Pakistan’s National Electricity Policy 2021 pledges that a “sustainable renewable energy market shall be developed, with a progressively increasing share in power generation as per the Indicative Generation Capacity Expansion Plan (IGCEP) based on the least cost principle.”

However, the latest IGCEP 2024-34 iteration, which outlines the country’s future energy generation strategy over a 10-year horizon to ensure reliable and sustainable power supply, does quite the opposite. It drastically slashes the share of cost-effective variable renewable energy (VRE) — solar and wind — in the total energy mix and declares expensive hydropower, nuclear and imported and Thar coal-based generation schemes as “committed” or “strategic” in complete disregard of the principle of the least cost.

“The VRE share has been reduced to 13.3 per cent in the energy mix from the previously projected 29.6pc in IGCEP 2022-31 through a substantial decrease in the planned contribution of wind, solar and other VRE sources,” notes a briefing paper prepared by the Pakistan Renewable Energy Coalition (REC). Notably, the solar share, including net metering, is projected to drop to 10pc by 2034.

The paper “Neglected Potential: How the latest IGCEP fails renewable energy future in Sindh and Balochistan” says the new IGCEP version not just goes against the Alternate and Renewable Energy (ARE) Policy, 2019 target of raising the VRE share in the energy mix to 30pc by 2030 and breaches the principle of the least cost to hold down consumer electricity tariffs but also “disproportionately overlooks the renewable energy potential in Sindh and Balochistan, which threatens to undermine the regions’ economic development and the nation’s commitment to renewable energy targets”.

The new IGCEP plan drastically slashes the share of cost-effective variable renewable energy in Sindh and Balochistan

Divergence from policy targets on VRE integration sends negative market signals, hurting investor confidence in the renewables sector and impeding the development of a robust VRE market, violating national electric policy.

As per the World Bank’s “Variable Renewable Energy Integration and Planning Study”, the US National Renewable Energy Laboratory estimates the theoretical potential for wind generation in Pakistan at 340GW, mainly in Sindh and Balochistan.

For Balochistan, the situation is abysmal as currently no solar or wind projects have been installed there, and despite the immense solar and wind integration potential of 1050MW and 1850MW, respectively, at interconnection-ready sites requiring no grid strengthening, no capacity additions have been committed or optimised in IGCEP. According to the World Bank study, Balochistan’s realisable solar and wind potential when grid strengthening measures are in place could be as high as 3.5GW and 6GW, respectively, by 2030.

The new IGCEP also overlooks feeder-based distributed generation, battery energy storage systems, and hybrid renewable energy solutions, and the quantum of net metering has also been reduced. The IGCEP 2022 had indicated that hybrid RE technologies would be considered in future iterations based on their operational feasibility studies, but they have not been considered at all.

Further, the new IGCEP version raises concerns about its overreliance on hydropower, where 70pc of the committed projects are hydro-based. By 2034, the plan projects that 60pc of energy demand will be met by hydro compared to 25pc indicated in its 2020 iteration. Likewise, solar has dropped to 25pc from 34pc and wind share from nearly 18pc to 0.5pc, mostly at the cost of the renewable energy potential of Sindh and Balochistan. Hydropower and Thar coal are favoured for generation expansion for their “potential to lower consumer costs and enhance energy security”.

Moreover, the new IGCEP iteration declares most projects as strategic, giving them preferential treatment of “committed projects” in violation of the least cost principle. Resultantly, 19,138MW (99.95pc) out of the planned capacity additions of 19,224MW by 2034 is committed capacity.

Of these, the vast majority (20 projects worth 13,672MW) are large public sector hydro (11,462MW), nuclear (1,200MW), and imported coal projects (960MW) whose financial and economic costs have neither been disclosed, nor transparently modelled nor acknowledged in the expansion plan. Only 87MW (0.05pc) has been optimised on the least cost basis — and even this optimised 87MW will originate from two hydropower projects, the REC argues.

“The emphasis on hydropower and conventional power generation sources diminishes the renewable energy opportunities in Sindh and Balochistan,” says Ammar Qaseem, an energy specialist at Renewables First. He doesn’t agree with the argument, citing the lack of transmission infrastructure for ignoring Balochistan and Sindh’s VRE potential.

“The 20pc VRE target can be largely achieved by utilising spare capacity at existing substations, without the need for immediate grid upgrades by strategically building solar and wind power close to existing substations and transmission lines,” he adds.

Therefore, a re-evaluation of the IGCEP is essential to harness the full potential of Pakistan’s renewable resources and ensure a balanced and inclusive approach to energy and economic development. “This re-evaluation would enable Sindh and Balochistan to leverage their renewable energy potential, driving regional development and contributing significantly to Pakistan’s overall energy landscape,” the REC concludes.

Published in Dawn, The Business and Finance Weekly, July 1st, 2024

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