Energy: Balancing Demand and Supply, Energy: Balancing Demand and Supply, Generation and Conservation, Big Dams Generation and Conservation, Big Dams

and Alternative Energy Technologiesand Alternative Energy Technologies

Motoo Konishi, Country DirectorMotoo Konishi, Country Director

Central Asia, World BankCentral Asia, World Bank

July 20/21, 2009July 20/21, 2009

Almaty, KazhakstanAlmaty, Kazhakstan

Central Asia International Cooperation MeetingResponding to the Compound Crisis in Central

Asia: A Framework for Action

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What We Know

(typical year)Winter Peak

Capacity ShortagesWinter Energy

Shortages

Kazakhstan

(does not include new N/S trans. line)

850 MW 3.0 TWh

Kyrgyzstan 100-150 MW 1.0 TWh

Tajikistan 700-850 MW 2.5 - 3.0 TWh

Turkmenistan Surplus of about 600 MW or more

Uzbekistan ~ 1000 MW ~ 1.0 TWh

Today’s circumstances are the result of a many factors: Institutional and political transition from the Soviet era Constrained investment in new and existing infrastructure Economic growth Nature and the elements

The situation is worsening and feeding upon itself: A negative dynamic for the region

Winter energy shortages are pervasive while summer surpluses do not maximize revenue

Water conflicts cast a shadow on regional stability and economic well-being

0

150

300

450

I II III I II III I II III I II III I II III I II III

Apr May Jun Jul Aug Sep

mcm

/dec

ade

Protocol Actual

Water shortage about 600 million

cubic meters

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What We Know cont’d

Collectively, the region is well-endowed in energy resources

Benefits to cooperation are identifiable and real

Risk mitigation for energy supply; Lower energy costs; Improved environmental management; More efficient use of water

CA Energy Resources Crude Oil

(MTOE)

Gas

(MTOE)

Coal

(MTOE)

Hydro

(TWh/YR)

Kazakhstan 1100 1500 24300 27000

Kyrgyzstan 5.5 5 580 163000

Tajikistan 1.7 5 500 317000

Turkmenistan 75 2252 ~ 2000

Uzbekistan 82 1476 2851 15000

Per capita water resources are constrained but manageable

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What We Observe

Donors are engaged

Multiple studies and Multiple studies and analyses provide an analyses provide an understanding of issues understanding of issues and optionsand options

A wide variety of solutions have been identified

JICA (2009) Intra-Regional Cooperation on Water and PowerUSAID (1999) Assessment of Water ManagementWorld Bank (2004) Water and Energy NexusICWC (2007) Achievements and Challenges of the FutureADB (2000) Regional Economic Cooperation in Central Asia: Electric EnergyUNECE (20070 Our Waters: Joining Hands Across Borders

UNECE World BankUNRCCA GTZADB EBRDUSAID SwitzerlandUNDP …..

Load sheddingWater productivity enhancementRehabilitation (energy and water)Payment agreementsCASA 1000New generationReduced system lossesWater sharingWater re-regulationSummer energy exportsAdditional interconnectionsStrengthened grid operationsStrengthen IWRM capacity

555

What We Observe cont’d

• We have not seen desired results on water releases• Past agreements have not held• No consensus on suggested solutions

• Integration across sectors is limited• Win-win solutions must include both energy and water sectors• Credible analysis must model energy, water, and the relation between the two

• Over the years the ICWC seasonal allocations were not adhered to. Essentially the winter releases at Toktogul reservoir exceeded the limits.

• Minor deviations from agreed regime in the case with Nurek.

• The agreement worked but only partially - the annual negotiations too long and there were timing differences in resource exchange.

• Upstream agreed with the above – the Downstream countries did not.

• 1998 Agreement is no longer functional.

• In Syrdarya basin, UZ and KZ built additional reservoirs to store winter releases (after 2004-05)

19981992 1998

EVOLUTION OF AGREEMENTS

• Ownership by Central Asian players is limited• Need to increase ownership of technical work• Need to increase links between analysis and discussion

666

Lessons from International Experience

Laos PDR is developing 1070MW, $1.25 billion Nam Theun 2 hydropower project for regional energy trade, through a public-private partnership

Significant water savings are possible in the Eastern Nile region (Ethiopia, Sudan, and Egypt) through improved management of storage

The Columbia River Treaty reduces avoids $100m in flood damages annually and leveraged low cost energy for economic development

THESE EXAMPLES ARE NOT WHOLLY TRANSFERABLE BUT THEY INDICATE A FRUITFUL AND REALISTIC PATH FORWARD

The challenges and opportunities faced in Central Asia are familiar to many other regions

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World Bank and Central Asia Energy

• World Bank will promote a consolidated program emphasizing:

(i) Technical analysis

(ii) Ownership by Central Asian countries

(iii) Consultation among Central Asia countries

(iv) Integration across energy and water

• The work program will be structured around three themes:

1. Winter Energy Deficits/Summer Surpluses

2. Regional Transmission and Dispatch

3. Energy-Water Nexus

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1. Winter Deficits, Summer Surpluses

Objective:Objective: Optimize summer/winter regional energy Optimize summer/winter regional energy trade on a commercial basistrade on a commercial basis

• Current winter shortages cannot be ignored• Constraints to a long term solution include: Transmission; Hydrology; Payment mechanisms; Focus on national self-sufficiency in generation

• Accommodation for winter 2009• Interim (2-3 year) stop-gap arrangements

• New long term investments in energy, water and/or institutions

999

2. Regional Transmission and Dispatch

• Central Asia has a strong energy profile:

• A rich complementary mix of generation resources (thermal in some countries and hydro with storage in others)

• Opportunities for managing demand across different time zones use patterns• Potential for significant regional exports• A functioning core bulk power transmission system

• But many opportunities remain unexploited due to transmission and dispatch constraints

Objective:Objective: Strengthen the transmission and dispatch Strengthen the transmission and dispatch system by enhancing the capacity of the Coordinating system by enhancing the capacity of the Coordinating

Dispatcher Centre (CDC)Dispatcher Centre (CDC)

• Identify opportunities for unified operation (short term)• Manage power pools, optimize transmission system

operation (long term)

101010

3. Energy-Water Nexus

• One reason for lack of progress is the practice of treating energy and water separately

• compromises ability to understand and assess benefits• detaches flow management from investments in water infrastructure

• Decision-makers need to:• Be able to ask questions about energy and/or water futures• Get answers for both water and energy sectors• Own a widely accepted tool for cross-sectoral discussions

INPUTS :• Shared data and tools to link water and energy models

• Regional technical focal point and International Advisory Panel

OUTPUTS:• Investments in both water and energy (incl. fast track projects)

• Resource management system to analyze integrated solutions

and monitor outcomes

Objective: Objective: Implement an Energy-Water Framework to improve understanding and management of energy-

water connections

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Donors involvement

Immediate requests

Provide feedback and suggestions on concept

Assist in establishing inventories of studies, models, data and proposed solutions

Continue/scale up funding (e.g., multi-donor regional trust fund)

Participate in Donors Roundtable in January 2010

This initiative requires multiple players.Donor involvement is critical.

Summary of Key Messages

1. WE KNOWWE KNOW• A lot about the basics that encourage and limit regional cooperation • That the challenges and opportunities faced in Central Asia are familiar to many That the challenges and opportunities faced in Central Asia are familiar to many other regionsother regions

2. WE PROPOSEWE PROPOSETo focus the World Bank energy program on three key themes:

• Winter Energy Deficits/Summer Surpluses• Regional Transmission and Dispatch• Energy-Water Nexus

3. WE EMPHASIZEWE EMPHASIZE Energy and water Energy and water must be treated togethermust be treated together, at national and , at national and regional scales, to understand and pursue the possibilities of regional scales, to understand and pursue the possibilities of cooperation cooperation Donor coordination will be essential in leveraging impactDonor coordination will be essential in leveraging impact

Thank-youThank-you

For further informationMkonishi@worldbank.org