RFI_72038619RFI00001-SA_EDGE.pdf

U.S. Agency for International Development American Embassy Chanakyapuri New Delhi 110 021

Tel: 91-11-24198000 Fax: 91-11-24198612 / 8454 www.usaid.gov/in

REQUEST FOR INFORMATION (RFI)

Subject: South Asia Enhancing Growth and Development through Energy (South Asia EDGE)

RFI Number: 72038619RFI00001 Issuance Date: February 27, 2019 Closing Date & Time: March 12, 2019, 18:00hrs India Time

Dear Stakeholders:

The United States Government, represented by the United States Agency for International Development (USAID) India is offering an engagement opportunity with interested organizations to provide comments, opinions, and recommendations in response to the proposed project approach and questions outlined in the upcoming subject activity called South Asia EDGE. This Request for Information (RFI) provides an overview of a potential USAID approach to address energy security challenges, with the goal of improving the delivery of affordable, secure, reliable and sustainable energy services through expanded, transparent and efficient energy markets in South Asia. For the purposes of this RFI, the geographic scope of South Asia EDGE includes Afghanistan, Bangladesh, Bhutan, India, Nepal, Maldives, and Sri Lanka.

The following are the purposes of this Request for Information (RFI):

1) To allow stakeholders and interested organizations to review, comment, and provide suggestions on the prospective activities; and

2) To increase USAID's knowledge of capabilities among potential organizations and the overall market for regional energy cooperation.

USAID/India also plans to host a multi-stakeholder consultative meeting with interested stakeholders from the private sector, governmental agencies, think tanks, non-governmental organizations, academic institutions, and other sector experts to provide comments to refine the South Asia EDGE activity and its approach. This meeting will be held on March 19, 2019 from 10:00 am-4:00 pm at the Claridges Hotel in New Delhi. Please indicate your interest in attending this consultative meeting by nominating no more than two (2) technical experts from your organization to participate. Please provide the names, titles, and contact information of these individuals no later than March 12, 2019, to indiarco@usaid.gov with a copy to vvats@usaid.gov . If deemed adequate, USAID may host consultative meetings in both Bangladesh and Nepal.

In addition to the opportunity to participate in the aforementioned multi-stakeholder consultative meeting, USAID is seeking responses to the questions of this RFI outlined below which can be discussed further during the consultation. The prospective USAID activity is anticipated to be in the range between $50,000,000 and $70,000,000 for a period of five years. USAID is not seeking technical or cost proposals at this time. Please do not submit a proposal/application.

mailto:indiarco@usaid.gov mailto:vvats@usaid.gov

1. As noted in the enclosed “Description of Prospective Procurement, South Asia EDGE”, USAID has defined four broad themes under South Asia EDGE. For each theme, please provide your expert opinion on its importance, critical areas of focus, and their challenges. The four themes are regional energy market integration;

deployment of advanced energy systems; utility modernization; and transparent best value procurement and private sector investment.

2. A theory of change is proposed in the enclosed “Description of Prospective Procurement, South Asia EDGE”. Please provide your expert opinion on the proposed theory of change.

3. Responding to this RFI is voluntary. Responders are free to address any or all of the above items.

This is a Request for Information (RFI) only and is issued solely for information and planning purposes. It does not constitute a request for proposal/application/quotation, an invitation for bids or solicitation, and any proposals/applications submitted in response to this request will not be considered. The information provided in the RFI is subject to change and is not binding on the United States Government.

This RFI does not constitute an award commitment on the part of USAID nor does it commit USAID to pay for any costs incurred in the preparation of response to the RFI. Responses to this RFI are strictly voluntary and it should be noted that responding to this RFI will not give any advantage to any organization in any subsequent procurements. If solicitations or funding opportunities related to the South Asia EDGE initiative will be announced, they will be on the Federal Business Opportunities website at www.fbo.gov or at www.grants.gov at a later date.

RESPONSES:

Interested parties are requested to respond to this RFI and provide any documents that support their comments. Responders should provide responses through email or through attachments to an email in either Microsoft Word compatible format or Adobe Acrobat format addressed to indiarco@usaid.gov with a copy to vvats@usaid.gov .

Thank you for your interest in the subject request for information.

Sincerely, Sd/-

Armando Espinosa Regional Agreement/Contracting Officer http://www.fbo.gov/ http://www.grants.gov/ mailto:indiarco@usaid.gov mailto:vvats@usaid.gov

Description of Prospective Procurement, South Asia EDGE

Introduction

With more than one-fifth of the world’s population, South Asia is developing rapidly, and resulting in strong, emerging global economies that are increasingly concerned about energy. It is estimated that the regional average GDP will grow to 7.1 percent in 2018-19 with much of the progress driven by India. Achieving energy security is one of the single largest challenges of the 21st century, and critical to the economic future of 1.5 billion people and the political future of one of the world’s most dynamic regions. The region faces basic development challenges that circumscribe its energy security requirements. It lags behind most regions of the world in energy trade and regional integration. There are a range of issues that are common throughout the region, including poor energy access, power shortages, limited energy diversity, inefficient power systems, limited use of electricity markets, limited power sector reforms, low private sector investment, low regional connectivity, and environmental pollution.

Importance of India

As the fulcrum of the South Asia region, India is central to regional energy cooperation. As the leading economic power in the region and its largest energy consumer, it is critical to energy connectivity and energy sector growth. For example, India has a much larger power system compared to other countries in the region and it is the third largest power producer in the world. It is the third major importer of liquefied natural gas in Asia and a significant, potential market for US shale gas.

With a current installed capacity of 72 GW of renewable power and a plan to attain 175 GW by 2022, India has created a dynamic renewable power market. India is pursuing several tracks to expand its power sector, including utility unbundling and privatization; competitive power trading; and investment in renewable and other advanced technologies. Its robust power transmission system has enabled the country to be unified with Bhutan and nascent, yet growing, connectivity with Bangladesh and Nepal. As experienced through USAID’s South Asia Regional Initiative for Energy, countries such as Nepal and Bangladesh have demonstrated interest in learning from India’s energy sector experiences. Given the centrality of India it is important that addressing its energy introversion is key to advancing its own energy security as well as that of the entire region.

Asia EDGE and Indo-Pacific Strategy

In July 2018, the United States Government (USG) announced the Asia Enhancing Development and Growth in Energy (EDGE) as a key component of its Indo-Pacific strategy. As a whole of government approach, Asia EDGE is a regional energy cooperation platform that aims to address several four key issues confronting the region, through (1) strengthening the energy security of regional partners; (2) creating open and transparent energy markets; (3) improving free, fair and reciprocal energy trading relationships; and (4) expanding access to affordable, clean and reliable energy.

Asia EDGE draws on the expertise of multiple USG agencies, private sector entities, and international financial institutions, and seeks ongoing collaboration with like-minded governments, non-governmental organizations, think tanks and private sector that are dedicated to sustaining equitable economic progress throughout the region. Due to the unique features that define the sub-regions of Asia, USAID's support to Asia EDGE is being implemented through three subregional hubs: South Asia (led by USAID/India), South East Asia (led by USAID/RDMA) and Central Asia (led by USAID/Kazakhstan).

South Asia EDGE: Theory of Change

In consideration of the USG Indo-Pacific Strategy, the aforementioned regional energy sector issues, and more specific challenges individual South Asian countries face in regard to their own energy resource availability, economic growth plans, political landscape, and policy drivers, the following Theory of Change has been developed to guide new South Asia EDGE activity designs:

IF South Asia is regionally integrated with enhanced energy markets, diversified energy sources and increased cross-border energy trade, increased deployment of advanced energy solutions and systems, improved technical and financial performance of energy utilities, and increased mobilization of the private sector investment and services for energy infrastructure, THEN access to affordable, secure, reliable and sustainable energy will be improved across South Asia, leading to sustainable economic growth and enhanced regional security.

USAID and the South Asia EDGE Initiative

Besides South Asia’s self-reliance and security advanced through expanding energy markets, there are major implications for the U.S.’s relationship with countries throughout South Asia. The role of USAID as a partner to assist the South Asian countries in their journey of self-reliance to attain higher degree of energy security would consist of building their capacity, strengthening infrastructure and creating enabling environments for businesses to invest in. These market driven strategies would serve to bridge the region’s energy deficit gap; harness the untapped hydro power resources that straddle the Himalayan region (Bhutan, India, Nepal and Pakistan); promote U.S. strategic, trade and business interests; and serve as a confidence building, socialization measure between the peoples and nations of the region with the U.S..

South Asia EDGE Technical Components and Cross Cutting Themes

Complementary to the strategic objectives of the greater Asia EDGE initiative, the subregional activity design is structured around four interrelated Technical Components that serve clear outcomes to support the South Asia EDGE Theory of Change: (1) Regional Energy Market Integration; (2) Deployment of Advanced Energy Systems; (3) Utility Modernization; and (4) Transparent, Best Value Procurement and Private Sector Investment.

Within each Technical Component, South Asia EDGE will make use of common tools and approaches, including: Enabling regulatory frameworks and policies; Innovation business model development; Technology development and demonstration; Transaction services and analysis;

Capacity building and institution strengthening.

Technical Component 1: Regional Energy Market Integration. South Asia EDGE aims to both expand economical gas markets as well as integrate regional electricity markets. As South Asian countries look to diversify their energy mix, there is an increased interest in LNG for use in power generation, transportation, industries, and for household uses. South Asia EDGE will focus on promoting a more enabling environment for the gas market through policy and regulatory frameworks that increase trade in South Asia and establish a regional gas hub. While cross-border electricity trade in South Asia has more than doubled from 1200 MW in 2013 to 2500 MW in 2018, significant potential remains. South Asia EDGE will capture this potential through supporting multilateral power trade, operationalizing power markets, and supporting the development of harmonized regulations and policy frameworks.

Technical Component 2: Deployment of Advanced Energy Systems. In supporting countries to modernize their energy systems, South Asia EDGE will focus on approaches and technologies that have the potential to transform the power sector and provide a large market opportunity for private sector investments. This includes advancing renewable energy (RE) generation, distributed energy resources (DER), digitalization technologies, off-grid energy, sustainable building technologies, and systems and technologies for minimizing air, land and water pollution.

Technical Component 3: Utility Modernization. South Asia EDGE will work with the utilities across the power chain (generation, transmission and distribution) to improve their financial performance, operational efficiency and adaptability to new technical advancements. It will also support creation of an enabling environment by development of policies and regulatory frameworks, improve access to finance and build the capacity of personnel through knowledge exchanges, peer-to-peer partnerships.

Technical Component 4: Transparent Best Value Procurement and Private Sector Investment.

USAID will use its convening power and vast expertise across the energy sector value chain to mitigate private-sector constraints and risks of investments, and build market-based approaches to energy security challenges. South Asia EDGE will work with technical and procurement divisions of the key public agencies to help them improve procurement processes and governance, adopt best value procurement practices for new technologies and increase competition. To increase private sector participation and investments, South Asia EDGE will develop new models for public-private partnerships (PPPs), improve the bankability of energy projects, and mobilize investment by increasing awareness among the private sector of investment opportunities.

Conclusion

For over four decades, the U.S. has been engaged in energy activities within the region, covering a wide range of issues, from policy and regulatory reform, to civil nuclear, oil/gas, RE, energy efficiency, and clean coal, as well as building power capacity. The proposed regional program complements the USG and other donor bilateral and multinational development bank activities in the region, enhancing regional collaboration and mobilizing greater resources through its activities to advance energy security, clean energy and the Sustainable Development for All goals. The existing USAID/India energy portfolio provides a strong base for South Asia EDGE. All activities under South Asia EDGE will be built on the pillars of a strong India and a strong inter-regional cooperation. It is in this context that South Asia EDGE must be viewed: to assist South Asian countries to move simultaneously on several fronts — from transition to natural gas to modernization of its moribund electric utilities, to regional energy market integration, and to ease of doing business.