FeaturedNationalVolume 14 Issue # 13

Renewable energy: A neglected resource

Pakistan is an energy starved country and faces a serious power crisis as evidenced by an endless cycle of load-shedding. We need an appropriate energy mix which is costeffective, but long years of wrong policy making have resulted in a reversal of hydel-thermal ratio from 70:30 in the 1960s to its exact reverse as of now. This has led to a debilitating reliance on oil import for thermal power generation. Using costly furnace oil and imported gas to generate electricity has made our industrial sector insolvent which cannot compete in the outside world.

To meet their needs costeffectively, most industrialised countries use an appropriate power mix based on their indigenous resources. For example, in the US thermal, renewable and nuclear energy account for 62.9 percent, 17 percent and 20 percent of its total power generation capacity respectively.  India’s energy mix is hydel (14 percent), thermal (68 percent, 59.8 percent coal), renewable (16 percent), and nuclear (3.22 percent). For China, this ratio is 19.8 percent, 62 percent, 14 percent, and 12 percent respectively. At independence, India had 508 megawatts of hydel generation through dams which has been expanded to 44,594 megawatts now. On the other hand, we at present produce 6481 megawatts of hydel energy despite a potential of 50000 megawatts.

 According to experts, a country’s economic growth potential can be best measured by the ratio of installed electricity capacity vis a vis its population. In the case of Pakistan, the ratio is 122 megawatts per million of population. By contrast, China, South Africa, Brazil, Mexico and India have a capacity of 1188, 836, 649, 470, and 246 megawatts per million respectively. Another well-known metric of national development is the per capita consumption of electricity. In Pakistan’s case, the average electricity consumption per year per person is 396 kwh. This compares unfavourably with the figures of BRICS countries like Brazil (2455), Russia (7448), India (746), and China (4265).

At present, Pakistan’s energy mix goes like this: thermal (oil, gas, and coal) 65.5 percent, hydel 28 percent, nuclear 3.1 percent, and Renewable Energy (Wind, Solar, and Bagasse) 3.4 percent. But our energy mix should ideally be hydel (50 percent), renewables (15 percent), thermal (25 percent, oil/gas 15 percent and coal 10 percent), and nuclear (10 percent). To move to the desired goal, the government needs to do some solid planning backed by sufficient funds and technical assistance from national and international agencies. Such a plan should be in line with a realistic development of the national electricity transmission and distribution network. Needless to say, our present electricity crisis has as much to do with a skewed national energy mix as with an inadequate transmission and distribution capacity.

Pakistan is endowed with economically viable renewable energy resources – wind and solar – with a potential of approximately 55,000 megawatts. But we have tragically neglected to develop this sector. All we have achieved till now is 1185 mw of wind and 438 mw of solar energy. According to available figures, power generation from wind as percentage of total energy mix for countries like USA, Denmark, UK, China, Germany, India and Spain is 11.9 percent, 45 percent, 23 percent,18 percent, 46 percent, 14 percent and 26.5 percent respectively. In Pakistan’s case the same figure stands at 5.5 percent. It may be mentioned here that the Fauji Group of Companies set up the first commercially developed wind IPP at Jhimpir (50 mw), and Gharo (100 mw). The first tariffs awarded by the government to wind IPPs were on cost-plus basis with wind risk covered to incentivize the pioneering developers. Since those early days the government has awarded tariffs to several IPPs for wind on cost plus as well as upfront basis with IRRs within the range of 15-17 percent.

Over the last few years, the situation has qualitatively changed because of the activities of the LNG lobby that did not want the renewable energy to be developed to save their huge profits. Another factor is the ambiguous approach of the regulator i.e NEPRA which has to keep the cost of generation through wind and solar low for the consumers. Ideally, a balance has to be struck between the profit margins of the investors and the interests of the consumers. But there are some invisible impediments into the way. It is said that the competitive bidding process for the wind, solar and hybrid solar projects would complicate things for small and mediumsized investors, leaving the turf clear for big investors with deep pockets and expertise.

The NEPRA and other government agencies like Alternative Energy Development Board, the relevant ministry and CPPGA are all responsible for the confusion in the sector. The result is that a cheap and indigenously available resource is being frittered away due to policy failures. The solution lies in bringing on stream the wind and solar projects that are in the pipeline without wasting any more time. The way forward for the government is to formulate a renewable energy policy as early as possible and implement it at top speed.