THE National Electric Power Regulatory Authority, the power sector regulator, has rightly blamed poor planning for generation overcapacity, which has made electricity unaffordable not just for residential consumers but also for industry. In a new report, the regulator has noted that “overinvestment in generation capacity to meet peak demand” is one of the key contributors to rising consumer tariffs and a burden on government finances. “Despite the fact that existing installed electric power generation capacity often remains underutilised in Pakistan, the IGCEP (Indicative Generation Capacity Expansion Plan) is developed with the aim to meet the peak demands that occur for less than few hours annually,” Nepra said. Other factors driving up consumer tariffs, according to the report, include delays in the expansion of Thar coal power and discouragement of rooftop solar adoption.
At the close of the 2024 fiscal year, the installed generation capacity was 42,512MW while the transmission and distribution network could bear a maximum load of only 25,516MW. That is not all. The maximum demand had peaked to 30,150 MW for a limited duration while the minimum demand stood at 7,015MW. The average annual load served was 18,463MW. In other words, Pakistan still has much more generation capacity than what it actually needs. However, these are the facts that most of us knew and which have widely been discussed. The question is what policymakers and planners can do to find a solution to the challenge of excess generation capacity combined with fluctuating demand and the system’s inability to consistently meet maximum demand.
The fact remains that the National Transmission and Despatch Company, one of the power sector regulators responsible for planning future needs of generation, transmission and distribution, has repeatedly proved that it does not have a vision or capacity to predict future demand and requirements. Not just that; a look at the last draft of the IGCEP, a document that projects future demand for the next 10 years, clearly indicates that the NTDC is also incapable of ensuring the development of new generation capacity on least-cost basis. That draft has now been retracted and a new version is being developed. With new developments being reported in renewable energy and battery technology helping slash the installation costs and increasing storage capacity, it is now only a matter of time before solar power disrupts and displaces the national grid. The Nepra report has correctly pointed out that the adoption of solar power should not be seen as a challenge but as an opportunity. The new IGCEP draft should focus on encouraging renewable energy, especially solar, rather than looking towards expensive hydel and dirty coal power. The reliance on fossil fuel-based generation technologies will only make electricity more expensive at the expense of economic progress.
Published in Dawn, January 6th, 2025
