1. Sector Planning & Policy Issues: The Energy Sector
Session on Planning & Policy
Rita Nangia
Asian Development Bank
The views expressed here are those of the presenter and do not necessarily reflect the views or policies of the Asian Development Bank (ADB), or its Board of Directors, or the governments they represent.

2. Session Description The session will cover -
Major energy trends in Asia
Sector planning and policy issues
Challenges and opportunities to integrated energy markets

3. Overview of the Session
Part I
The GMS energy scene
Sector planning issues
Part II
Interactive session

4. Access to Electricity Varies...
Source: World Development Indicators 2004 & World Energy Outlook 2002

5. Access to Electricity Varies...
Source: Key Energy Statistics, 2005, International Energy Agency & World Development Indicators Online

6. Overall Quality of Electricity Supply Varies...
Source: The Global Competitiveness Report

7. The Greater Mekong Subregion
Land area 2.5 million km2 Population Million

8. The GMS Economic Conditions
Myanmar
Land area: 677,000 km2
Population: 55.4 M
GDP per capita: US$ 176
Yunnan & Guangxi, PRC
Land area: 624,000 km2
Population: 93.8 M
GDP per capita: US$ 842
Thailand
Land area: 513,000 km2
Population: M
GDP per capita: US$ 2,727
Viet Nam
Land area: 332,000 km2
Population: 83.1 M
GDP per capita: US$ 622
Cambodia
Land area: 181,000 km2
Population: 13.8 M
GDP per capita: US$ 393
Lao PDR
Land area: 237,000 km2
Population: 5.6 M
GDP per capita: US$ 491
Source: Beyond Borders – Regional Cooperation Strategy & Program Update, ; Asian Development Outlook, 2006; ADB Key Indicators, 2006; FAO/People’s Govt. of Yunnan Province;

9. The GMS Energy Scene
Hydro: 333,700 mega watts Coal: 59,340 million tons Gas: 1,378 billion cubic meters Oil: 478 million tons
Source: GMS Energy Strategy July 2006 Proceedings, work in progress

10. Source: GMS Energy Strategy July 2006 Proceedings, work in progress
Energy Resources
Myanmar
Hydro: 100,000 MW
Coal: MT
Gas: 160 BCM
Oil: 32 MT
Yunnan, PRC
Hydro: 150,000 MW
Coal: 23,580 MT
Gas: 32 BCM
Oil: 226 MT
Cambodia
Hydro: 15,000 MW
Gas: BCM
Oil: MT
Viet Nam
Hydro: 30,000 MW
Coal: 32,250 MT
Gas: 144 BCM
Oil: 82 MT
Thailand
Hydro: 12,700 MW
Coal: 2,400 MT
Gas: 943 BCM
Oil: 124 MT
Lao PDR
Hydro: 26,000 MW
Coal: 910 MT
Source: GMS Energy Strategy July 2006 Proceedings, work in progress

11. Challenges and Opportunities
Big disparity in the size of the countries’ markets.
Four countries (PRC, Thailand, Vietnam and Myanmar) have transmission systems that interconnect most of their internal demand centres. Two countries currently have no nationwide transmission systems (Lao PDR and Cambodia).

12. Challenges and Opportunities (continued)
Three countries (Myanmar, Lao PDR and Cambodia) have internal demand levels that do not allow for the development of large-scale generation projects that are only based on internal load. Therefore the possibilities of obtaining energy at low (competitive) prices are linked to cross-border trading.
Constraints to develop new hydro power in Thailand and there is a growing concern that natural gas reserves are not sufficient to satisfy future load growth. Coal resources are also limited to lignite, which has historically been associated with significant environmental problems.

13. Historical Growth Rates for Electricity…
****
*** * **
Sources:
*ADB Key Indicators, 2005
**RPTCC Presentation
***Viet Nam Master Plan VI Essentials
****ADB, MKOC Study on Electricity Production

14. National Electricity Forecasts in GMS -
Item
2004
2010
2015
Ave. Growth (%)
Peak Demand, MW
Cambodia
138
406
500 5
Lao PDR
251
492
665 7
Myanmar
1,425
2,012
7,357 53
Thailand
19,326
29,808
40,978
Viet Nam
8,253
19,000
32,000 14
People's Republic of China
62,740
103,850
141,310
Total GMS
92,133
155,568
222,810 9
Source: Country Presentations RPTCC Meeting, Myanmar 2006

15. National Electricity Forecasts in GMS -
Item
2004
2010
2015
Ave. Growth (%)
Generation Capacity, MW
Cambodia
142
639
1,194 17
Lao PDR
660
2,305
6,971 40
Myanmar
1,725
3,416
9,946 38
Thailand
26,443
34,668
47,898 8
Viet Nam
11,197
24,447
36,520 10
People's Republic of China
80,154
136,815
184,348 7
Total GMS
146,764
202,290
286,877
Source: Country Presentations RPTCC Meeting, Myanmar 2006

16. National Electricity Forecasts In GMS -
Item
2004
2010
2015
Ave. Growth (%)
Load/Demand, GWh
Cambodia
625
1,793
3,800 22
Lao PDR
1,220
2,721
3,610 7
Myanmar
5,402
21,288
64,364 40
Thailand
127,473
193,530
265,788
Viet Nam
46,240
97,111
164,961 14
People's Republic of China
386,600
619,000
815,800 6
Total GMS
567,560
935,443
1,318,323 8
Source: Country Presentations RPTCC Meeting, Myanmar 2006

17. GMS Energy Strategy Policy & Planning Issues
Energy demand, access, and quality of supplies
Energy security
Expanding private sector participation
Energy and environment

18. Energy Demand, Access, and Quality of Supplies
Most country level forecasts see energy demand growth between 8% to 16%. Demand has to be met to ensure that adequate energy at reasonable price is not a constraint to economic growth.
Uneven access across countries in the region and even within country - rural energy access at affordable prices is important.
Quality, reliability, and security, important challenge

19. Energy Security
Rapid motorization and a vehicle boom increases the region’s oil dependence dramatically in the next two decades.
Poor production prospects, weak demand management, insignificant penetration rates for alternative energy sources, and high global oil prices make the region insecure and vulnerable.
In addition, there are no institutional mechanisms to deal with energy disruptions arising out of emergency or supply shocks.

20. Expanding Private Sector Participation
Presently, most energy entities are owned through public sector. Isolated regional private projects such as Nam Theun 2.
Large investment needs for energy: Country level resources are inadequate.
More attractive to harness private sector investments through regional approach.
Need to attract private initiatives also in the area of energy efficiency.
Need cost recovery, sector reforms, and greater competition to improve efficiency for energy.

21. Energy and Environment
Integrating environmental concerns at planning stage is usually a better alternative than clean up at later.
Cross-border environment impacts need to be integrated at planning stage.
Often environmental issues require cross-sectoral policy action - e.g., urban transport and air pollution as a result of energy use pattern.
Awareness and public education
Higher share of renewables and alternative energy

22. Sector Planning Basics
Part II:
Interactive Session - Identify step-by-step approach to sector planning

23. Developing the GMS Energy Strategy
Use the energy strategy model MESSAGE to develop a regional energy sector strategy.
MESSAGE utilizes existing domestic and internationally available information to formulate alternative energy supply strategies, each of them optimized under different sets of assumptions (“scenarios”) reflecting future uncertainties.
These strategies will be assessed for robustness of policy options, and policy recommendations will be based on these analyses.
The advantages of expanded cooperation among the GMS countries will be assessed by comparing country strategies with integrated strategies for the GMS.

24. Formulating Energy Strategies Using MESSAGE
MESSAGE identifies a flow of energy from primary-energy resources to useful-energy demands that
Is feasible in a mathematical and an engineering sense, and at the same time
Represents the investment choices that lead to the least cost of all feasible energy supply mixes to meet the given (expected) energy demand.
Feasibility is defined by constraints imposed, for example, by the environment, energy resources, and technology build-up.

25. MESSAGE Model for Energy Supply System Alternatives and their General Environmental Impacts
Input
Energy system structure (including vintage of plant and equipment)
Base year energy flows and prices
Energy demand projections (MAED)
Technology and resource options & their techno-economic performance profiles
Technical and policy constraints
Output
Primary and final energy mix
Emissions and waste streams
Health and environmental impacts (externalities)
Resource use
Land use
Import dependence
Investment requirements
MESSAGE

26. Formulating Least-Cost Strategies
Formulating strategies from model solutions requires the assessment of political feasibility including possible implementation barriers such as the unavailability of investment financing. A crucial aspect of strategies will therefore be the possible involvement of the private sector.
The most important strategy will describe a maximum of GMS-wide integration of the individual energy systems.

27. Key Messages
Need an integrated approach both across sectors and across regions.
Need to mainstream cross-border public goods such as network expansion of markets and resulting efficiency, reliability, and security gains, as well as public bads - cross-border pollution, downstream impacts, haze, etc.
Need attention on harmonization of policies as also institutions.
Need comprehensive capacity building plans.