THE total installed wind power capacity now stands at 60,000 MW. Nearly 50 countries have laws and regulations to support the development of renewable energies such as wind, which are gaining importance, thanks to the spiralling cost of oil and gas and the need to limit emissions because of global warming.

A record was set in 2005 with the installation of 11,769 mw of wind energy, representing a 43.4 per cent increase in annual addition to the global market. The annual growth rate was 25.5 per cent during last ten years.

The countries with the highest total installed capacity are Germany 18,428 MW, Spain 10,027 mw, the USA 9,149 mwW, India 4,430 mw and Denmark 3,122 mwW (2005 figures). India has thereby overtaken Denmark as the fourth largest wind market in the world. A number of other countries, including Italy, the UK, Holland, China, Japan and Portugal have crossed the 1,000 mw mark of installed capacity.

Every single installed mw of wind power saves approximately 2,000 tons of CO2, 27 million cubic feet natural gas or 25 million litres of HSD every year. One can easily weigh the benefits in terms of environment and fuel bill.

According to a survey from Eurobarometer published in January 2006, almost 80 per cent of EU citizens prefer renewable energies as alternative to high-priced oil and gas imports, while nuclear is preferred by only 12 per cent.

Indian experience: As wind energy comes under non-conventional energy, it gets a tax break of 80 per cent as depreciation during the first year. Banks / IREDA provide 70-80 per cent of the project cost as loans at nine per cent interest for installation of wind energy. The energy produced can be sold to State Electricity Boards.

Domestic demand and supply: Pakistan has a total installed generating capacity of about 19,522 MW. The break-up is: Wapda 11,327 MW, KESC 1,756 MW, PAEC 462 MW and IPPs 5,977 mw. Of the total capacity, 5,000 mw (about 26 per cent) is hydro while the rest 14,522 mw is thermal.

Between 1985 and 2005, Pakistan’s total installed power generating capacity increased nearly fourfold i.e. from 5229 mw to 19,522 mw. Between 1991 and 2004, total consumption increased by more than 84 per cent i.e. from 31 TWh to 57 TWh.

The demand for electricity will continue to rise in the years to come. An average annual increase of seven per cent has been postulated in the following graph. The power supply line is well below the generating capacity which needs separate discussion and elaboration.

To cater for this growing power demand, 45 new power plants of aggregate capacity of 12,000 mw are expected to be constructed between 2008 and 2013. Among these, 30 are thermal (gas, oil, coal) and 15 are hydro. Nuclear and wind are not included in the list.

Energy security: Gas is a prime mover of Pakistan’s economy whose use, allocation and prices should be managed with great care, expertise and long-run vision.

The biggest consumer of gas is the power sector which uses it for generating electricity. Nearly 45 per cent of the gas fuels the power sector whereas industry uses 19 per cent. The fertilizer industry uses only 16 per cent as feed stock for producing urea, the major fertilizer of agriculture based Pakistan. Domestic consumption is 15 per cent followed by commercial and CNG use of two per cent each.

During FY 2004-05, the total gas consumption was 1.3 trillion cubic feet (TCF). Our current gas reserves are 32 TCF. At present rate of consumption, which is bound to rise with increase in growth, our reserves are adequate for only 24 years.

As the import bill of petroleum products rose by 64.5 per cent to $4.615 billion during the July-March period of the current fiscal year as against $2.806 billion during the same period last year, the need of an energy security plan based on renewable sources is all the more important.

Comparing wind with fossil fuel: Presently the upfront tariff of power produced by new gas run plants is 6.6-7.3 c$/kWh and by oil run plants is 11-15 c$/kWh for the first ten years on BOO basis. The tariff worked out for a 50 mw wind farm is around 11 c$/kWh on the same basis.

Since gas and oil prices are often linked to wind power as people often compare wind tariff with fossil fuel tariff, it is pertinent to mention their volatility especially in domestic market. The natural gas prices in Pakistan have skyrocketed to Rs241 in current year from Rs108/ MMBtu in 1999, indicating an average annual increase of 12 per cent.

As the price of fuel gas will rise around 10-15 per cent per annum till 2010, the new market products like imported LNG, imported pipeline gas and domestic financial structure will dictate its price.

Similarly, the international prices of fuel oil increases with an average annual figure of 18 per cent in the last seven years. The furnace oil increased sharply in 2005 from Rs12,190 per ton to Rs21,303 per ton, an increase of 75 per cent. Now it stands at around Rs27,000 per ton.

An oil market think tank based in USA (Facts Inc.) presented future scenario of oil prices in international market up to year 2015. Three cases were projected: (a) Base case representing 8.2 per cent annual growth rate (AGR) in oil prices, (b) High case portraying 10.5 per cent AGR, (c) Low case depicting five per cent AGR.

Even if we consider the low case of five AGR in oil prices and 7.5 per cent for gas prices and project, the upfront tariffs defined by Nepra for fossil fuel plants for the next 20 years, we will see that wind power will be cheaper than composite fossil fuel power after only five years from now. Wind power tariff will touch rock bottom after 10 years when the debt will be repaid. No other source of energy can compete with wind power.

Comparing with hydro: After so many years of hibernation, now Pakistan is upbeat with the new hydro projects. This only happens due to the foresight of present government and subsequent provision of a supporting policy including higher tariffs for hydro power units. No doubt hydro power is the requirement of the day but it cannot be conceived as replacement of wind power.

Wind power has unparalleled advantages over hydro like fastest project completion, no destruction of land and environment, no population shifting and no political estrangement.

Environment: Thermal power production is a major contributor to the greenhouse gases. The warmest month ever recorded was July 1999 and the warmest year was 1998. The warmest decade was the 1990s and needless to say that the warmest century in the last 10,000 years was the 20th century. There is a dire need to reduce the global warming and wind power is one of the five best devices for reducing global warming out of a list of 75 options.

Renewable energy: In May 2001, the two separate research institutions NIST and PCAT merged to become the Pakistan Council for Renewable Energy Technology (PCRET), the main goal being to better co-ordinate research activities and avoid overlaps.

The Alternative Energy Development Board (AEDB) was founded in May 2003 for supplying wind- solar and mini / small hydropower generated electricity in remote regions.

AEDB is also responsible for developing the country’s medium- and long-term promotion policy for renewable energy sources. In addition, its functions include the coordination of joint ventures with the aim of having foreign technologies in the field of alternative energies fabricated in Pakistan.

The AEDB has a mandate of 10 per cent of the total installed capacity from Renewable Energy sources by 2015. The government has decided to install 100 MW wind power farms during the year 2006. This programme initiated by the AEDB involves financing through private sector, land on lease from the government of Sindh and power purchase by NTDC for HESCO / KESC.

The federal government guarantees are backed through Nepra. The AEDB has issued LOIs to 34 national and international companies for generation of 50 MW each totalling 1700 MW power through wind energy.

The Sindh government has leased out around 18000 acres of land for the project to 12 LOI holders. Land for balance of 22 investors to be leased as soon as possible. The land leased so far is creek land, barren and uninhabited. Water comes in and goes out twice a day and follows the moon pattern also. The sea gets rough during monsoon season, which is starting now, however, the creeks are not rough but the water rises in them, makes movement restricted.

The new transmission line from Thatta to individual wind farms is to be constructed by NTDC in order to evacuate the 132 kV power generated by the wind. Similarly, the access road to wind farms capable of carrying heavy and very long loads and dyke to check water incursion into wind farm area are to be constructed. There is a need to speed up these constructions to match with the schedule of wind power projects. Without this infrastructure, wind power projects will remain on paper.

The government has already issued guidelines for determination of tariff for wind power generation. The main highlights are:

• Power purchaser (PP) to buy all generated electricity; IPP will be made immune to the variation of wind; however, it will be responsible for the availability of plant. PP will take wind risk up to the bench mark; construction of transmission line should be the responsibility of PP; 15 per cent IRR is guaranteed; variation in exchange rate for the dollar and floating interest rates are indexed; O&M costs are indexed with wholesale price index (WPI); exemption from income tax, turnover rate tax and withholding tax on imports; zero custom duty and sales tax on plant and machinery, spares and construction machinery and equipment; 10 per cent custom duty and zero sales tax for spares after commissioning; five per cent custom duty and zero sales tax for transmission and grid station equipment

Conclusions: No external energy dependence; no energy imports; no fuel costs and price risk; no exploration, extraction, refining; no pipelines; no CO2 emissions and radioactive waste. Can we say no to that?