Rethinking renewable resistance

There is a major shift in paradigm taking place in the global energy landscape with renewables gaining popularity. The reasons are obvious with the ever decreasing cost trend coupled with the environmental friendly impact. The International Energy Agency (IEA) has predicted the share of renewable energy in the global energy mix to rise to at least 26 percent by 2020.

Even countries like Saudi Arabia have jumped on the renewable train with the Kingdom seeking to invest a whopping $50 billion in the renewable energy sector. However, back home the case has not been particularly optimistic for renewable energy with policymakers making the constant base load argument to discourage renewables in the power sector.

Put simply, officials of the Ministry of Water and Power (MoWP) believe due to the intermittent nature of renewable sources liked wind and solar it is not possible to rely on these for minimum power generation also called the base load. One of the major reasons behind this is incapacity of the grid to handle the fluctuating renewable load.

In recent interview with BR Research, Kashif Ansari, CEO of Sachal Wind, was of the view that “renewables were being sacrificed at the altar of the grid.” A visible example is the treatment of wind power IPPs which have faced considerable constraints in getting grid connections from the National Transmission and Despatch Company (NTDC).

The good news is that Denmark has offered to provide assistance to Pakistan in increasing its renewable energy share in the power mix by improving grid constraints. The Danish Ambassador Ole Thonke told BR Research that Denmark has been able to change the dynamics by making renewables as base load.

Pakistan stands today where Denmark was in the early 1970s with the majority of power generation being done by expensive imported fuels. From having more than 90 percent imported oil in its energy mix in the 1970s, the Danish now boast over 40 percent renewables in their power mix. The major reason behind the shift was the crippling pressure it put on foreign exchange reserves and the current account deficit.

Pakistan has also faced similar situations with the most crushing being the 2008 spike in oil prices when crude oil shot to $140/bl. However, our policymakers have still not realised the importance of weaning the country away from expensive fuel imports. There is a consensus among energy experts that Pakistan can achieve 25 percent of renewable energy in its total energy mix from the current paltry 5 percent. The Danish offer comes as boon to this desired target and coupled with the ready financing of renewable energy projects by multi-lateral institutions such as the Asian Development Bank, the target is realistically achievable.

The world’s largest wind turbine maker, Vestas Wind Systems also Danish, is investing more than $2 billion to initially set up 250MW of wind farms which is part of the 1000MW Quaid-e-Azam Wind Park in Punjab. If the company can pull off the project in a cost competitive manner against traditional fossil fuel based energy, the perception about the scale and scope of wind energy might be altered positively.

. This column agrees with the Danish Ambassador’s view that in the next five to ten years the prices of renewables will continue to go down, and it will outcompete traditional fossil fuel based electricity. The disruption is not a question of “if” but when and it is crucial for Pakistan to start planning for it in a strategic and long term manner. It is not possible to increase the share from the current 5 percent to 25 percent in a year or two.

As the power sector is going a major transformation now is the time to start investing in renewables and utilising the necessary expertise offered by the Danish to overcome our grid constraints. Otherwise, as has been the norm in the past Pakistan will miss the bus and continue its historical trend of using inefficient and obsolete resources to meet its energy needs.