A Regional Common Use Transmission Assets Concept for Advancing Multilateral Power Trade in ASEAN
4 November 2024
Highlights
Common-use transmission assets are those that provide widespread benefits across a market area, rather than serving only the countries or jurisdictions hosting the infrastructure.
These assets were integral from the start in two major multilateral power markets: the Southern African Power Pool (SAPP) and the Central American market (SIEPAC), where transmission design, financing, and cost allocation were developed alongside the markets themselves.
The planning and coordination for multilateral common-use transmission projects benefit significantly from development banks and finance institutions, as demonstrated in other regional markets.
In ASEAN, several potential common-use transmission projects could progress with the support of development banks, aligned with efforts to develop a multilateral power trade (MPT) market. There are several initial conclusions that ASEAN can draw regarding common use assets, including lesson learned from other regions employing this concept:
Advancing Infrastructure: Given its potential for optimal cost allocation, the regional common-use asset concept should be examined by ASEAN stakeholders as a way to accelerate ASEAN Power Grid (APG) infrastructure development and to unlock MPT opportunities.
Identifying Assets: In the absence of regional market structures, a region-wide technical study is essential to assess how interconnections can benefit multiple countries. The AIMS process could be tasked with this analysis.
Regional Market Benefits: Regional market structures would provide mechanisms for identifying common-use project benefits while allocating costs fairly for new assets.
Collaborative Financing: It’s critical to work with development finance institutions (DFIs) and partners to create a financing model tailored to the region’s needs, including for common use assets.
Agreement on Cost Allocation: For the common-use asset model to succeed, participating countries must agree on cost allocation and recovery methods, potentially through a standardized wheeling charge methodology.