In the context of Pakistan, renewable energy resources include biomass fuels, water, solar and wind energy, which all are potentially significant but highly unpredictable in their respective behaviours. Bio-energy systems transform biomass resources into heating, electricity and other uses, at much lower cost.
But the systems developed are at too small a scale and thus are neither economically sustainable nor reliable. Solar thermal system is employed for heating, cooking and a broad range of other applications. It is cost-effective and efficient but its market will remain undeveloped due to many factors. Solar photovoltaic systems are large scale and too expensive.
These systems are, therefore, unable to play a major role in contributing towards meeting the national power requirements, at any given time. Nonetheless, the need for rural electrification of remote areas utilising these resources that require short gestation period has assumed greater significance than ever before, particularly for containing poverty and improving socio-economic conditions.
In fact, Sindh and Balochistan provinces are ideal for utilisation of solar energy. In some of these far-flung areas, sadly, light is the only requirement of the populace, and there are about 44,000 villages in the country yet to be electrified.
Since July 2003, the government has implemented a plan to develop remote areas with the help of alternate energy resources. The schemes included construction of 5,000 solar homes, 10,000 solar cookers and 6,000 geysers. The physical achievement, however, remains much below the target.
Power generation through exploitation of renewable resources of wind energy and small hydropower at a large scale can prove to be economically viable and sustainable. These projects entail high capital cost and associate different risks-hydel projects are complex in nature, whereas power from wind turbines may be available intermittently.
The National Energy Security Plan proposes to set up renewable energy projects, progressively, with a cumulative capacity of 9,700 MW, by the year 2030, with focus on exploiting wind energy resources. It was planned to contribute from present non-existent share of renewable energy to the initial level of ten percent in the total installed power capacity by 2010. This, however, does not seem to be practically achievable under the given circumstances.
The AEDB, since its inception in July 2003, has not been able to establish a single project worth mentioning, either wind or solar energy. It had taken over the UNDP-sponsored 100-150 MW wind farm project for fast-track implementation, for which a comprehensive feasibility study was available many years ago, but failed to achieve any physical progress so far.
The dismal performance of the AEDB may have direct impact on the prospects of success of the new Power Policy in so far as the wind energy is concerned. The original target of developing power through renewable energy resources to achieve 10% share in total installed generation capacity by the year 2010 was revised downward to 5% in 2005 and has been further slashed this year to just over one percent.
This may precisely be the reason that the Policy allows AEDB to deal with, in addition to micro - (less than 100 kW) and mini - (100 kW to one MW) hydropower units, the development of small hydropower projects up to 50 MW capacity, in a bid to justify its existence.
At present, three wind-farm power projects of total 145 MW capacity are being established, on Build, Own, Operate and Transfer (BOOT) basis, at Keti Bandar and Gharo in Sindh.
These "fast-track projects", which are being implemented by the American, Canadian and Swedish wind turbine manufacturers jointly with local investors, have already run into snags, delayed by almost two years and are being re-scheduled for commercial operation.
In the second phase, wind power plants of 700 MW cumulative capacity will be installed. As many as 22 national and international companies have signed contracts for developing projects of about 1,100 MW cumulative capacity windmill farms, however the prospective sponsors have not come forward so far.
The Policy, nonetheless, attempts to extend more incentives and benefits, even to the on-going projects, as it would basically deal with the projects achieving financial close by end June 2008.
The power purchaser, as per the provisions of the policy, shall absorb the risk of availability of wind speed that would have impact on effective energy output. Sadly, the policy document does not provide any safeguard to the consumer ensuring affordable electricity.
World-over the wind energy system is known for moderate capital outlay, short lead-time, lower line losses and increased energy efficiency of electricity distribution. Thus, the wind energy power generation cost is much lower than the oil - or gas-based projects.
Wind energy costs compare favourably with conventional fossil-fuelled power plants, and continue to decline steadily and substantially as technology improves. Wind power generation cost has come down to an average of US Cents 2.5 per kWh in developed countries while in developing countries, the cost is a maximum of Cents 5 per unit depending upon site conditions.
Earlier, the AEDB had estimated energy cost through its planned projects as Cents 7 per kWh, which was considered to be on the higher side and was acceptable to project sponsors. But NEPRA has subsequently allowed, in August this year, an up-front tariff of Cents 11.75 per kWh levellised (average) for the first 10 years and Cents 9.5 per kWh levellised for project life of 20 years.
A 45-MW wind energy project in Pakistan is costing US $400 million, in spite of cheap and subsidised land-cost, availability of infrastructure and numerous concessions to the investor. Undoubtedly, the Western investors and suppliers of machinery have taken us for a ride, as they develop business opportunities in Pakistan's emerging market, with much higher profits.
Pakistan Power Policy 2002 categorises projects up to 50 MW as small hydropower, and their development is within the purview of the provincial and Azad Jammu & Kashmir (AJK) governments. At present a number of small-size hydel power plants are operating in the country, predominantly in the public sector, with a total installed capacity of approx. 242 MW.
WAPDA is operating eight small hydel power plants having over 107 MW total installed capacity. Sarhad Hydel Development Organisation (SHYDO) has developed a number of small hydropower stations in the NWFP, a few of which have recently been leased out to the private sector.
In the Azad Jammu and Kashmir, there exist seven hydel power stations, in the range of 0.1 MW to 30.4 MW capacity. The projects developed by the private sector include Jagran power project (30 MW) commissioned in October 2000 and Jarikas (Mirpur) power station (1 MW), which is in operation for the last eight years or so. The policy, nonetheless, claims to deal with the "first-of-kind" renewable energy projects.
According to a report published by the PPIB, there exists a total hydropower potential of additional 41,722 MW. Out of this, as many as 570 schemes and sites, with a potential of cumulative capacity of above 2,165 MW capacity, have already been identified for establishing small-size hydropower stations.
These schemes of capacity varying up to 40 MW capacity include projects for which technical and economic feasibility studies have been finalised. Studies are being conducted on various other sites too in the country meanwhile, and the experts estimate that further potential exists to generate additionally 3,000 to 4,000 MW through establishing small hydropower plants.
Punjab government has recently approved 40 schemes of small power units on various canals and barrages that would be capable to generate a cumulative total of 65 MW electricity.
Efforts are thus underway by various concerned departments and agencies, at provincial level, to exploit the small hydropower potential with the strong participation of the private sector. Power policies of the governments of the NWFP and AJK have adopted simple procedures, extending fiscal and financial concessions and attractive tariffs.
The NWFP government has recently revised its power policy to make it more investor-friendly, while the Punjab government has approved the hydel power policy only last month.
The latest move of the AEDB to take over the authority and resources resting with the provinces is bound to create conflicts and non-co-operation, if not a tug-of-war situation, among various federal and provincial organisations, thus hampering the on-going progress on development of small hydropower.
The nation has suffered heavily, in the past, due to lack of implementation of comprehensive, integrated and consistent policies, thereby facilitating promotion of a sub-sector at the cost of the other. This is yet another case. The Policy for Power Generation Projects Year 2002 provides requisite framework, guidelines, fiscal and financial incentives and concessions to power plants of 50 MW capacity and above, including renewable energy projects, and has been successful.
The Renewable Energy Policy has adopted same or similar guidelines, concessions and provisions for application and implementation procedures etc, but offering much liberal and attractive incentives package to the investor.
Even neighbouring India, which currently generates a total of about 7,000 MW power in private sector through renewable energy resources, had not offered similar or comparable incentives to the investors at any stage.
In essence, the Policy for the Development of Renewable Energy in Pakistan 2006 is a flawed document with misplaced focus. It is simply an attempt to build the AEDB empire that would result in widening the gulf between the federal and respective provincial governments, implementation of which may not ensure the envisaged achievement of desired objectives.
It may attract private sector investment in the renewable energy projects, but availability of electricity to the consumer at affordable tariff shall remain elusive in the foreseeable future.
(Concluded)
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