Regional Cooperation Diversifying Eleсtricity Transportation Routes USAID Central Asia - Energy Links Project Regional Cooperation Diversifying Eleсtricity Transportation Routes Matthew Addison, Deloitte Consulting ASHGABAT INTERNATIONAL ENERGY CHARTER FORUM Ashgabat, Turkmenistan May 31, 2017

"Would you tell me, please, which way I ought to go from here "Would you tell me, please, which way I ought to go from here? That depends a good deal on where you want to get to.” "If you don't know where you're going, any road will take you there."

Recent Trends In CAR

Which one is best

Recent Trends In CAR (as per CDC Energia)   2005 IMPORT (GWH) KZ KG TJ UZ TM AF Total EXPORT (GWH)  -  0 0  2668.1 230.1 2898.2 68.5 3.5 -  683.5 755.5 - 814.9 2736.6 1045 4468.6 2015 421 13 9 22 146 1184 1330 471 15 1285 1300 582 2940 3544

What Can Other Regions Teach Us? Energy Independence VS Energy Security The natural connection of hydro and thermal regions Bilateral vs Regional Different Business Models

The Mistaken Notion of Energy Independence

We must diversify our routes, our technologies and our markets Energy Independence or Energy Security? “On no one quality, on no one process, on no one country, on no one route, and on no one field must we be dependent. Safety and certainty in oil lie in variety and variety alone.” Winston Churchill We must diversify our routes, our technologies and our markets

The Example of South Asia

India – Bhutan - Nepal Interconnections

Lessons From South Asia’s Experience Financial insolvency can turn a surplus to a deficit and be a major road block State Owned Utilities operating under the discipline of the market can be engines of growth There is wisdom in linking hydro and thermal regions Economic Growth and Political Stability lie in Energy Security not Independence Energy Security lies in variety – more than one route! Diversification can be a win-win

Lessons From International Experience Economic Growth and Political Stability lie in Energy Security not Independence Financial insolvency can be a major road block There is wisdom in linking hydro and thermal regions Regional Infrastructure is built on the results bilateral plans and country specific investments Regional Coordination in planning, operations and training begin to build those enabling frameworks that reduce the detours – reduce time and cost Even a modest amount of trading can yield significant financial benefits for all Creative structuring combined with a history of trust (built above) can lead to truly regional investments Energy Security lies in variety – more than one route!

Levelized Cost of Electricity   Euro per kWh Fuel Min Max Coal 4 11.6 Gas CCGT 5.3 16.8 Gas ST 9.5 22.7 Nuclear 3.6 8.4 Hydro RoR 2.2 10.8

Which one is best

Benefits of Trade Over 4 years using actual consumption, generation capacity and cost data. $5.2 billion Every country a winner But not possible if everyone seeks energy independence

Questions?? Thank You! Matthew Addison Sr. Power Market Advisor E-mail: maddison@deloitte.com Phone: +1 703 944 3879