especially in India) to satisfy its projected demand profile.<sup>9</sup> We compare this baseline with a scenario that has a fully integrated regional system. In the model, we represent this as capacity investments and capacity utilization decisions made to minimize the present value of investment and operation costs across the region – as if the region were one power pool. While this is certainly not what one might expect right away with gradual increases in cross-border cooperation and trade in the near-to-medium term,<sup>10</sup> it does illustrate the potential benefits of cross-border trade and investment. It also illustrates the kinds of investments in both generation and transmission, and the nature of power flows, that increased cross-border cooperation and trade could engender.

We run two other cooperation scenarios for different sub-regions of SAR. The first subregional cooperation scenario focuses on the eastern part of South Asia – Bangladesh, Bhutan, India and Nepal. The second sub-regional cooperation scenario focuses on Afghanistan and Pakistan. As described further in Section 5, we also have looked at the base and full cooperation scenario under several different assumptions about model parameters. In particular, we have checked what happens to the model results if we assume the capacity investments currently in project pipelines are slowed and unserved demand takes longer to be reduced.

# **3.  Data and Assumptions**

The volume of data needed by this type of study is substantial. The key data items needed in this analysis include physical characteristics of existing as well as candidate power plants, economic data, system reliability data and load forecasts. The description of data items, their sources and various assumptions we made under each data category are briefly discussed below.

# **3.1  Physical characteristics of power plants and transmission interconnections (existing and candidate)**

For the existing thermal electricity generation plants, information needed includes plant capacity, utilization factor, plant vintage, heat rate (or thermal efficiency) and heat and pollutant contents of the fuel. For hydro power plants information needed are type of plant (e.g., storage, run of river or pumped storage), capacity utilization rate by month or season as water discharge varies every month, especially in the case of run of river type hydropower plants. Resource availability information, in terms of capacity utilization, is also needed for other renewable sources such as solar, wind and biomass. For transmission interconnection, information needed are power flow capacity, voltage level and distance between interconnecting points. All information mentioned above are needed for all power plants and transmission interconnections that can be candidates for new addition during the planning horizon (2015 to 2040).

In Afghanistan, the list of existing as well as candidate power plants and their physical characteristics are taken from the power sector master plan prepared by the Asian Development Bank (ADB, 2013a) and a study commissioned by the Special Inspector General for Afghanistan Reconstruction in 2010 (SIGAR, 2010). All candidate hydropower plants in Afghanistan are assumed to be run of river type. In Bangladesh, the list of power plants and their physical

> 9 This includes Nepal-India, Bangladesh-India, and Bhutan-India; it also includes the 1000MW for Afghanistan and Pakistan from Central Asia under the CASA project. 10 It is what would emerge eventually from successful implementation of the SAARC’s 2014 agreement on coordinated development of a regional power market.

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