Challenges of the participation of private sector in the development of the Greater Mekong Subregion Power Trade (GMS-4)

Abstract

Energy and power market integration is one of the eight priorities defined in the strategic framework 2012-2022 of the GMS Economic Cooperation program, relying on interconnection infrastructure development and power trading. Strongly promoted by the Asian Development Bank, power trade is expected to better allocate power supply and to contribute to the regions growth. However, this ambition requires large investments, which has resulted in seeing private sector as a critical ingredient to the power sector development, and, accordingly, power trade. Focusing on GMS-4 countries, the research expounds the current features of private participation in the power sector and its fit in the regional grid

then examines the limitations of private participation to the development of regional power trade, by introducing the angle of cross-border infrastructures investment specificities. This thesis offers a comprehensive understanding of the relation between electricity market structures, power trade institutions and the diversification of actors of the electric grid, and argues that the GMS institutions gradual approach toward an integrated electricity market, orchestrated by the Regional Power Trade Coordination Committee (RPTCC), is contrasting with the inclusion of private sector investment in the regional grid. In addition to coping with heterogeneous macroeconomic and legal frameworks in the event of cross-border infrastructure development, private sector participation isnt backed by current institutions or regional initiatives. Current institutions are accommodating national state-held power sectors and are building on bilateral agreements. The present researchs comparison with other regional power trade experiences highlights that the central role of transmission system or the diversification of power purchase agreements may deserve to be integrated to GMS initiatives.