Electricity trends

June 19, 2016


The writer is a renewable energy entrepreneur.
The writer is a renewable energy entrepreneur.

THE electricity grids we have today were designed in the 19th century to transport energy from a central power generation plant and deliver it to the substation level to serve communities. From there, the distribution circuits could carry it to the end consumer.

Going forward, this one-way flow is going to change dramatically. Four main trends are going to drive the change. Let’s examine them and see whether our energy governance regime is ready to embrace that future.

The first is that we can expect to see a lot more renewable energy generation, notably from wind and solar central ‘farms’ entering the grid. Driven by climate change concerns, staggering allocations towards research and development into these technologies have led to manufacturing efficiencies and exponentially lowered costs. Today, the cost of generating solar electricity even without any subsidy is cheaper than any other type of fossil fuel even at the presently depressed oil prices.

The second trend would be distributed generation with many more homes generating most of their own energy requirements and even some surplus to feed back into the grid. Both these trends would require a lot more automation on the grid to adapt to the variability of generation. Energy storage may be required in parts of the grid to create buffers and smooth out variability. All this would dramatically change how the grid is operated — often referred to as ‘smart grid capability’.

The third trend would be the development of high-density batteries and, by 2025, electric vehicles. An average vehicle would require power equivalent to one or two households. Many households have more than one car. So imagine what that would do to the grid in areas with high vehicle density when all commuters plug in their batteries before or after their commute. A habit not so unlike how we plug our mobile phone charger in at night-time.

The government should promote small-scale solar power installations.

The fourth trend would be an open-access electricity trading regime where you, as the consumer, would be able to buy, sell and store electricity. There would be different rates for different times of the day and even dynamic rates, spot and future prices.

You would perhaps instal a software app that predicts your demand pattern against the production from your solar PV rooftop system, then taking into account your home’s installed battery capacity, decide when to buy and store and when to dispatch electricity back into the grid in a way that gives you the most favourable outcome.

If things work out this way you could expect to be paying less for your electricity and car fuel costs going forward. The cost of solar generated electricity from some large plants being built in the US, the Middle East and India is coming in at under five cents a unit this year.

In Pakistan too, a cost as low as Rs4 per unit can be achieved from a good quality home rooftop mounted solar plant. For its part, our government appears to be frantically seeking investment in coal- and LNG-fired power plants and locking itself into long-term contracts in excess of eight and 10 cents per unit respectively.

Allowing for the fact that some base load in thermal generation capacity is necessary, it should be understood that these rates will adversely affect electricity prices in the event of the rupee losing strength in the future. Any rise in fuel commodity prices will also reflect in the form of fuel adjustment surcharge, as will costs of transmission and losses, all of which are passed on to the end consumer.

Instead, it should be exerting equal effort into achieving ‘distributed generation’ by promoting small-scale solar power installations at homes, offices, industry and for water pumping in agriculture.

On the other hand, the government has announced a subsidy in electricity tariff for agriculture when the same effect could have been achieved by devising a clever programme with renewable energy and without needing to burden the exchequer.

It should also be exerting an equal amount of effort into modernising the grid to handle more renewable energy — in other words, attracting investment in a smart grid. But the power-sector reforms have languished under the present government, neither has the latter been able to privatise or attract investment in the distribution companies.

Ironically, even K-Electric under private management is seen to be dragging its feet in implementing Nepra’s regulations on net metering. This measure alone could be the shot in the arm for consumers to access the best benefits of solar electricity.

Unless the government gets its act together very quickly, Pakistan will be a laggard in arriving in this exciting new world which is unfolding at a rapid pace all around us.

The writer is a renewable energy entrepreneur.


Published in Dawn, June 19th, 2016