China Plans Super-Grid for Clean Power in Asia

As hydropower hits problems, China plans renewable energy for region.

The Belt and Road Initiative (BRI), China’s ambitious outbound investment strategy which links at least 65 countries along terrestrial and maritime trade corridors, will open massive new opportunities for trade and investment in frontier markets.  Energy infrastructure investments are a backbone of BRI, so aligning these investments with sustainable development goals is necessary for China to navigate regional patchworks of social, environmental, and economic priorities.

The first port of call for BRI is central Asia.  Here, water security has emerged as a key geopolitical risk with potential to destabilize the region.  Whilst hugely inefficient, the Soviet Union had an organized approach to coordinating energy and water supplies across upstream and downstream countries.  This unified energy system of central Asia was dismantled in the 1990s, and individual countries quickly sought to become self-reliant in meeting their growing energy needs.

As a result, hydropower projects upstream have affected the flow of water for the agriculture of downstream countries, which rely on their oil and gas for energy, making everyone worse off and fuelling tension.  Glaciers that feed water to the region are receding.  Half of the glaciers in central Asia could disappear by as soon as 2035, and entirely disappear in parts of Pakistan.  Climate change impacts will almost certainly reduce water availability in an already water-stressed region.

Chinese state-owned banks and companies dominate investments in oil, gas and hydropower along BRI.  The China Development Bank has already granted $160bn in loans to countries involved in the BRI, and has identified a further $350bn worth of projects.  The geographic definition of central Asia itself is being changed by these investments — from the Soviet Union’s boundaries that included Kazakhstan, Uzbekistan, Turkmenistan, Tajikistan, and Kyrgyzstan, to include Pakistan and Afghanistan.  China’s $62bn investment commitment in BRI’s China-Pakistan Economic Corridor is equivalent to 20 per cent of Pakistan’s GDP, and encompasses investments in coal, hydro, wind and solar power projects.

With these factors in mind, an interconnection of energy across borders would aid in securing these investments, water supply, and long-term regional stability.  Large-scale grid connection projects are seen as vital to address significant transmission and distribution losses, reinvigorate regional energy trade, and deepen regional co-operation through growth.  The $1bn Tutap project financed by the Asian Development Bank, seeks to link the power grids of Turkmenistan, Uzbekistan, Tajikistan, Afghanistan, and Pakistan into a unified grid system from existing hydropower and coal and gas-fired plants.

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