population with access to electricity al electricity cooperation and integration is expected to services. yield: • significant social, economic and environmental To address these issues,among others,most developing benefits; countries, encouraged by the leading international • more reliable and stable electric power systems; organizations, are presently reforming their electric • an extended market; and power systems and moving towards liberalization • important new business opportunities. and the introduction of private independent electric- ity generators. The business opportunities offered through regional electricity cooperation and integration (increased These reforms, as several developing countries are market scale, cross-border opportunities, complemen- currently experiencing,can be optimized through the tarities, etc.) will be further enhanced in a context of pooling of resources, from engineering expertise to deregulation and liberalization. electricity generation capacity, on a regional basis. The pooling of resources further offers unique,value- added advantages. It: • allows optimum use of available resources, • enhances environmental protection efforts, • facilitates a sustainable development approach, • reduces the cost of electricity services to customers, • increases the ability to meet potential customers’ demand, and • constitutes a lever for the country’s economic development. The development of regional electricity cooperation and integration 1. Pooling experience and expertise A Step-by- The exchange of experience and expertise between electricity utilities in developing countries will foster 1 greater cooperation,and could therefore be considered Step Process the first step towards the successful implementation of a RECI organization. The electricity supply industry requires considerable diversified expertise. In many developing countries rom an exchange of expertise however, that industry is too small and cannot afford to full integration of electricity to hire and train a critical mass of engineers and F economists, notwithstanding the efforts of interna- markets, regional electricity coopera- tional institutions to that effect. Accordingly, there is tion and integration is a long-term a strong case for pooling expertise from the electric- process. Consequently, a step-by-step ity supply industry into regional entities. approach to the implementation of a 2. Exchanging information RECI organization will prove to be the on the development and operation most effective and efficient manner of of power systems reaping the full benefits of the pooling In a region where countries use the same river basin, of resources and the interconnection of for instance, the development and operation of electric power systems. hydroelectric dams must be coordinated both to optimize electric generation in the river basin, and to take into account other possible uses of water Above all, it is fundamental to ascertain and enhance resources (navigation, irrigation) by the countries the political will for cooperation. This may actually situated downstream. be considered a preliminary condition to the entire implementation process. Until now in fact, regional The use of water resources must be agreed upon by electricity cooperation and integration has developed the countries of the river basin; the plan for operation first and foremost in countries with political cooper- of the dam must be conveyed in advance by upstream ation experience. to downstream countries, etc. This type of informa- tion exchange is highly recommended, particularly when the national power systems are physically inter- connected. In a given region, moreover, countries may wish to share information on load patterns, the operation of the generation
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