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Motoo Konishi , Country Director Central Asia, World Bank July 20/21, 2009 Almaty , Kazhakstan

Central Asia International Cooperation Meeting Responding to the Compound Crisis in Central Asia: A Framework for Action. Energy: Balancing Demand and Supply, Generation and Conservation, Big Dams and Alternative Energy Technologies. Motoo Konishi , Country Director Central Asia, World Bank

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Motoo Konishi , Country Director Central Asia, World Bank July 20/21, 2009 Almaty , Kazhakstan

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  1. Central Asia International Cooperation MeetingResponding to the Compound Crisis in Central Asia: A Framework for Action Energy: Balancing Demand and Supply, Generation and Conservation, Big Dams and Alternative Energy Technologies MotooKonishi, Country Director Central Asia, World Bank July 20/21, 2009 Almaty, Kazhakstan

  2. What We Know • Winter energy shortages are pervasive while summer surpluses do not maximize revenue • Water conflicts cast a shadow on regional stability and economic well-being Water shortage about 600 million cubic meters • Today’s circumstances are the result of a many factors: • Institutional and political transition from the Soviet era • Constrained investment in new and existing infrastructure • Economic growth • Nature and the elements • The situation is worsening and feeding upon itself: A negative dynamic for the region 2

  3. What We Know cont’d • Collectively, the region is well-endowed in energy resources • Per capita water resources are constrained but manageable •  Benefits to cooperation are identifiable and real • Risk mitigation for energy supply; Lower energy costs; Improved environmental management; More efficient use of water 3

  4. What We Observe • Donors are engaged • Multiple studies and analyses provide an understanding of issues and options • A wide variety of solutions have been identified JICA (2009) Intra-Regional Cooperation on Water and Power USAID (1999) Assessment of Water Management World Bank (2004) Water and Energy Nexus ICWC (2007) Achievements and Challenges of the Future ADB (2000) Regional Economic Cooperation in Central Asia: Electric Energy UNECE (20070 Our Waters: Joining Hands Across Borders UNECE World Bank UNRCCA GTZ ADB EBRD USAID Switzerland UNDP ….. Load shedding Water productivity enhancement Rehabilitation (energy and water) Payment agreements CASA 1000 New generation Reduced system losses Water sharing Water re-regulation Summer energy exports Additional interconnections Strengthened grid operations Strengthen IWRM capacity 4

  5. What We Observe cont’d • We have not seen desired results on water releases • Past agreements have not held • No consensus on suggested solutions EVOLUTION OF AGREEMENTS 1992 1998 1998 • Ownership by Central Asian players is limited • Need to increase ownership of technical work • Need to increase links between analysis and discussion • Integration across sectors is limited • Win-win solutions must include both energy and water sectors • Credible analysis must model energy, water, and the relation between the two 5

  6. Lessons from International Experience The challenges and opportunities faced in Central Asia are familiar to many other regions • Laos PDR is developing 1070MW, $1.25 billion Nam Theun 2 hydropower project for regional energy trade, through a public-private partnership • Significant water savings are possible in the Eastern Nile region (Ethiopia, Sudan, and Egypt) through improved management of storage • The Columbia River Treaty reduces avoids $100m in flood damages annually and leveraged low cost energy for economic development THESE EXAMPLES ARE NOT WHOLLY TRANSFERABLE BUT THEY INDICATE A FRUITFUL AND REALISTIC PATH FORWARD 6

  7. World Bank and Central Asia Energy • World Bank will promote a consolidated program emphasizing: • Technical analysis • Ownership by Central Asian countries • Consultation among Central Asia countries • Integration across energy and water • The work program will be structured around three themes: • Winter Energy Deficits/Summer Surpluses • Regional Transmission and Dispatch • Energy-Water Nexus 7

  8. 1. Winter Deficits, Summer Surpluses • Current winter shortages cannot be ignored • Constraints to a long term solution include: Transmission; Hydrology; Payment mechanisms; Focus on national self-sufficiency in generation Objective:Optimize summer/winter regional energy trade on a commercial basis • Accommodation for winter 2009 • Interim (2-3 year) stop-gap arrangements • New long term investments in energy, water and/or institutions 8 8

  9. 2. Regional Transmission and Dispatch • Central Asia has a strong energy profile: • A rich complementary mix of generation resources (thermal in some countries and hydro with storage in others) • Opportunities for managing demand across different time zones use patterns • Potential for significant regional exports • A functioning core bulk power transmission system • But many opportunities remain unexploited due to transmission and dispatch constraints Objective:Strengthen the transmission and dispatch system by enhancing the capacity of the Coordinating Dispatcher Centre (CDC) • Identify opportunities for unified operation (short term) • Manage power pools, optimize transmission system operation (long term) 9

  10. 3. Energy-Water Nexus • One reason for lack of progress is the practice of treating energy and water separately • compromises ability to understand and assess benefits • detaches flow management from investments in water infrastructure • Decision-makers need to: • Be able to ask questions about energy and/or water futures • Get answers for both water and energy sectors • Own a widely accepted tool for cross-sectoraldiscussions Objective: Implement an Energy-Water Framework to improve understanding and management of energy-water connections • INPUTS : • Shared data and tools to link water and energy models • Regional technical focal point and International Advisory Panel • OUTPUTS: • Investments in both water and energy (incl. fast track projects) • Resource management system to analyze integrated solutions and monitor outcomes 10

  11. Donors involvement This initiative requires multiple players. Donor involvement is critical. Immediate requests • Provide feedback and suggestions on concept • Assist in establishing inventories of studies, models, data and proposed solutions • Continue/scale up funding (e.g., multi-donor regional trust fund) • Participate in Donors Roundtable in January 2010 11

  12. Summary of Key Messages • 1. WE KNOW • A lot about the basics that encourage and limit regional cooperation • That the challenges and opportunities faced in Central Asia are familiar to many other regions • 2.WE PROPOSE • To focus the World Bank energy program on three key themes: • Winter Energy Deficits/Summer Surpluses • Regional Transmission and Dispatch • Energy-Water Nexus • 3.WE EMPHASIZE • Energy and water must be treated together, at national and regional scales, to understand and pursue the possibilities of cooperation • Donor coordination will be essential in leveraging impact

  13. Thank-you For further information Mkonishi@worldbank.org

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