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Power pools constitute a set of sometimes complex institutional arrangements for efficiency-enhancing coordination among power systems. Where such institutional arrangements do not exist, there still can be scope for voluntary electricity-sharing agreements among power systems. This paper uses a particular type of efficient risk-sharing model with limited commitment to demonstrate that second-best coordination improvements can be achieved with low to moderate risks of participants leaving the agreement. In the absence of an impartial market operator who can observe fluctuations in connected power systems, establishing quasi-markets for trading excess electricity through the kind of mechanism described here helps achieve sustainable cooperation in mutually beneficial electricity sharing.

Electricity Trade --- Energy --- Energy Production and Transportation --- Energy Technology and Transmission --- Infrastructure Economics --- Infrastructure Economics and Finance --- Macroeconomics and Economic Growth --- Political Economy --- Power & Energy Conversion --- Risk Sharing Arrangements --- Self-Enforcing Contracts

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This study examines the importance of enhancing the cross-border transmission interconnections and regional electricity trade to promote hydropower in the South Asia region and quantifies the potential of hydropower development and trade under alternative scenarios. While South Asia is endowed with large (> 350 gigawatts) hydropower potential, only around 20 percent has been exploited so far. This study shows that development of regional electricity markets through expanded cross-border transmission interconnections and regional electricity trade agreements is needed to benefit the region from the exploitation of the untapped hydropower resources. It also finds that development of hydropower in the region would increase by 2.7 times over the next two decades if the region could facilitate an unconstrained flow of electricity across the borders in South Asia. If a moderate carbon tax is added on top of that, hydropower capacity in 2040 could be more than three times as high as the current level.

Climate Change Mitigation and Green House Gases --- Cross-Border Transmission --- Electricity --- Electricity Generation --- Electricity Trade --- Energy --- Energy Policies and Economics --- Energy Supply --- Environment --- Hydro Power --- Hydropower --- International Economics and Trade --- International Trade and Trade Rules --- Power and Energy Conversion --- Renewable Energy --- Rural and Renewable Energy --- Rural Development --- Water and Energy --- Water Resources