Pakistan has been undergoing an energy crisis of unprecedented volume. With a shortfall of 7000 Megawatts (MW) being reported during May to August 2023, the state suffers from worrying load shedding and an angry populace.
Presently, Pakistan’s energy mix is dominated by thermal sources i.e. 59 percent followed by hydel, nuclear and renewable; 27, 9 and 7 percent respectively. Not only is this energy mix cost-ineffective but also results in a mounting circular debt. With the increasing difference between installed power generation capacity which is 43,775 MW and power supply which stood at 21,200 MW for the months of May to August 2023, the state remains liable to pay the capacity charges to the Independent Power Producers (IPPs).
It has therefore become imperative for Pakistan’s state machinery to look for better, more reliable and cost-effective options to solve the energy crisis. Renewable energy, in particular solar and wind, hold the key to the resolution of Pakistan’s energy disaster.
What Exacerbates Pakistan’s Energy Crisis?
Over the years, Pakistan’s energy crisis has worsened owing to a plethora of policies by successive governments. Some of the main factors that have contributed to the country’s failure to reach a sustainable energy supply include an absence of political will and uniform, practical energy policies over the years.
Furthermore, Pakistan experiences economic volatility and a lack of technical know-how. Additionally, an excessive dependence on expensive, non-renewable fossil fuels (which account for 59% of the total energy mix) has also worsened the debt on national exchequer.
Pakistan faces continuous hurdles in updating its transmission and distribution lines and power generation infrastructure. Resultantly, it has been incurring extensive line losses. To make matters worse, the kunda culture i.e. free riding behavior in Pakistan whereby people steal power from the distribution lines and the consistent failure of the administrative section to keep people in check has led to rampant power theft.
Moreover, inefficient utilization of energy and wasteful practices, overpopulation and subsequently rising demand, corruption and inefficiency, myopic power deals with IPPs, and mounting circular debt have all collectively resulted in the energy crisis becoming a predicament for the state.
Current Energy Mix of Pakistan
Pakistan is rich in natural resources, including coal and fuelwood. It also features enormous potential for solar energy in the country’s southwest and south, as well as wind potential in the immediate vicinity and along its coastline. Furthermore, Pakistan has a 41722 MW hydropower potential, primarily in the north.
Tragically, political squabbles and a halt to technical growth have prevented these resources from being utilized. In Pakistan, 30% of thermal energy sources and 70% of hydel energy were used to generate electricity in the 1970s.
A least-cost energy mix for Pakistan has been recommended by the World Bank in its Variable Renewable Energy Integration and Planning Study, which may save the country’s energy sector about USD 5 billion in expenses. In essence, this would mean increasing the share of variable renewable energy sources in the energy mix to 20% until 2025 and 30% until 2030.
Need for Adoption of Renewable Energy
It has become apparent that by 2030, Pakistan must switch to an optimal or least expensive energy mix because the country is experiencing an energy crisis with the potential to worsen into an economic slump. Roughly 10,000 MW of fossil fuel-based power facilities will be phased out over the course of the following 15 years.
Also Read: Pakistan seeks Danish support for 40% Renewable Energy target
Contracts requiring both energy production and capacity payments cannot be upheld by the government, particularly in light of the growing price of imported gas and coal. The emphasis will instead be on progressively boosting the usage of renewable energy, which is in line with the government’s objective of reaching a 20% share of variable renewable energy by 2030.
Additionally, the government is required to pay for the production of electricity to Generation Companies (GENCOs) and IPPs under the terms of the take or pay agreements. A significant portion of these base load power plants could be replaced by the Renewable Energy system if its expansion is carried out in accordance with the government’s aim.
Because the production of renewable energy plants is erratic, these base load power plants would still need to run as backups, but the government power purchase agencies and WAPDA would be spared from having to adjust fuel prices. Even more encouragingly, it might lead to renegotiation of the problematic Power Purchase Agreements (PPAs) that were signed with the IPPs.
In addition, as per the World Bank’s study, the additional setup and installation expenses associated with the Renewable energy could amount to USD 0.5 to 1.5 billion. However, if Pakistan’s energy mix continues to be dominated by non-renewable energy sources, the payable externalities could be anywhere between USD 2 and USD 6 billion. In such a case, Pakistan may apply to international climate organizations for environmental funds to help cover the increased costs associated with setting up renewable energy projects.
Way Forward
The research conducted jointly by National Transmission and Distribution Company (NTDC), United States Agency for International Development (USAID) and the World Bank Pakistan has discovered a few ways to increase the nation’s solar and wind power potential without upsetting the already precarious, loss-bearing energy sector or its T&D system.
Every province in Pakistan has enormous solar and wind potential. The majority of this is located in the province of Baluchistan. There are several sites that might be ideal for the construction of hybrid farms:
- Huge wind corridors in the region of Baluchistan await the opportunity to be explored. With respect to wind potential, it is by far the richest province, and its solar resources are exploitable. Out of all the energy types in the nation, the cost per unit of wind energy produced in the western regions of the province, specifically in Chaghi, would be the lowest. The primary obstacle to realizing this promise is the need to create T&D networks and grid infrastructures, which haven’t been established for fossil fuels yet. The bright side is that Baluchistan’s territory is largely uninhabited and arid, making it easy for the province and federation to establish hybrid farms there.
- Even though Punjab has very little wind potential, its solar potential is more likely to develop. The solar farms can be built in close proximity to the load centers, eliminating line losses and sharing the excess production of base load plants, thanks to the significant maturation of the grids and T&D systems. The area in South Punjab can also be used for solar PV farms because it is unsuitable for agriculture and is thereby barren.
- Although Sindh has a grid infrastructure for wind farms and two key wind corridors, Jhimpir and Gharo, it can be further developed.
- When it comes to regulated energy potential, KPK excels at hydropower, however, it struggles with intermittent energy potential. KPK has increased its hydel power to some extent, but more work is needed because the province requires base load plants to prevent damage from fluctuations regardless of the installed renewable energy capacity.
In short, over 41 possible project sites have been identified across all four provinces.
Conclusively, Pakistan needs to move to energy sources that are reliable, sustainable and accessible in times of crisis unlike oil and gas which cannot be plugged or capped if a disaster grips the world by its throat. This does not necessarily mean abandoning non-renewable energy entirely, since that is an impossible task in such a short period. However, substituting coal and oil with solar PV, wind farms and hydel plants are feasible options that might save Pakistan from future jolts to the energy system.
**The opinions in this article are the author’s own and may not represent the views of The Diplomatic Insight. The organization does not endorse or assume responsibility for the content.
