Introduction

South Asia, the most populous region of the world, is increasingly being recognized as a key player in the global energy sector due to its strategic location, growing energy demand, and significant renewable energy potential. The region is one that is witness to economic vibrancy, demonstrating strong economic growth as a whole for nearly three decades (figure 1).
Figure 1: South Asia’s Economic Growth of the Past Three Decades speaks for itself (source: World Bank)

South Asia has witnessed a steady increase in cross-border electricity trade (CBET) over the past decade. Several initiatives and agreements have strengthened energy cooperation among neighboring countries. Some key cross-border electricity exchange developments include:
India-Nepal Electricity Trade: With a current capacity of around 900 MW, Nepal exports hydropower to India and benefits from power imports during dry seasons.
India-Bhutan Power Cooperation: Bhutan’s hydropower sector generates over 2,100 MW, primarily for export to India, playing a crucial role in bilateral trade.
India-Bangladesh Energy Integration: Power trade between India and Bangladesh has expanded to approximately 2,660 MW, ensuring a stable power supply for both nations.
India-Myanmar Connection: Though still limited to 3-6 MW, this trade represents the potential for future expansion.

Overall, CBET in the South Asian region has touched nearly 5,706 MW. While a milestone in itself, there is still substantial room for growth. India has emerged as a central player due to its geographic position and infrastructural advantages – this makes it a key facilitator in regional electricity exchange. Facilitated by the integration of the sub-regional grid networks within India, the Indian grid network creates a seamless system that can theoretically allow all its neighboring countries connected to the Indian “mother grid” to trade power (figure 2).
Figure 2: CBET in South Asia has touched an all time high in the year 2024 (source: Central Electricity Authority)
Real time and day ahead trading of electricity by Nepal and Bhutan on the Indian power exchange has been active since 2021, which has also seen 10.7 billion units of electricity being traded. This has also been achieved at a price range of ₹3.74 – 5.78/kWh, creating a win-win situation for all players (figure 3). Moreover, October 2024 saw a major development take place, with power flowing from Nepal to Bangladesh with the help of the Indian grid network, the first big step towards trilateral and multilateral electricity movement within the region. By further developing CBET, South Asia can address power shortages, reduce reliance on fossil fuels, and improve energy security.


Figure 3: Power Trade by Nepal and Bhutan through India’s Power Exchange Platform has Seen an Upward trend, as they see benefit from it (source: CERC Market Monitoring Reports)

One Sun, One World, One Grid (OSOWOG) Initiative

The One Sun, One World, One Grid (OSOWOG) initiative, proposed by Prime Minister of India Shri Narendra Modi and championed by India, is a transformative vision of global energy integration. This concept leverages the differences in time zones and geographic resources to optimize electricity production and distribution (Figure 4). With a focus on clean energy, it also holds the key to accelerating the implementation of the powerful idea of energy transition. If successfully implemented, OSOWOG could revolutionize the global energy landscape, making South Asia a leader in clean energy production and trade.

Figure 4: Moot Concept of One Sun, One World, One Grid Initiative (Source: Electra)
The idea is rooted in the belief that the sun is always shining somewhere on the planet, enabling uninterrupted solar power generation across different regions. The plan envisions linking the South Asian grid with those in Africa, the Middle East, and Southeast Asia, creating a seamless energy market. By facilitating renewable energy trade, OSOWOG seeks to lower electricity costs, reduce carbon footprints, and ensure sustainable energy access for millions.

A well-integrated trans-regional energy grid is essential for maximizing resource efficiency and ensuring stable power supply. Currently, several key projects are under consideration at the regional level. These include the creation of the BBIN Power Grid (Bangladesh, Bhutan, India, Nepal), which will help to strengthen energy trade within the BBIN sub-region to promote stability and reduce dependency on fossil fuels. Similarly, one futuristic project that can take the OSOWOG to be a meaningful reality and that is getting a lot of attention and deliberation is the India-GCC (Oman) high-voltage direct current (HVDC) Link. The India GCC HVDC Link is a proposed 3,000 MW HVDC submarine cable between India and Oman to facilitate power exchange with the Gulf Cooperation Council (GCC).

In the same series, there will also come the Africa-GCC-South Asia Power Corridor. This power corridor will help to enhance cooperation between African nations, the Middle East, and South Asia to develop a robust transcontinental energy network. In the same vein, to the east of India will be the ASEAN-South Asia Grid Integration, that will be built by utilizing Myanmar and Thailand as bridges to connect the ASEAN grid with South Asia, fostering regional energy trade. These large-scale projects could increase cross-border electricity trade by 49 GW by 2050, attracting significant investments and ensuring long-term energy sustainability.

Challenges in Developing a Trans-Regional Grid

Despite its potential, trans-regional energy integration faces several critical challenges. Overcoming these obstacles will require strong multilateral agreements, regulatory coordination, and strategic investments in energy infrastructure (figure 5). While all the factors are equally important, the Role of Regulatory Cooperation to achieve this integration deserves greater appreciation. A well-coordinated regulatory framework is crucial for the success of trans-regional energy integration. Bilateral and Multilateral Agreements for establishing long-term energy treaties among nations to ensure seamless power exchange. And the creation of Regional Regulatory Forums that serve as working groups for cross-border coordination of electricity markets and grid operations can play a big role in ensuring seamless interaction and regulatory cooperation. One important step in this regard can be the nudge towards Grid Code Standardization, which is necessary for implementing common technical standards to improve grid stability and energy security.


Figure 5: A variety of risks and challenges need to be overcome for achieving the desired objective of OSOWOG
Last, but not the least, Financial Incentives and Investment Mechanisms are critical to successfully realizing CBET transmission projects. Many countries have to build mechanisms to encourage foreign direct investments (FDIs), concessional loans, and grants to support trans-regional projects, given the differing stages of development of region’s financial markets. Cooperation can also enable easier access and knowledge sharing to ensure coordinated development.

Future Outlook: South Asia as a Global Energy Hub

With an estimated electricity demand of 810 GW by 2040, South Asia is poised to become a global energy hub. The region’s commitment to renewable energy expansion—targeting 584 GW by 2030—places it at the forefront of the global energy transition. Successful integration of trans-regional grids will help to lower electricity costs, enhance energy security, foster economic growth and support climate ambitions of the region. As South Asia advances its energy strategy, regional collaboration and technological innovation will be key drivers of success.

The vision of South Asia as a trans-regional energy hub is an ambitious but achievable goal. The insights from the SAFIR-SAREP dialogue underscore the need for political commitment, regulatory alignment, and substantial investment to realize the full potential of interconnected electricity grids. By fostering cross-border trade, enhancing renewable energy capacity, and integrating with ASEAN, GCC, and African grids, South Asia is well-positioned to shape the future of global energy markets.

Moving forward, it will be essential for policymakers, investors, and energy leaders to collaborate on establishing a sustainable and resilient regional power network. With India at the helm, the region has a unique opportunity to lead in energy innovation, economic integration, and climate action.

Rajiv Ratna Panda and Rohit Pathania work as researchers advancing the case of Cross Border Electricity Trade in South Asia.

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