Power Interconnection in ASEAN Region Lessons learned from international experiences Principal Investigator: Prof Anthony David OWEN Co- Investigators: Anton FINENKO, Jacqueline TAO Power Interconnection in ASEAN Region • • • Power Interconnection in ASEAN Region Lessons learned from international experiences This report was prepared as part of research project conducted by the Energy Studies Institute, National University on Singapore for the Konrad-Adenauer Stiftung (KAS). Energy Studies Institute National University of Singapore 29 Heng Mui Keng Terrace, Block A #10-01 Singapore 119620 Tel: (65) 6516 2000 Fax: (65) 6775 1831 Corresponding author: Anton Finenko [email protected] Fehler! Verwenden Sie die Registerkarte 'Start', um Heading 1 dem Text zuzuweisen, der hier angezeigt werden soll. 1 Power Interconnection in ASEAN Region • • • Table of Contents Table of Contents ..................................................................................................................................... 2 List of Figures .......................................................................................................................................... 8 List of Tables ............................................................................................................................................ 9 Foreword ................................................................................................................................................ 15 Acknowledgements .............................................................................................................................. 16 Executive summary ............................................................................................................................... 17 Chapter 1: Political economy of electricity interconnections .......................................................... 20 Introduction ....................................................................................................................................... 20 Welfare effects of interconnection ................................................................................................... 21 Quantifying the benefits of interconnectors .................................................................................. 22 Factors affecting the benefits of interconnection .......................................................................... 24 Security of supply benefits of interconnectors .............................................................................. 24 Environmental costs and benefits ................................................................................................... 25 Chapter 2: Southern African Power Pool ........................................................................................... 26 Introduction ....................................................................................................................................... 26 Historical development .................................................................................................................... 27 1980s ................................................................................................................................................ 27 1990s ................................................................................................................................................ 27 Inauguration of the power pool .................................................................................................. 28 2000s ................................................................................................................................................ 29 Benefits of market integration ......................................................................................................... 29 Vision and objectives ........................................................................................................................ 30 Fehler! Verwenden Sie die Registerkarte 'Start', um Heading 1 dem Text zuzuweisen, der hier angezeigt werden soll. 2 Power Interconnection in ASEAN Region • • • Geographical coverage ..................................................................................................................... 31 Southern region ............................................................................................................................. 31 Northern region ............................................................................................................................. 31 SAPP members .................................................................................................................................. 33 Electricity markets ............................................................................................................................. 35 Long-term contracts ...................................................................................................................... 36 Forward physical market ............................................................................................................. 36 Day-ahead and intraday markets................................................................................................ 37 Transmission allocation and pricing .............................................................................................. 37 Electricity prices and tariffs ............................................................................................................. 38 Protection of interests ....................................................................................................................... 40 Current state of supply and demand.............................................................................................. 40 Supply mix and capacity .............................................................................................................. 40 Electricity demand and consumption ........................................................................................ 42 Geographical power flows ............................................................................................................... 43 Infrastructure bottlenecks ................................................................................................................ 43 Generation ...................................................................................................................................... 43 Transmission and distribution .................................................................................................... 44 Infrastructure development ............................................................................................................. 44 Organizational structure .................................................................................................................. 45 Regulation .......................................................................................................................................... 47 Financing ............................................................................................................................................ 48 Conclusions ........................................................................................................................................ 49 Chapter 3: European Electricity Markets ........................................................................................... 51 Introduction ....................................................................................................................................... 51 Historical Development ................................................................................................................... 52 1996-2003 First Electricity Directive ............................................................................................ 53 2003-2009 Second Electricity Directive ....................................................................................... 53 Fehler! Verwenden Sie die Registerkarte 'Start', um Heading 1 dem Text zuzuweisen, der hier angezeigt werden soll. 3 Power Interconnection in ASEAN Region • • • From 2009: Third Energy Package .............................................................................................. 55 Coupling of national markets and the “Target Model” ............................................................... 56 Geographical coverage ..................................................................................................................... 58 Vision and objectives ........................................................................................................................ 60 Market Participants ........................................................................................................................... 61 Electricity markets ............................................................................................................................. 63 Bilateral contracts .......................................................................................................................... 64 Power exchanges ........................................................................................................................... 65 Day-ahead markets and coupling of day-ahead markets ........................................................ 65 Intraday markets ..........................................................................................................................