**Table 4: Changes in cumulative electricity generation for the 2015-2040 period from the baseline**

||Diesel|Gas<br>Turbine|Hydro|Solar|Coal/Steam|Wind|Combined<br>Cycle|Biomass|Nuclear|Total|
|---|---|---|---|---|---|---|---|---|---|---|
||||Absoluteg<br>|eneration<br>|(TWh)chang <br>|e from the<br>|baseline<br>||||
|Afghanistan|0|0|190|0|0|82|0|0|0|271|
|Bangladesh|-8|0|0|1|-1,206|0|-331|0|0|-1,544|
|Bhutan|0|0|1,110|0|0|2|0|0|0|1,112|
|India|0|35|721|9|-3,799|-478|485|-47|-29|-3,103|
|Nepal|0|0|3,598|0|0|0|0|0|0|3,598|
|Pakistan|1|-41|-17|0|-332|-40|-16|0|15|-431|
|Sri Lanka|0|1|0|0|22|2|-19|0|0|6|
|Total|-7|-5|5,602|10|-5,315|-432|120|-47|-14|-90|
|||||% chan|ge from the ba|seline<br>|||||
|Afghanistan||-5.0|39.3|||5156.7||||55.7|
|Bangladesh|-67.6|-100.0|0.0|0.6|-35.2|0.0|-44.6||0.0|-34.8|
|Bhutan|-14.8||86.5|||||||86.7|
|India|-66.6|74.8|10.6|1.3|-7.9|-13.0|54.2|-2.0|-0.7|-4.7|
|Nepal|||605.7|5.2||||||605.0|
|Pakistan|7.3|-43.9|-0.5||-7.2|-3.3|-5.4|0.0|1.8|-4.0|
|Sri Lanka|0.0|4.5|0.0|0.0|6.1|1.3|-23.8|0.0||0.9|
|Total|-23.2|-3.4|43.5|1.1|-9.4|-8.5|5.9|-1.9|-0.3|-0.1|

# **4.3  Electricity Supply Costs**

The changes in cumulative electricity supply costs over 2015-2040 due to the full regional electricity cooperation and trade, relative to the baseline, are illustrated in Figure 3. As illustrated in the figure, regional trade in the power sector would lead to $222 billion in undiscounted net savings of power supply costs in the region during the 2015-2040 period. When discounted at the assumed 5% real discount rate, this net savings would be $97 billion in 2015 dollars. This is about 5% of the total electricity supply costs during the 2015-2040 period. The cost savings mainly come through the savings in operational costs, which fall by $270 billion US$, undiscounted, and $119 billion when discounted. At the same time, there would be a net increase in investment and fixed O&M costs for both expansion of generation capacity and transmission interconnections. The total regional investment (including fixed O&M costs) would be $48 billion, undiscounted and $22 billion, discounted. The ratio between the discounted benefits and costs stands at 5.34. This indicates the extent to which regional electricity cooperation is beneficial for the South Asia region as a whole.<sup>15</sup>

> 15 In principle, it would be possible with the model to assess net benefits for individual countries using the shadow prices generated by the model’s cost-minimization as representing competitive market prices.  In practice, however, this turned out to be difficult to do, even if one accepted a competitive power market as the benchmark for calculating different countries’ net benefits.  This was due in part to the presence of congestion rents in a number of interconnections and demand blocks in the optimization.  Further work is needed to assess different potential countrylevel distributions of regional benefits from trade.  However, it seems clear that there are (infinitely) many distributions of generation and congestion rents such that all participants are better off than in the baseline.  Which distributions might emerge will depend on the relative degree of market power of different supply sources, among other factors.

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