Greater Mekong Subregion: From Geographical to Socio-economic Integration

11. Energy Sector Integration for Low-Carbon Developent in GMS: Towards a Model of South-South Cooperation

11 energy Sector integration For Low-carBon deveLopment in gmS towards a model of South-South cooperation Yongping Zhai and Anthony J. Jude The Greater Mekong Subregion (GMS) comprises Cambodia, the People’s Republic of China (PRC), Lao People’s Democratic Republic (Lao PDR), Myanmar, Thailand, and Vietnam. In 1992, with the Asian Development Bank (ADB)’s assistance, the six countries entered into a programme of subregional economic cooperation designed to enhance economic relations among the countries. The establishment of an integrated subregional electric power market is a major component of the economic cooperation of the GMS countries. When the idea of the subregional power market was first conceived in the early 1990s, the main concern was to ensure an adequate energy supply at the least cost to meet the requirements of economic development in the subregion, which is one of the fastest growing areas in the world. As the subregional power sector integration gradually takes shape amid growing international concerns on climate change, the GMS countries have come to 216 Low-Carbon Development in the GMS 217 realize that cooperation in the energy sector is also an effective way to achieve low carbon development in the subregion. To this end, the GMS countries decided to expand their cooperation in the energy sector to include energy efficiency, renewable energy, and clean fuels. On the basis of an overview of the current status of the energy sector integration, particularly in the power sector of the GMS countries, this chapter analyses the potential for carbon emissions reduction in the GMS countries through subregional cooperation. In particular, the GMS cooperation model in the energy sector is proposed as one of the means of addressing global climate change. current StatuS oF power interconnection and energy Sector cooperation in the gmS The GMS has diverse energy resources that are unevenly distributed among its member countries. Although the subregion is well endowed with hydropower and fossil fuel resources, most of the exploitable resources are concentrated locally. Hydropower resources are abundant in the Lao PDR, Myanmar, and Yunnan, PRC, and are expected to exceed their own demands for the foreseeable future. Most of the fossil fuel resources (oil and gas) are in Yunnan, PRC, and Myanmar, and, to a lesser extent, in Vietnam. Thailand has limited domestic gas and oil reserves, and the country is expected to rely on imports for its future energy needs. Cambodia currently also relies on imported energy (petroleum products and electricity) though its resources (hydropower, oil and gas) have been largely untapped. Therefore, the region’s uneven energy endowment and geographic proximity of member countries makes the GMS an ideal region for power interconnection and energy sector cooperation. The quality of the power transmission infrastructure in the GMS is also very uneven. On the one hand, the PRC, Thailand, and Vietnam have welldeveloped power grid systems, with 500 kV integrated backbone transmission grids. On the other hand, Cambodia, the Lao PDR, and Myanmar have only low and medium voltage power systems of limited extent, quality, and reliability. Electricity consumption in the GMS in 1990 and 2008 grew slightly faster than the growth rate of electricity production (9.5 per cent per annum). The average per capita consumption of electricity in the GMS was 1,045 kilowatt-hours in 2008, with Thailand posting the highest consumption of 2,105 kilowatt-hours, and Cambodia, the lowest, at 124 kilowatt-hours. 218 Yongping Zhai and Anthony J. Jude power trade and interconnection To enable reliable exchanges of power and develop opportunities for power trading, without negatively affecting reliability of their own systems, the GMS countries must connect and synchronize the operations of their national grids. To achieve subregional power interconnections fully, the GMS countries prepared a road map with phased development in stages and involving both infrastructure development and institutional building activities. Phased Development in Four Stages: In 2005, through a memorandum of understanding (MOU-1) which was reconfirmed and strengthened by another MOU (MOU-2) in 2008, the GMS countries committed to embarking on a road map for the phased development of subregional power interconnection in four stages as follows: Stage 1: This corresponds to the regional power transactions that are possible currently and in the near future, with development of the first crossborder connections. In this stage, transactions will only be possible between two neighbouring countries. Stage 1 is oriented to take advantage of surplus capacity of cross-border transmission facilities...