Address by Mr Rod Hilton, Deputy Australian High Commissioner to India
South Asia Power Summit 2018
Friday 16 November, The Leela Palace, New Delhi
(check against delivery)
Good morning everyone.
Thank you to The Asia Foundation, Ms Baruah, and the Confederation of Indian Industries (CII), Ms Banerjee, for inviting me to be part of the Second South Asia Power Summit given the esteemed gathering here today.
It is my pleasure to acknowledge:
Mr Ajay Kumar Bhalla, Secretary, Ministry of Power, India
Secretary Dasho Yeshi Wangdi, Ministry of Economic Affairs, Royal Government of Bhutan
Secretary Dr Sanjay Sharma, Ministry of Energy, Water Resources and Irrigation, Government of Nepal
- I would like to highlight these three gentlemen and their departments for their roles in driving reform in the energy sector. Thank you for your addresses this morning.
Mr Ved Mani Tiwari, CEO-Global Infrastructure, Sterlite Power Grid Venture Limited
Mr Deepak Amitabh, CMD, PTC India Ltd
- I couldn’t agree more on the role of business in taking this agenda forward
Ms Soma Banerjee, Executive Director Energy and Infrastructure, Confederation of Indian Industry; and
Ms Nandita Baruah, Country Representative, The Asia Foundation India.
(Introduction: energy demand in South Asia)
Delegates – we all know that electricity demand is growing rapidly in South Asia, and with high projected economic growth rates across the region, this demand will continue to rise.
To meet this demand, and also mitigate current shortages, we know that electricity supply systems in the region will need to be significantly expanded.
According to the Asian Development Bank, energy infrastructure investment in the broader Indo-Pacific region is likely to reach $15 trillion from 2016-2030.
But it is not just about infrastructure and finance.
If we are to achieve energy security in the region, we must also look at increasing cooperation and connectivity.
Looking at Bangladesh, Bhutan, India and Nepal – the BBIN countries – it is clear that there is significant energy potential with untapped hydropower, solar, natural gas and wind.
To best harness and develop these resources, the necessary infrastructure and financing will be required, but we will also need to see the continued development of regional institutional arrangements that allow cross-border power exchange.
That is not easy, as there are many challenging issues that can arise when considering cross border arrangements that may require the generation of energy in one country, transmission through another, and consumption in a third.
However, the presence of delegates from all BBIN countries here today demonstrates an increasing commitment to connecting energy markets, and that the momentum generated by the first Summit, held in December last year, is being sustained. Welcome to you all, and thank you all for travelling to Delhi for this event. I hope the conversation today will be a productive one.
(Australia’s commitment to energy security in South Asia)
Access to reliable and affordable energy is crucial to trade, economic growth and development. It will transform the lives of many millions of people who live without electricity, improve social and economic outcomes, and in turn contribute to a more stable and secure Indo-Pacific region.
These factors underpin Australia’s commitment to improving energy, food and water security throughout South Asia. That is why we are proud to be supporting this Summit through our Sustainable Development Investment Portfolio (SDIP), which is part of our South Asia Regional Development Program.
The Asia Foundation – one of our SDIP partners - has undertaken an important analysis on the region’s energy sector – including around access, distribution, infrastructure, markets and investment. The potential for BBIN countries to increase and diversify their energy sources is apparent, as is the potential for surplus energy to benefit neighbouring countries. There are also potential benefits both for climate mitigation and broader regional cooperation. The findings are outlined in a publication called “The Price of Power”, which is available online – and I encourage you to access it.
Other related work under the SDIP program has been conducted by Australia’s Commonwealth Scientific Industrial Research Organisation (CSIRO) which is helping to build a better understanding of the impact climate change will have on South Asia’s water resources.
Building this knowledge will help ensure that the region’s energy system, including the significant hydropower potential, develops over the coming years in a way that can accommodate changes in water availability. In turn, food security for over one billion people in the region will depend on the availability of a safe and reliable supply of water, and also energy for agriculture, storage and transportation of produce.
Understanding this broader nexus between energy, food and water security therefore remains critical.
(Energy security and changing regional energy dynamics)
Delegates - while there is a clear case for cross-border electricity cooperation and trade, the potential needs to be harnessed amid the rapidly changing dynamics of the energy sector.
In particular, it is likely that renewable energy will contribute a much larger share of electricity production in the coming years and supply projections are rapidly being revised upward.
Solar energy is rapidly emerging as a cost-effective energy supply option, relative to alternative sources, and with considerable growth potential.
Large scale photo voltaic (PV) solar is now the cheapest form of new capacity in India, The large scale (750 Mega Watts) Rewa solar mega project in Madhya Pradesh, brokered by the International Finance Corporation with Australian support, has stimulated several similar additional potential investments totalling 1,500 Mega Watts through new innovative financing and contracting arrangements.
Rooftop solar for captive industrial customers, especially when combined with cost effective energy efficiency measures, has also emerged as a cost effective option for meeting industrial electricity needs.
India’s success over the last 18 months in adding large-scale grid connected solar, of around 10 Giga Watts, has helped create investor confidence in the long-term stability of the sector.
In this vein, I should also acknowledge India’s leadership, together with France, in spearheading the International Solar Alliance. The Alliance intends to bring together solar resource rich countries to implement large-scale programmes such as solar agricultural pumps, promising affordable and reliable access to energy and mobilising finance for deployment of these technologies. The Alliance can, and will, play an instrumental role in carving a path for solar technologies to be rolled out in BBIN countries, and Australia is very proud and honoured to be a founding member.
The emergence of solar, together with the increasing contribution of cost-effective wind and hydropower investments, offers an exciting opportunity for South Asia – as both an innovator and consumer of green technologies - to move rapidly to a less carbon intensive energy sector.
As one example, pumped hydro-electric storage could provide a cost effective and innovative solution for overcoming intermittency issues associated with wind and solar energy production.
Such exciting developments and dynamics offer much benefit, but they will also have profound implications for the structure and operation of the electricity market over the coming decades. It will be important that delegates such as yourself continue the discussion on the impact of these new technologies on market structures, and cooperation.
(Mechanisms for increasing energy security)
Sustainable development in the Indo-Pacific is essential to a prosperous, stable and resilient region. It will require multi-sectoral and cross-jurisdictional cooperation. The power industry will play a significant role in devising innovative technical – and financing - solutions to develop storage capacity and maintain system reliability.
Public-Private Partnerships will be effective tools in realising energy solutions and viable, inter-connected networks across the region. Consumers will need to be empowered to both demand – and access – energy. Maintaining reliability will also require policy and regulatory reforms, and government has an important role in ensuring an appropriate enabling environment to incentivise private investment and transition to a modern, efficient and smart power system.
Meeting the region’s energy needs will also require quality infrastructure. Australia is a strong advocate for infrastructure investment in the Indo-Pacific that:
- reinforces an open, global economy;
- promotes fair and open competition;
- is based on strong and transparent rules;
- follows non-discriminatory, predictable regulatory systems;
- promotes robust social and environmental safeguards, including gender equality considerations; and
- meet genuine needs, and avoid unsustainable debt burdens.
The recent announcement by Prime Minister Morrison of a new Australian Infrastructure Financing Facility, which will provide grant and loan financing for priority projects in energy and other sectors, reflects Australia’s interest in a secure and economically stable Southwest Pacific – and broader Indo-Pacific – region.
Another way Australia is partnering with South Asia on these challenges is an increased focus on building our trade and investment relationships. This is important as it will be our education, science, and innovation partnerships in energy that will lead to new and exciting developments – made possible when we bring together our brightest minds and share knowledge and experience.
Australia is also a key resources provider. A number of new technologies, especially those in renewables, will require access to a number of strategic resources, which only a handful of countries have. Australia is a leader in this regard and holds reserves of these resources that will help build the secure and sustainable energy future we all desire.
(Conclusion)
Therefore, it becomes apparent that for us to have greater energy security, we must continue to build our economic relationships, promote more open markets, and increase trade, investment and people-to-people links among our countries.
Placing cross border cooperation on power at the centre of the regional agenda benefits from an alignment in national interest, and will be an important element of providing reliable and cost effective electricity supplies to consumers. It is essential to maximising the potential of South Asia’s energy resources.
Forums such as this Dialogue are critical mechanisms for deliberation on low-carbon energy pathways that meet the growth needs of countries in the region in the way that you all want.
I congratulate The Asia Foundation and CII, along with the support of the Ministry of Power and the Ministry of External Affairs, on convening this important dialogue for the second year running, commend all delegates for their participation as well as their commitment to advance the economic and social development of the BBIN subregion, through improved energy security.
Thank you.