107142 is a knowledge and technical assistance multi-donor trust fund (MDTF) administered by the World Bank. CAEWDP’s mission is to build energy and water security for The Central Asian Power System (CAPS) was created under the auspices of the Soviet Union in the the countries of Central Asia – 1970s and was constituted from the power networks of present-day Uzbekistan, southern Kazakhstan, Kyrgyz Republic, Kazakhstan, the Kyrgyz Republic, Tajikistan, and Turkmenistan. The system sought to ensure Tajikistan, Turkmenistan, and consumers’ energy supply through a jointly operated regional generation and transmission network, Uzbekistan – through enhanced thus creating a high level of interconnection and coordination across all of Central Asia’s diversified regional cooperation. energy resources. Given the role of hydropower in generating energy as well as regulating downstream water flows, water resource management was a key component of CAPS. Since its inception in 2010, CAEWDP has received support The end of the Soviet Union resulted in a progressive decline in a crucial function of CAPS: the joint from bilateral and multilateral coordination of the operations of dams, water reservoirs, irrigated lands, and fossil fuel generation. donors including the Government of Each country now undertakes energy decision-making independently, eroding established practices Switzerland’s State Secretariat for (including the physical and technical parameters of the infrastructure). Indeed, Tajikistan’s and Economic Affairs (SECO), the Turkmenistan’s electricity systems are now disconnected from the regional network. Reduced European Commission (EC), the coordination has contributed to numerous system emergencies and exacerbated winter energy United Kingdom’s Department for shortages, which unfortunately have only further spurred the countries to further focus on International Development (DFID), independence of their national power systems. the United States Agency for International Development (USAID), and the World Bank Group. In order to provide a preliminary assessment of the opportunities in strengthening electricity systems across Central Asia, the World Bank’s Central Asia Energy-Water Development Program (CAEWDP) commissioned a study from Mercados, a Spanish energy markets research and consulting firm. Published in October 2010, the study described the status of CAPS; identified the benefits of a joint  Sunil Kumar Khosla: power system operation and the downsides of losing system coordination; and, using a risk-based CAEWDP Energy Development Pillar Leader: analysis, suggested possible low-cost, easily implementable solutions to strengthen integrated power skhosla1@worldbank.org system operation.  Abena Akuffo-Akoto: CAEWDP Partnership Specialist: aakuffoakoto@worldbank.org  A strong legal and technical basis exists for CAPS: The Parallel Operational Agreement, signed by all member countries in 1998, provides the legal basis for operational network rules. At the same time, there exist a number of problems of technical, economic, legal and regulatory nature that need to be addressed for CAPS to benefit from regional trade. “Load Dispatch and System  Regional cooperation would provide the countries with a higher level of security of supply Operation Study for Central Asian Power System” (2010): than do independent national systems and bring substantial financial benefits: The report’s modeling indicated that the joint operation of CAPS countries’ power systems would save http://documents.worldbank.org/cur more than 1.6 billion USD in the first three years of operation as negligible capital cost. ated/en/2015/08/24901339/load- dispatch-system-operation-study-  The study recommended measures split in three stages: (I) Address immediate problems central-asian-power-system that encourage CAPS members to leave the system; (II) Enhance regional power trade by overcoming technical, economic, regulatory and legal barriers; and (III) Optimize regional power trade. The study outcomes served as a basis for World Bank technical assistance/knowledge sharing support to CAPS countries, including through CAREC energy meetings. As per CAPS countries’ request the study is being updated and made more detailed in 2015.