Cross-Border Electricity Trade between India and Sri Lanka: Impact on Power System Operations

Recent developments in South Asia have the potential to increase the incentives for cross-border energy trade (CBET) between India and Sri Lanka. India's surplus power, including from its rapid expansion of wind and solar generation, provides an incentive for it to increase investment returns through exports. Sri Lanka is considering options to increase its power supply, and CBET could alleviate the need for investments in new thermal generation capacity, while giving it access to India's large and diverse power system. Finally, CBET can facilitate renewable energy (RE) integration by allowing the two countries to more efficiently harness balancing resources and smooth out wind and solar variability over larger geographic areas. This study builds on several prior analyses of a potential high-voltage direct current transmission link between India and Sri Lanka. Uniquely, the study makes use of a detailed one-year, 30-minute resolution unit commitment and economic dispatch (UC&ED) model of both countries to examine the technical and economic impacts of CBET between India and Sri Lanka in the year 2025. The study finds that CBET, enabled by a 500-MW high voltage direct current transmission link, could generate annual production cost savings of USD 180 million and improve power system operations. Through better utilization of the most efficient generators, generation from relatively expensive natural gas plants in Sri Lanka is displaced by lower cost imports from India. In addition, increased flexibility through exports reduces RE curtailment in India's Southern region by 400 GWh annually. While the study captures many previously unconsidered intertemporal operational constraints, it does not provide a complete characterization of system operations with a high-voltage direct current interconnection. Additional work should include a dynamic analysis of system stability following interruptions to the direct current interconnection, an AC power flow analysis and consideration of any non-technical barriers to trade which might prevent the optimization of CBET between India and Sri Lanka at 30-minute timescales.