One World, One Grid - The ultimate Green Solution?

Around the world, more and more countries and politicians are advocating deep decarbonization and ambitious renewable energy goals. US has been calling for 20 countries that account for 81 per cent of global emissions — including India — to take the lead in reducing greenhouse gas emissions. The aim is to achieve net-zero emissions — off-setting emissions from sectors where greenhouse gases can’t be done away with — by or before 2050 in the pursuit of the Paris Agreement goals.India has pledged to reduce the greenhouse gas emissions intensity of its GDP by 33 to 35 per cent below 2005 levels. It also aims to generate 40 per cent of India’s power through renewable energy, and create a carbon sink capable of sucking in 2.5 billion-3 billion tonnes of carbon dioxide through additional forest and tree cover .

In April, US climate envoy John Kerry visited India. Later, India also participated with 40 nations in climate summit hosted by US President. Countries are working out their strategies for upcoming the 26th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP26) slated in November. During his stay in India, Mr. Kerry met with various business leaders. Then one of the media coverage by Business standard mentions about One Sun, One World, One Grid Project.

Cost curves are helping, with new renewable generation undercutting greenfield fossil fuel projects in most circumstances, but achieving 80-100 percent renewable energy penetration requires new ways of thinking about the electricity grid. One is to interconnect grids and increase electricity trade across domestic and international borders.The idea was also floated by PM Modi in 2018 during the first assembly of the International Solar Alliance (ISA). According to the draft plan of the Ministry of New and Renewable Energy (MNRE), the ambitious OSOWOG will connect 140 countries through a common grid that will be used to transfer solar power. In 10 years’ time, there will be 750 Gw of power (com-bined with thermal) that can’t be consumed during the after-noon (low demand hours) in India. “The vision behind the OSOWOG mantra is ‘The Sun Never Sets’ and is a constant at some geographical location, globally, at any given point of time. With India at the fulcrum, the solar spectrum can easily be divided into two broad zones viz. far East, which would include countries like Myanmar, Vietnam, Thailand, Lao, Cambodia etc, and far West, which would cover the Middle East and the Africa Region,” MNRE said.

The plan is divided into three phases:

Phase 1 will connect the Indian grid with grids in West Asia, South Asia and Southeast Asia to share solar and other renewable energy resources. Phase 2 will connect the first-phase nations with the African pool of renewable sources. And Phase 3 will be the final step of global inter-connection.

However, having an intercontinental power infrastructure is a fairly new idea. Australia-based Sun Cable is developing the Australian-ASEAN Power Link (AAPL) under which it will supply renewable electricity from Australia to Singapore and later to Indonesia. National Grid UK supplies extra renewable energy to other European countries. Globally Technology-wise, it is yet to make sense. With battery and storage technology becoming cheaper, electricity consumption at source end is a more feasible idea for solar power. However, shortage of land bank and limited hours of sunshine tip the balance in favour of expanding the sourcing of solar energy to other nations.

Chinese companies are already active in several African markets. Also the recently opened Shandong-Hebei 2,800-km 1-million-volt line in China took less than two years from project approval to operation.The IEA counts at least 7,000 km of Chinese-built transmission lines coming online in developing Asia between 2013 and 2022, particularly in Cambodia, Laos, and Pakistan. Most projects are financed by the Exim Bank of China, and adopt Chinese design and equipment standards. The majority of projects involve the construction of substations, roughly one-third of the projects are of 500 kV and higher, and some are cross-border projects. The 500-kV “Backbone & Sub-region Transmission Line Project” is funded by Exim Bank and will allow electricity trade between Cambodia and Laos from 2021.

The economic and environmental benefits of Greater Mekong Subregion energy sector integration are estimated at about 19 percent of total energy costs, or about $200 billion. The savings from expanding the interconnection of power systems alone are estimated at $14.3 billion, mainly due to the substitution of fossil fuel generation by hydropower. China, historically a net importer of power, invested massively in its own generation capacity as well as regional projects. Since 2010, China’s investment in hydropower, wind, solar, and nuclear reversed its need for imports while also increasing capacity in Laos and Myanmar.

In 2019, the League of Arab States (LAS) and the World Bank spearheaded renewed efforts to establish a Pan-Arab Electricity Market (PAEM) to deliver hundreds of billions of dollars in system savings and reduce the need for generation capacity by almost 50 gigawatts (GW) by 2035.A long-delayed interconnection between Egypt and Saudi Arabia is planned to link two of the largest regional power markets and extend the GCC power pool.

South Asia: In India, companies have also started working on it. Sterlite Power is working on Interconnector project. Company is conducting feasibility studies to connect Indian Grid with West Asia and Africa. Per unit costs are becoming feasible and in 3-5 years it can be reality. India has been integrating its own regional power grid into national grid. According to Brookings India and Bloomberg New Energy Finance, India’s demand for electricity is expected to near triple by 2040, meaning that investment in infrastructure must continue on its determined and dynamic pathway. The Indian Power Grid is one of the largest synchronous transmission grids in the world. Of this, 163,000 circuit kms of transmission line – enough to encircle the Earth's diameter at the Equator thirteen times - 248 substations, and a transformation capacity of about 4,120,000 MVA, has been established by POWERGRID.

In recent years, India has created several transnational links with about 5 GW cross-border power transfer capacity with Bangladesh, Bhutan and Nepal, and more are planned for the future. Regional power trade could also reduce greenhouse gas (GHG) emissions by more than 9 percent compared with business as usual, partly from an increased use of hydro power (+72 GW) and decreased use of coal (-54 GW) to 2040. Direct cost savings on the order of about $9 billion per year relative to the status quo, or 5 percent cost savings to 2040. To help realize those savings, a number of subregional initiatives have been mobilized by SAARC, the World Bank, the Asian Development Bank (ADB), the UK Department for International Development (DFID), and the United States Agency for International Development (USAID).

Expected Benefits of integration of grids:

1. Transnational grids will ensure better utilization of power assets, storage systems. Firms will get better ROI, investment turnaround. Electricity grids have been historically created considering consumption areas and nearby power source. Interconnecting varied assets at different lifecycle stages is complex. By engaging in cross-border trade, they can maintain the same level of reliability with less reserve generation capacity; they can also benefit from comparative natural resource advantages.

2. Integrated grids will ensure power generation failure at some location can be balanced by other assets i.e. more resilience. Remember Texas power outage in February? It came about as a result of three severe winter storms sweeping across the United States; a massive electricity generation failure in the state of Texas; and resultant shortages of water, food, and heat. More than 4.5 million homes and businesses were left without power, some for several days. At least 151 people were killed directly or indirectly. During the crisis, some energy firms made billions in profits, while others went bankrupt, due to some firms being able to pass extremely high wholesale prices ($9,000/MWh, typically $50/MWh) on to consumers, while others could not, as well as this price being held at the $9,000 cap by ERCOT for allegedly two days longer than necessary creating $16 billion in unnecessary charges.

3. Integrated power grids will ensure transparent price discovery. Demand and Supply will be completely visible, helping markets to negotiate better prices. In times of abundant generation from renewables in one part of an interconnected system, excess electricity does not need to be curtailed at zero value and can be exported to other parts where its value at the same time is higher, for example, due to a low availability of domestic resources or because of higher demand patterns.

4. The environmental benefits of cross-border integration derive primarily from the fact that larger power systems are able to integrate higher shares of renewables. With larger balancing areas there is a natural smoothing of the underlying resource (for example, the wind blows and the sun shines with different levels of intensity across large geographic areas). As renewable generation becomes more competitive than traditional fossil fuel generation in many parts of the world, the intermittency of the technology is encouraging larger international grid and driving domestic energy market reform in order to match pricing across borders.

The infrastructure requirements are not cheap: under the International Energy Agency’s (IEA) Sustainable Development Scenario (with double the current annual investment in renewables, leading to 4.7 times more installed renewable capacity in Asia by 2040), annual transmission investment worldwide to 2040 rises from current levels by a third to $103 billion, and network investment rises more than 71 percent to $475 billion.

In various Asian subregions, total system cost savings are calculated to be on the order of 5–19 percent with regional power trade. In North America, the National Renewable Energy Laboratory (NREL) calculates that improving transmission interconnections at the seams between subnational grids could reduce production costs by up to 4 percent. The introduction of electricity trade in MENA decreases the total system cost (in present-value terms) by $83.6 billion, or 6 percent.

Challenges

• While the economic gains of increasing cross-border electricity trade and integrating markets are often clear and growing around the world, implementation is often difficult in practice. Economic benefits are rarely distributed evenly across parties. Since benefits can be hard to measure, it can be difficult to agree on cost-sharing for interconnection.
• Interconnection can provide benefits, but also challenges, for the energy security of the system. Countries or jurisdictions may expect to maintain self-sufficiency; tight coupling of power systems across borders can increase the risk of blackout spillover; and synchronized systems must deal with unexpected cross-border power flows (often called “loop” or “transit” flows), particularly where a high penetration of renewables increases the impact of weather-related fluctuations. Power policy will get more complex. Nation can't make any changes in its power portfolio on its own as it can impact other nations connected in grid.
• Countries are already grappling with how to design markets and transmission systems to handle both intermittency and the requirement for backup power that renewables entail. More advanced countries need to develop better capacity markets and scarcity pricing mechanisms, and grid operations must contend with higher frequency scheduling and dispatch. But developing countries with a legacy of vertically integrated monopoly utilities may still be operating under a single-buyer model or only starting to accommodate private sector participation. The process of domestic power market reform has been reignited in many countries, often after years of stop-start progress.
• Carbon leakage can occur where emission-intensive electricity produced in countries without strict regulation undercuts power elsewhere. By trading the end product directly, free power trade also masks the myriad state interventions or poor conditions along the value chain. Domestic subsidies distorts free power markets and increase risks. Gulf Cooperation Council interconnection has a particularly advanced institutional arrangement designed to handle regular commercial activity, but only operates at 4–5 percent of capacity (compared to almost 50 percent for European interconnections). That is largely because of domestic fuel subsidies for generation feedstock that get hidden in electricity prices, making it difficult to price traded power without cross-subsidizing neighbors
• There is a tension between various models of transparent and competitive bidding open to outsiders on the one hand, and one of fiscal-expansionary, state-driven strategic investments coupled with closed-door deals.
• Public financing or cheap credit that is coupled with long-term foreign control of assets or technology, can be seductive ways to circumvent close scrutiny of the creditworthiness of projects or borrowers. However, they can also pose long-term strategic risks.
• Digital electricity systems are already vulnerable. New generation and storage technologies increase the need for grid management ICT, and distribution technologies add many new entry points to the increasingly smarter grid, opening up vulnerabilities to cyber-attack. Recent alleged attack on Mumbai electricity distribution systems and similar one on US Colonial Pipeline are testament to vulnerabilities at larger scale.

May be One Global Grid may have to wait for few years. But it looks promising future to make the most of resources and cost cycles.

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Useful Links :

https://www.business-standard.com/article/economy-policy/all-you-need-to-know-about-one-world-one-sun-one-grid-plan-120082101244_1.html

https://www.business-standard.com/article/companies/70-of-our-projects-are-fully-green-sterlite-power-md-pratik-agarwal-121052401517_1.html

https://en.wikipedia.org/wiki/2021_Texas_power_crisis

https://www.hitachiabb-powergrids.com/news/global-news/perspectives/powering-india-with-a-grid-that-is-fit-for-the-future

https://www.atlanticcouncil.org/in-depth-research-reports/report/international-grid-integration-efficiencies-vulnerabilities-and-strategic-implications-in-asia/