DUSHANBE, December 4, 2012, Asia-Plus — Tajikistan’s electricity system is in a state of crisis.
A study by the World Bank,
Tajikistan’s Winter Energy Crisis: Electricity Supply and Demand Alternatives
, notes that approximately 70% of the Tajik people suffer from extensive shortages of electricity during the winter. These shortages, estimated at about 2,700 GWh, about a quarter of winter electricity demand, impose economic losses estimated at over US$200 million per annum or 3% of GDP. In addition to the financial costs of inadequate electricity, the Tajik people suffer the social costs as well, including indoor air pollution from burning wood and coal in homes and health impacts from extreme winters. The electricity shortages increased considerably in 2009 when Tajikistan’s energy trade with neighboring countries through the Central Asia Power System (CAPS) stopped. The electricity shortages have not been addressed because investments have not been made in new electricity supply capacity and maintenance of existing assets has not improved. The financial incentive for electricity consumers to reduce their consumption is inadequate as electricity prices are among the lowest in the world.
The study notes that without prompt action to remedy the causes of Tajikistan’s electricity crisis and with growing demand, the shortages could increase to about 4,500 GWh by 2016 (over a third of winter electricity demand) or worse.
The study focuses on the investments and policy reforms needed between now and 2020 to strengthen the financial, technical and institutional capacity of the Tajik power sector and prepare the Government of Tajikistan (GoT) for undertaking a major expansion of power supply capacity. The study explores a range of supply and demand alternatives (e.g., thermal, run-of-river hydro, other renewables, energy efficiency, demand management).
The study says the winter electricity shortages are caused by a combination of low hydropower output during winter when river flows are low and high demand driven by heating needs.
The GoT should focus its immediate attention on three ways to eliminate the current winter power shortages: (1) ambitious energy efficiency plans to reduce uneconomic power usage; (2) new dual-fired thermal power supply to complement the existing hydropower supply during winter; and (3) increased energy imports to leverage surplus electricity supply in neighboring countries.
A strategy that combines these solutions could nearly eliminate the winter energy shortages by 2016, but the achievement of these goals requires accelerated, focused commitment by the GoT and support from its partners. A package of policy reforms, trade promotion and investments is needed. Measures to manage demand, switch fuels for winter heating and reduce losses would be the most significant and immediate contributors to solving the problem, covering about 40% of the expected deficit in 2016.
An ambitious energy efficiency program (EEP) should be broad-based and address the industrial sector, buildings and scale up the power network loss reduction program, as well as align electricity tariffs. An EEP could save roughly 1635 GWh of energy in the winter months by 2016.
Energy losses in the Tajik power transmission and distribution networks are nearly double the level of good practice and should be an important part of the EEP. With financial support from the World Bank, the GoT has started its network loss reduction program but improvements to date are modest. It is recommended that this program be accelerated with a target of reducing electricity network losses from the current level of 18% to 12% by 2020, with an interim target of 15% by 2016.
Between now and 2020, rehabilitation of the existing hydropower assets is an important component of the plan to address Tajikistan’s winter electricity crisis.
The GoT should fast-track the implementation of the proposed thermal power plant. The plant could initially use low-cost local coal to bring new domestic sources of thermal power to the electricity system. The plant could provide 1,000 GWh per year operating base-loaded during the winter and partially during the months immediately before winter seasons when hydropower does not fully meet demand. In addition, given the possibility of local natural gas supply, and/or the re-establishing of gas supply from Uzbekistan or Turkmenistan, the GoT should consider that the plant be designed to be dual fired (coal and gas). This fuel flexibility would make it possible to use clean, low-cost local gas in the future at modest incremental investment cost.
The GoT should also consider increasing the use of waste heat to heat buildings. The proposed thermal power could be designed as a combined heat and power plant (CHP) so that the waste heat from the plant could be used to heat homes in Dushanbe during the winter. Waste heat from TALCO could also be used to heat the buildings in the adjacent town. An investment in waste heat could be realized in four years and has been managed well in many other countries in the Europe and Central Asia region.
The primary concern of the World Bank is to help the GoT solve its winter energy shortages in the most sustainable ways possible. The following are some of the key issues that will need to be addressed:
1. The proposed plan would require US$3.4 billion over the next 8 years, roughly US$380 million per year or about 5% of GDP.
2. With the current low electricity prices, this plan to address Tajikistan’s electricity crisis is not financially viable; electricity prices would need to increase by roughly 50% in the short term. It is expected that a price increase of this size is needed as soon as possible to: (i) dampen growth in demand by providing an incentive to use energy prudently; and (ii) help fund part of the cost of the investment program. A delay in price increases would delay the closing of the supply-demand gap, resulting in extending the costs associated with load shedding. Such a price increase would be roughly one third of the estimated future cost of supply and below the estimated willingness to pay for most consumers. The resulting electricity price would be well below the level of electricity prices in other countries in the region. The exact size of the required price increase should be determined from a detailed financial analysis coupled with a prioritization of investments in the power sector and social safety nets to protect the poor.
3. A targeted social safety net should be developed to address the needs of the poor and economically vulnerable electricity consumers. It is recommended that the GoT establish a targeted safety net for the poor, coupled with a household energy efficiency program to decrease household energy consumption while maintaining healthy living standards.
4. The increase in pollution and associated health and climate risks from new coal-fired power as well as imported natural gas-fired power plants would need to be minimized.
5. Rebuilding trust and removing political barriers to electricity trade would benefit all Central Asian countries. Restoration of a synchronous tie is likely to enable considerable benefits not only to Tajikistan, but its neighboring countries as well, and so represents an important goal for all countries in Central Asia.
