Wind power

August 04, 2015


The writer is a business strategist and entrepreneur.
The writer is a business strategist and entrepreneur.

IN many countries, wind energy now forms a substantial portion of energy production. In Pakistan, excepting three projects of total 150MW, we have not been able to make a go of it. A few years ago the Alternate Energy Development Board (AEDB) prepared a wind energy development plan. This targeted 3,000MW by 2016 and 5,000MW by 2020. Now, there are three reasons why this is not happening: 1) Even if wind power plants are planned, we have the rather anomalous situation where the grid in the Jhimpir wind corridor does not have sufficient capacity to take in more power; 2) the constant tinkering with tariffs offered has put off many investors; and 3) the unnecessary and complicated red tape around the process for obtaining wind power generation licenses from Nepra, the national power regulator, deters many applicants who have reasons to believe that licenses are only granted to political favourites. These bottlenecks are above and beyond the largest commercial impediment to investment in any power generation business in Pakistan: circular debt.

Meanwhile in southern Sindh, tens of thousands of acres of rich wind potential are lying desolate in what should have been operational wind farms of all types and sizes. Adjacent to one of the world’s largest mega cities, this is not some remote unreachable area. In addition there is thousands of megawatts of additional potential offshore. In contrast, India has installed 24,000MW of wind power across Tamil Nadu, Maharashtra, Gujarat and Rajasthan. This is more than Pakistan’s total installed capacity from all sources and represents 10pc of India’s total power generation capacity.

Assuming there is political will, can there be a plan to harness 3,000MW in, say, the next three years?

So assuming there is political will, can there be a fast track plan to harness 3,000MW in, say, the next three years? The answer is a resounding yes. But for that, the multitude of power-sector organisations would have to align their objectives. They currently seem to be working at cross-purposes. The ministry of water and power needs to put the sequence straight. Briefly, that would require 1) the national transmission and dispatch company (NTDC) to urgently undertake a massive upgrade of grid infrastructure (its current plan of 500MW upgrade is grossly insufficient). Power evacuation is guaranteed under the power policy, there is no excuse for government failure on this count. 2) Nepra should fix a realistic and reasonable upfront tariff; and following this, it can 3) adopt a liberal licensing policy and let project sponsors find ways to develop viable projects while working within this tariff figure.

To save time, Nepra ought to grant a license (if a licensee fulfills all other conditions) even if the grid capacity currently does not exist. On granting the license it should advise NTDC to ensure the necessary grid capacity in the two years it takes for project financial close and construction. For this the NTDC should be provided funds and if it is still unable to complete the job then it can be made liable for penalty payments till the date power evacuation begins. This would remove the uncertainty and clear the way for projects to proceed.

Another opportunity is the arrangement known as wheeling, where a power producer in one location could sell electricity to a bulk consumer in another, while paying a tolling fee to the NTDC. Again the provision for this exists in the power policy but the ministry of water and power has been unable to make this work in the last two years. This policy should be made operational immediately and Nepra should penalise any distribution company (DISCO) found falling short.

This series of steps would remove the major impediments after which AEDB can be given the target to achieve 3,000MW in new projects in the next three years — that is, if the PML-N government is serious about its pledge of ending power outages, or load-shedding, as we like to call it. I raise the question because I have on more than one occasion heard talk among the wind power investment community of the current political government’s lack of enthusiasm for Sindh’s wind potential, preferring instead to prioritise the solar initiative in Cholistan and LNG-fuelled power projects in Punjab. I hope this talk is merely banter.

The latest State Bank of Pakistan report indicates that foreign direct investment (FDI) has all but dried up and is down to $700 million in the last fiscal. This reflects more a lack of imagination and capacity than any external challenge. As shown, once the objectives are aligned and things are put in the correct order, $5 billion in FDI can be attracted in the wind power

sector alone. I will ask the question one more time: does the PML-N government have the will?

The writer is a business strategist and entrepreneur.

Published in Dawn, August 4th, 2015

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