A Regional Common Use Transmission Assets Concept for Advancing Multilateral Power Trade in ASEAN

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:

1. 1. 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.
   2. 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.
   3. Regional Market Benefits: Regional market structures would provide mechanisms for identifying common-use project benefits while allocating costs fairly for new assets.
   4. 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.
   5. 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.