Clean energy is ramping up in Pakistan. Solar PV and LED lighting solutions are fast becoming pervasive in both rural and urban areas with thousands of small businesses signing up for clean energy.
For consumers, it is only logical to move beyond intermittent grid electricity which has proven to be both expensive and unreliable.
As per the latest International Energy Agency Report for 2016, clean energy accounted for 70pc of total electricity generation investment, sidelining investments in fossil-fuel based generation by a wide margin.
Clean energy investments are led by wind power (37pc), solar PV (34pc) and hydropower (20pc).
Amongst countries, China leads the global investment in clean energy generation and continues to invest roughly more than double its investment in clean energy as compared to fossil fuel generation, followed by the European Union, the United States and Japan.
Pakistan has taken a different approach towards energy security. The CPEC has shifted the bulk of the new additions to coal and nuclear. Despite this, solar, wind and micro hydro have all taken off.
What is really encouraging is the use of solar PV by small and medium businesses amid unreliable and expensive grid electricity.
The electricity regular, Nepra, must be given full credit for setting the right sectoral tone by introducing Wheeling, Net Metering and Distributive Generation regulations, all in a short span of time.
Consumers have realised that it is grid energy which is intermittent and expensive and not clean energy.
At the grid level, consumers are unnecessarily penalised with surcharges and taxes which include tariff rationalisation surcharge, debt servicing surcharge, Neelum Jhelum surcharge, FED, sales tax and other fees.
Through all this, the cost of grid electricity is being pushed much higher despite low crude oil prices.
Circular debt, as per media reports, is once again hovering in the range of Rs450 billion and the only plausible way to pay it off is via levy of another surcharge. It has become a norm in the sector that those who pay are only asked to pay more for those who don’t pay at all.
Pakistan needs to understand the business case for clean energy — primarily the impact on jobs and increase in business productivity.
As a country, we too will be adding roughly 1,000MW of clean energy (wind, solar and bagasse) in the next two years but will be adding substantially more from coal and nuclear power.
The government needs to realise that the tide has shifted. The old notions that clean energy is expensive and intermittent no longer holds true.
With changing times, incentives must be provided to help scale clean energy, provide it with the right eco-system, along with regulations to help consumers shift to improved technologies.
Now is the time for Pakistan to truly embrace its clean energy potential, make an early transition and reap the benefits of higher business productivity and increased job creation.
The Writer is a Fulbright scholar and currently serves as a consultant to the Asian Development Bank
Published in Dawn, The Business and Finance Weekly, July 3rd, 2017
