The document proposes funding the development of a Caspian Energy Grid through innovative financing mechanisms to improve energy infrastructure connectivity and efficiency in the Caspian region. It suggests establishing a "Clearing Union" platform where investors can purchase energy credits at a discount, which producers and consumers can then use to fund infrastructure upgrades. As a proof of concept, it outlines plans for a Kazakhstan-Azerbaijan-Turkmenistan energy triangle connecting Turkmen gas and power generation assets to the other countries via undersea high voltage direct current cables, which could help Turkmenistan export surplus energy while conserving domestic gas resources. The proposal aims to minimize development costs through "energy loans" that are repaid with energy rather than interest, increase energy market integration

1. Funding Caspian Energy Infrastructure
A Caspian Energy Grid
Chris Cook
Vienna 14th
April 2015

2. Reliable & Stable Transmission – Problem
'Caspian Energy Grid' = Caspian region energy
transportation/ generation & transmission infrastructure
Existing legacy infrastructure fragmented, fragile &
grossly inefficient (<20% output efficiency)
Huge carbon fuel waste between producer & consumer
Competition between Caspian regional producers for
sales of energy-as-a-commodity
Market volatility & ongoing bank capital shortage means
conventional funding almost impossible

3. Reliable & Stable Transmission – Solution
Least Carbon Fuel Cost Principle - minimise carbon fuel
system input for given electricity, heat or power output
$ 100s billion investment in
- efficiency upgrade of legacy gas transportation &
heat/power generation
- existing legacy power grid
- next generation gas to power & efficient grid
transmission eg HVDC
Question - how can Caspian Energy Grid upgrade/
development be funded?

4. Funding the Grid
Prepay Energy Credit
- energy consumers or investors pay forward at a discount
- pre-dates modern debt/equity finance capital
- re-emerging in use eg $85bn prepay transaction by
Sinopec with Rosneft
Energy Loans
- investors lend $, € or other agreed currency
- Energy Loan denominated in energy eg MWhrs or MMbtu
- Project repays loan by purchasing energy credits at the
energy market price in $, € or agreed currency

5. Funding the Grid
Value Proposition
- consumers buy in advance cheaper & lock in price
- producers obtain interest free credit & lock in price
- investors obtain energy return & sell to consumers
Requirements
- physical energy market & pricing benchmark
- accounting system
- framework of trust - “Clearing Union”

6. Caspian Energy Grid Market Platform
Caspian Energy Grid
(Custodian)
Caspian Energy Grid
(Custodian)
Investors
Caspian Energy
Grid Users
Service
Providers
%Prepay
Use Fee

7. Energy-as-a-Service – Value Propositions
Producers/Generators & Consumers - share cost of
Caspian Energy Grid through agreed use payment
Service Providers - receive agreed entitlement as %age of
use fees - balance of use fees available to investors
Investors - buy energy prepay credits at a discount
Consumers – pay for energy delivered using conventional
payment or energy prepay credits

8. Proof of Concept – KAT Core
KAT = Kazakhstan, Azerbaijan, Turkmenistan
Turkmenistan littoral Gas to Power generation hub
- state of the art Combined Cycle Gas Turbines (CCGT)
- c 60% efficiency
High Voltage Direct Current (HVDC) subsea triangle
- Turkmenistan – Kazakhstan (eg Atirau)
- Turkmenistan – Azerbaijan (eg Baku)
- Azerbaijan - Kazakhstan

9. Marchwood (UK) – 58% efficient CCGT

10. BritNed and NorNed HVDC Connections
BritNed 260km - 600MW NorNed 580km - 600MW

11. Caspian Energy Grid – KAT Core
Turkmen Gas/
Power Hub

12. Caspian Energy Grid - Outcomes
Turkmenistan exports power to Caspian littoral states
Energy savings fund development of Caspian Energy Grid
Turkmenistan conserves gas which is then available for
generation or export
Azerbaijan & Kazakhstan reduce local carbon fuel requirement
and release fuels for export
Caspian energy market & pricing benchmark
Minimise funding costs: energy loans bear no compound interest
Increased resilience - Grid also capable of carrying regional
renewable energy power & load balancing

13. Proposal & Next Steps
Wimpole Consortium – led by major global energy engineer/
manufacturer
Two proposed proofs of concept
- KAT Core proposal
- re-powering of existing legacy gas transmission infrastructure