Pakistan’s untapped potential
09/01/2012 – by Noor Fatima
Pakistan mostly relies on fossil fuel: flood victims lining up for diesel in the summer of 2010
The Government of Pakistan (GOP) is aware of the challenges, but its action, so far, remains half-hearted. Pakistan currently has almost
21.600 GW of installed capacity for electricity generation. Conventional thermal power plants, which use oil, natural gas and coal, account for almost 68 %. Hydropower makes up for around 30 % and nuclear power for about two per cent. This energy mix is heavily skewed towards expensive fossil fuels. To meet growing demand, Pakistani authorities want to boost the country’s generating capacity by 50 % by 2014.
Today, Pakistan imports about one third of the energy the country uses. The results include strained foreign exchange reserves and over-dependence on foreign supplies. Since power generation is not up to demand, the people suffer from black outs which often last eight to 16 hours. At the same time, at most 70 % of the people have access to electricity at all, according to the Competition Commission of Pakistan. The official Pakistan Economic Survey of 2006/07 similarly revealed that more than 40,000 villages are not linked to the power grid. It is obvious that the scenario is not satisfying, and things are likely to get worse as the population grows.
It is equally obvious, moreover, that Pakistan does not use energy efficiently. The country consumes 10 to 30 % more energy per unit of GDP than rich nations do. At the same time, per-capita consumption is quite low, only about one third of the global average.
In view of climate change, it is obvious that fossil fuels are not the answer. Moreover, the risks of nuclear power became evident in Fukushima. Given that an advanced, tech-savvy nation like Japan apparently cannot manage this technology safely, there is no reason to believe that developing countries will do better.
No doubt, RE solutions are what the country needs. On top of being clean and relying on locally available resources they have the advantage of generating local employment. Decentralised power generation means jobs in many places. Decisionmakers, however, do not seem to be comfortable with RE options. To some extent this is due to the fact that the rich world is only tentatively introducing renewables. Pakistan’s leaders, however, should follow the example of China, where the government is quite active in introducing climate-friendly technology.
At the federal level, the Ministry of Water and Power framed Pakistan’s first national RE policy in 2006. For large hydroelectric (hydel) schemes of more than 50 MW, the Government of Pakistan adopted the Policy for Power Generation Projects in 2002. Additional policy guidelines are to be issued in the course of time.
The RE policy spells out strategies to promote small scale hydel, wind and solar power generation. Some of its salient features are:
– It deregulates small scale power generation (of up to five megawatt for hydel and one megawatt for other technologies) with renewable resources.
– It lays down simple and transparent principles for determining tariffs.
– It facilitates projects to obtain carbon credits for avoided greenhouse gas emissions, helping improve financial returns and reducing per unit costs.
– It aims to develop 3730 MW wind power generation capacity by 2020 and 9700 MW by 2030.
– It invites investment from the private sector. Relevant incentives include tax exemptions, freedom from customs duties for relevant equipment and unrestricted international trade in shares in RE facilities.
The policy wants to mainstream RE use in the development plans of the country. It stipulates that at least two per cent of all investments power generation should be dedicated to RE and that RE facilities should account for at least 10 % of the country’s energy supply by the year 2015.
In view of the growth challenges Pakistan is facing, these goals are not very ambitious. More could and should be done. After all, the RE potential is huge according to the government:
– Pakistan’s hydel potential is estimated at about 50,000 MW, of which only 6600 MW was developed in the past 50 years. There are numerous sites, especially in the mountains, where hydel power could be generated. Capacity would range from 1 MW to more than 10 MW per site.
– Pakistan gets very much sunshine. Per square meter, on average 5.5 KW could be generated. This approach is particularly important for providing off-grid power in the mountains and deserts (also note essay by Joe Fischbeck on power supply in remote rural areas on page 27).
– Wind energy offers a potential of up to 50,000 MW. Pakistan has 1000 Km of coastline, where wind farms could be set up. So far, there is not a single wind power system that would generate more than 500 W in Pakistan.
Need for action
Pakistan lacks several things that would help to speed up RE development. The country needs an off-grid consumer concept to boost independent power generation in remote rural areas. Federal and province-level agencies have begun to tackle this issue. While private sector companies, public agencies, non-governmental organisations and even individuals are allowed to set up small scale power generation and distribution schemes at suitable locations, there are no clear rules about how to manage customer-client relations in such mini-grids.
Pakistan also needs a feed-in tariff concept, which would allow small scale power generation to generate revenues by boosting supply in the national grid. Germany and other rich nations have such programmes. Experience shows that attractive feed-in tariffs help to increase RE power generation fast.
All summed up, Pakistan has begun to move in the right direction, but only slowly so. One reason for the lack of momentum is that several large bureaucracies are involved (see box on p. 15). Given that Pakistan is a nation of more than 170 million people that speak different regional languages, there is no point in complaining about the size of the bureaucracy as such.
The real question is whether renewable energy options and the environmental movement are finally getting the attention of policy makers who need to encourge foreign and domestic investments. It seems evident that action so far has not been as effective as desired. The government and its agencies, particularly the Pakistan Council of Renewable Energy Technology (PCERT), established in 2001, and the Alternative Energy Development Board (AEDB) created in 2003, have the challenge to promote investments in renewables. They would do well to accept the technical and financial support donor agencies are willing to offer. The country has nothing to lose, but a lot to gain in the field of RE.
So far, the key factors hindering RE technology transfer are financial constraints and limited infrastructure. Market expansion is vital for the growth of the renewable energy sector, not only in Pakistan but in other developing countries and even in advanced nations too. The public sector must play a significant role to make it happen.
The path towards a sustainable energy future in Pakistan is not easy, but the option is evident. Nonetheless, there is a sense of limbo and impasse. No break-through is in sight. As long as there is a lack of political will and determined leadership, Pakistan will not be able to rise to the challenges.
The government has to make RE a priority area. The nation needs new legislation to make compulsory the use of alternative technologies for electricity generation for residential appliances as well as to meet energy shortages. Such an approach is more promising than simply trying to expand the national grid, which is expensive, but nonetheless will never reach all people in need.