Can help cut $500m losses and circular debt: World Bank calls for utilising Balochistan’s ‘VRE’ potential

ISLAMABAD: Balochistan has enormous variable renewable energy (VRE) potential which can electrify the province and help Pakistan in achieving the 30 percent VRE target, besides reducing the approximately $500 million annual losses by 2028, contributing to reducing the circular debt in the sector, says the World Bank.

The bank in its latest report, “Balochistan Renewable Energy Development Study,” stated that enhancing the grid capacity and expansion for developing VRE opportunities would reduce the country’s dependence on water availability for hydropower generation. It also will develop Balochistan’s economy and in the longer run, will reduce the cost of electricity for other provinces by more than $1 billion. Realising VRE opportunities in Balochistan will reduce Pakistan’s need for electricity imports, it added.

The report noted that Balochistan offers an impressive resource potential for economically viable solar and wind power generation, both of which are mostly untapped so far. With a photovoltaic (PV) potential ranging from 2,000 to 2,500 kWh/m2, Balochistan emerges as one of the world’s most resource-rich regions. PV power in Balochistan can achieve grid utilisation factors up to 35 percent, and its supply profile correlates positively with the demand profile. Additionally, excellent available Direct Normal Irradiation (DNI) of up to 2,500 kWh/m² per year in some areas of Balochistan offers great opportunities for Concentrated Solar Power (CSP).

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Furthermore, Balochistan has the best spots for wind power within Pakistan in the remote areas of Chagai and Panjgur, with average wind speeds of up to 10 m/s at a height of 100m, corresponding to a 15 GW power generation potential capacity at a highly competitive cost from clean energy resources.

Roughly 5 GW of short-term opportunity in 28 sites for different types of technology have been identified—based on the long list of priority sites identified by the VRE Locational Study, exploring the grid slots and land availability in more depth and analyzing them further to achieve the most competitive generation from VRE. This significant potential capacity is the “low-hanging fruit” opportunity, which can be unlocked in the short term (2028) by utilizing the current grid infrastructure. The analysis considered the expected energy yield, installation cost (including grid connection), and expected price of electricity for the identified capacity. The output of this exercise is shown below as potential short-term utility-scale projects overlaid on a PV energy output map, in line with the 2028 National Transmission System Expansion Plan (TSEP).

The expected PPA rates under the current cost framework and condition of the sector are between US$0.042 and US$0.057/kWh for these identified sites. Implementing of identified VRE by 2028 would not only help Balochistan transition fully toward clean energy — as the VRE potential surpasses the Balochistan demand in 2028—but also create an opportunity where competitive low-cost RE energy becomes available for other provinces.

In addition, there is a potential for 1.7 GWp Distributed PV to solarise about 28,000 grid-connected tube wells operated by farmers, the main electricity consumer in Balochistan. Installation of DPV would not only free up an additional capacity in the grid for further VRE installation but when combined with the investment in efficient motors and pumps; it would dramatically reduce the electricity losses in this segment. In other words, it would improve the electricity company’s financial stability by reducing the approximately US$500 million annual losses by 2028, contributing to reducing the circular debt in the sector. By co-locating solar and wind capacity, more reliable, least-cost energy options will be available in the long run—at a higher generation capacity factor than comparable hydropower plants. Western Balochistan possesses significant potential for wind and solar PV electricity co-generation. This area’s vast available space further enhances its potential for generating green energy at low costs, where up to 9 GW of solar and wind could be developed in stages as a large hybrid park with a higher capacity factor than comparable hydropower projects at competitive costs ranging from US$0.065 to US$0.082/kWh. Enhancing the grid capacity and expansion for developing VRE opportunities would reduce the country’s dependence on water availability for hydropower generation. It also will develop Balochistan’s economy and in the longer run, will reduce the cost of electricity for other provinces by more than $1 billion.

The bank recommended that to unlock the identified potential, an active governmental role, political support, and strong decision-making at both the provincial and national levels are needed. At the federal level, the Pakistan government should set clear targets and clarify responsibilities among provincial and federal governmental entities for developing VRE projects.

The federal government should strongly encourage the opportunities identified in the rolling planning activities for the national electricity supply. The NTDC approval of the plants identified in this study would be required to start the planning, while the grid interconnection readiness can be checked in-house. For the PPIB, the opportunity can be taken up for competitive bidding once the national competitive bidding process is finalised. To get the lowest cost with the highest line capacity factor, the bidding should focus on the maximum energy to be delivered into the grid (AC requirement) rather than a fixed DC size.

The bank further stated that local acceptance and community engagement are critical factors for successfully realising RE projects. This serves to mitigate the security risks. Conversely, if RE projects are realised without the prior engagement of local communities, a negative local perception of those projects is expected. Some guidelines include participatory processes that can lead to increased public acceptance.

Copyright Business Recorder, 2024