# Presentation: 096729

## South Asia Regional Initiative for Energy(SARI/Energy)

- Pre-Solicitation Conference
- January 27, 2006

**Notes:**
Q’s for Steve:
Are the numbers on 2.2 Annual?
Are you sure about the wind MW number for India, I thought it was closer to 4000 MW

## Overview

- Context
- About SARI/E
- Objectives of this Solicitation
- Tips About the Operating Conditions

## Context

- Energy Security in South Asia

## South Asia as a key U.S. Partner

- South Asia is one of the most promising U.S. trade partners and global allies
- India is one of the top FDI destinations in the world; and is opening the FDI environment
- South Asia is also one of the least stable regions in the world
- CIA data indicates that in 2004 greater than 40% of global terrorist acts took place in India
- Stability requires a successful economy with stable growth
- GDP growth >6% & increasing
- Stable, growing economies require energy security
- Energy intensity is high, approx 3x the U.S.
- Diversification is low, and exposure to volatility in supply & pricing is high
- Regional drive for Energy Security is high; but is predominantly outward looking
- Relies as much on sound indigenous solutions as it does import strategy

## Regional Energy Trends¡

- Energy access is <50%
- Growing gap for commercial energy needs
- Resulting in high cost, often petroleum fueled, captive power
- Import dependency is high
- Regionally, an average 50% of commercial energy needs are met through imports, and are petroleum dependent
- Indigenous conventional & renewable resources in South Asia are significant but unequally distributed and inefficiently utilized
- Estimates at ~47,000 mtoe, with ~800 mtoe in renewables
- Plant load factors average ~50%
- Hydro development at ~10% of potential, Wind at < 15%
- Intra-regional trade is low
- <4% of imports of any sort are internal to the region
- <1% of ***energy ***imports are internal to the regions

## Energy Security Challenge

**COMPETITIVE**

**RISKY**

**Notes:**
Energy is critical to economic growth.  Currently energy imports putting pressure on the competitiveness of countries, foreign reserves, and economic growth  
India and Pakistan face potential energy security risk compared to competing economies and developed economies

## Approaches to & Benefits of Energy Security

- Access & Sustainability:
- Increasing sustainable energy access can result in:
- 50-70% increase in rural incomes
- Employment increases of 51% on average, with skilled employment increases of 78%
- Health & Education rates also increase measurably
- Availability, Reliability & Affordability
- Increased trade & investment, and grid interconnections can result in:
- Strengthened & accelerated overall levels of, and affordability of, resource development
- Captures complimentarity of load profiles, reducing peaking needs & system costs
- Strengthen political & economic linkages in the region

## How We Operate

## Eight SARI/Energy Member Countries

- .

- .

- .

**MALDIVES**

**SRI LANKA**

**INDIA**

**NEPAL**

**BANGLADESH**

**BHUTAN**

**PAKISTAN**

**AFGHANISTAN**

## SARI/E Management Structure

**Advisory Board **is composed of the South Asian Mission Directors, the RDM/A Director, the ANE/TS Office Director, and the South Asia Office Director
**Program Management Team** is based in India
**SARI/E Country Coordinators (CCOs) **in all 6 presence countries
**Meetings**
- SARI/E Champions Meeting – 1/year
- Implementing Partners Planning Meeting – 1/year
- CCO’s & PMT – 1/quarter

## SARI/E Implementing Partners

**Nexant:** Technical assistance and training
**U.S. Energy Association**: Regional partnerships
**Winrock**: Small grants
**U.S. Chamber of Commerce**: Business advocacy
**U.S. DOE National Renewable Energy Laboratory**: Renewable energy technology mapping & support

## A Sample of our Partner Activities

- Nexant:
- Analysis & assistance for regional energy trade & investment
- Training on rural energy, distribution, regulatory reforms
- Reports on energy security and regional energy trade
- NREL:
- Wind & Solar Mapping in Sri Lanka, Maldives, Afghanistan, Pakistan
- Winrock: Cross-border Grants
- 31 grants totaling >$750,000 made to 54 institutions in 5 countries
- USEA: Regional Partnerships
- 5 Partnerships: Regulation, Transmission, Media, Distribution Utilities, Parliamentarians
- USCoC: Advocacy in Business Sector
- South Asia Regional Energy Coalition (SAREC) roundtables

## SARI/Energy Results in partnership with USAID bilateral Missions

**Legal framework for cross-border energy trade**
- Assisted on energy legislation in the four historic presence countries, Regulatory strengthening
**TA to Regional energy trades under negotiation**
- E.g. Nepal West-Seti, NOC-IOC, etc
**Focused advocacy and outreach campaign for cooperation**
- SAREC media roundtable events
**Spread best practices for utility operations, and on energy efficiency**
- Energy efficiency standards & Sustainable Guarantee Fund in Sri Lanka, Regional Rural Energy Training Network (RETN)

## Objectives of this Solicitation

## Results Framework

**SO: Promote energy security in South Asia**

- IR1: Increased access to diversified clean energy supply

- IR2: Harmonize markets to enable regional energy trade

## Task 1: Energy Security 

**OBJECTIVE & *****EXAMPLE *****ACTIVITIES**
**Foster Regional Cooperation on Energy Security**
- Analysis of energy security status in South Asia
- Sharing of data between countries on their energy sectors
- Regional study on capturing complimentarity of National Grid Interconnections
- Promotion of the advantages of cooperative approaches to meeting energy security needs
- Facilitate development of the SAARC Energy Center
- Strengthen SAARC Energy Working Group processes if and where appropriate

## Task 2: Clean Energy Access in South Asia

**OBJECTIVES:**
**Technical Assistance**
- Strategic diversification of clean energy
- Reduced exposure to fuel/supply volatility
**Project Development**
- Spreading use of clean energy; sustainable technologies/fuels
- Spreading models for energy access, improved operational efficiencies, &c
**Training**
- Renewable & distributed sources
- Distribution reform & energy efficiency

## Task 2: Clean Energy Access in South Asia

**EXAMPLES:**
**Technical Assistance**
- Analysis of optimal models to facilitate clean energy access for communities with given socio-economic conditions
- Develop bankable documents for a large grid-scale renewable projects, or smaller scale community projects
**Project Development**
- Pilot projects in unproven regions using proven models
- Public-private partnerships for projects to increase clean energy access
- Sustainable Guarantee Funds for ESCO’s
- Facilitate use of DCA or GDA mechanisms for financing energy projects
**Training**
- Increased Efficiency &/or Reliability of energy to industrial sources
- Best practices for distribution systems, rural electrification &c

## Task 3: Market Models that Foster Trade & Investment

**OBJECTIVES:**
**Training**
- Educate regulators, grid operators, policy makers & private sector on how successful deals and successful markets are formed
**Executive Level Policy & Investment Forum**
- Allow investors & developers to dialogue with senior policy makers on what is needed to open investment
- Bring together key deal makers from around the region
**Legal, Regulatory & Institutional Reforms**
- Harmonize practices to facilitate cross-border trade
**Facilitating Trade and Investment**
- ID sponsors, ID deal structures & financing mechanisms
- Create the potential for trade

## Task 3: Market Models that Foster Trade & Investment

**EXAMPLES:**
**Training **
- Market Structures that Enable Trade & Investment
- Case studies on successful cross-border T&I
**Executive Level Policy & Investment Forum**
- Regional Public and Private Sector Participation
- Topical on mechanisms needed to facilitate T&I
**Legal, Regulatory & Institutional reforms**
- Harmonize tariff structures, grid codes & standards, regulatory structures
**Facilitating Trade and Investment**
- Innovative approaches to facilitate financing & successful projects: DCA, GDA, Guarantee Funds & Risk Guarantees working with gov’s, MLBS, donors, Public-Private Partnerships, &c
- Technical Assistance for specific deals

## Task 4: Program Management

- Headquarters Location in New Delhi
- Key Staff located in New Delhi
- Regional offices with dedicated country staff as needed
- Meetings:
- One annual meeting in region with stakeholders (70-150 ppl) *state of the art conference organization requirements*
- One annual meeting for integrated implementing partner planning with select stakeholder involvement (15-30 ppl)
- Additional program meetings as often as quarterly (10-15 ppl)
- Annual Work Plan, Reporting &c as normal

## Tips on the Operating Environment

## Challenges & Political Sensitivities

- Intergovernmental relationships lack a high degree of trust & confidence in region;
- SAARC process is slow;
- Political risks are high
- Many countries feel at a competitive disadvantage and would rather wait than under-sell their resources
- There is virtually no cross-border infrastructure of any kind
- The reform process stumbles along;
- Regulations & tariff structures tend to be somewhat volatile,
- Contract enforceability remains a challenge
- There is a significant portion of the population and the politicians that lack a willingness to pay for services, resist private sector involvement/ownership

## Operating Environment

- Extremely sophisticated commercial base in India and the region
- IMPLICATION: Work must be of extremely high commercial quality in order to accomplish targets
- IMPLICATION: Regional capability to conduct this work is very high and should be utilized to the greatest degree possible
- A wide disparity of capability in the region; e.g. Afghanistan vs. India education & development levels
- IMPLICATION: Leveraging experiences & resources of one country for the benefit of another is key
- IMPLICATION: Flexibility & adaptability in approach are key!
- Security risks in this region are high
- IMPLICATIONS: Contractor must be willing to operate in these environments

## Programmatic Considerations

- Huge scope.  Small budget.
- IMPLICATION: Close collaborate & joint planning with SARI/E implementing partners will be a requirement
- IMPLICATION: Ability to focus on 2-3 key annual objectives through paths of least resistance is key
- IMPLICATION: Priority on leveraging resources & innovative partnerships with private sector, GDA, DCA, donors & others
- USAID bilateral Missions in many countries do not have energy programs, and/or have significant competing priorities: e.g. Pakistan and Afghanistan
- IMPLICATION: Critical to work closely with bilateral Missions; ALL SARI/E SUCCESSES HINGE ON THIS COOPERATION
- IMPLICATION: Important to distinguish between activities that are regional in nature vs. those that are country-specific

## The SARI/E Network

- Extremely supportive network of senior champions has been built over the past 5 years.  They are absolutely central to success.
- IMPLICATION: Network must be preserved and strengthened
- Political Will varies considerably
- IMPLICATION: Ensure direction is correct/synchronized, early buy-in and close coordination with relevant decision makers
- IMPLICATION: Working with sector/projects that has greatest gain will be critical for success (e.g. regional leading private sector firms)

## Operational Leveraging

- There are a number of donors and ILI/MLBs operating in this environment with significant resources
- IMPLICATION: for success to occur coordination and leveraging of resources will be critical
- There is a large and growing, globally competitive, extremely sophisticated private sector presence in the region.  All are looking for good investments.
- IMPLICATION: must look to these entities as facilitators and partners for opening trade and investment across borders and at the community level

## For more info:www.sari-energy.org