The planning of Pakistan’s power sector, particularly the generation expansion strategy, has transcended from being a mere hugger-mugger anecdote or juicy elbow-gripping gossip to a matter of national significance.
According to the Grid Code 2023 under PC4, the National Transmission and Despatch Company (NTDC) is mandated to prepare a comprehensive generation capacity expansion plan every year, spanning at least ten years with a rolling horizon.
Despite this mandate, the latest Integrated Generation Capacity Expansion Plan (IGCEP) has come under scrutiny for its failure to address key considerations essential for a robust national power strategy.
The journey began with the first IGCEP in 2021, which optimised 3,083MW of renewable energy over ten years, envisioning a total generation capacity of 53.3GW.
The subsequent IGCEP 2022 revised the demand forecast, projecting a generation capacity of 68.6 GW by FY2031, with a 30% share of renewable energy and a 33% share of hydropower.
However, the latest IGCEP 2024 presents a significantly reduced demand forecast, raising several concerns. Hydropower projects dominate the committed capacity, with major initiatives like Dasu (2,160MW), Mohmand Dam (800MW), and Diamer Bhasha (4,500MW) scheduled for completion between 2025 and 2030.
Nevertheless, the plan overlooks potential delays and cost overruns that often afflict large hydropower projects. For example, approximately 2,200MW of hydropower capacity classified as committed in the previous IGCEP 2022-31 has now been reclassified as candidate projects, with an average CAPEX increase of 28% and delays of 2-3 years.
Consequently, considering 10,177MW of hydropower as committed is unrealistic and marginalizes more cost-effective renewable sources like wind and solar.
One of the most critical oversights in the IGCEP 2024 is the net metering projections. The plan assumes 2,107MW from net metering by FY2034.
Investments in modernising the distribution grid has an added advantage that monitoring and control enables the overcoming of theft and losses other than the benefit of increased RE absorption.
However, as of April 2024, the installed net metering capacity had already exceeded 2,000MW, and this trend is expected to always accelerate due to rising electricity prices and solar PV prices lowest in Pakistan.
Additionally, the federal and provincial governments are aggressively promoting solarisation to maximize the use of indigenous and renewable sources.
It is believed that one reason for the decline in energy demand of the system is due to solarisation whether net metered or non-net metered.
According to Bloomberg, Pakistan imported around 13,000MW of solar modules in the first six months of 2024 alone, making it the third-largest destination for Chinese exporters.
This massive import volume and the growing trend of rooftop solar installations necessitate a prudent consideration of solarisation’s impact on demand side. Incorporating rooftop solar, both net-metered and non-metered, across all consumer types—industrial, three-phase, and single-phase—is crucial.
Therefore, projecting a mere 2,107MW of net metering (with approximately 200MW of Net Metering per annum) capacity over the next ten years is unrealistic and far from reality.
NTDC Planning department argues that the business-as-usual growth rate taken as 2.8% in the existing IGCEP caters for the rise in net-metered solarisation. However, it is worth mentioning that IGCEP does not specifically mention this and only mentions the yearly quantum of net metered solar systems.
It is also essential to evaluate whether to include utility-scale or distributed rooftop solar systems.
The average power purchase price for large-scale solar projects (approximately 750 MW) in Pakistan have reached PKR 37/kWh, while the same energy can be supplied to the neighborhood load at PKR 27/kWh through rooftop solar (due to its excess energy).
It is important to note that the PKR 37/unit cost for large-scale solar does not include Use of System Charges (UoSC) and the distribution margin of the grid. Moreover, rooftop solar systems provide energy at a fixed price per kWh, without the need for sovereign guarantees or tariff indexations and adjustments, thereby relieving the government of these complex obligations.
The major questions to be asked are.
- Whether adding additional central power procurement makes sense considering the yearly decrease in energy demand despite low energy forecast growth?
- Whether the forecasted Net Metered yearly capacity addition in IGCEP should be replaced with Distributed Solar PV quantum (NM and Non net metered) with more realistic projections?
- Whether consumer-based Roof top solar should be encouraged rather than Government procured utility scale solar?
Renewables First and PRIED (Policy Research Institute for Equitable Development) have proposed some approaches, modeling the entire power generation system using PLEXOS, the same optimisation tool employed by NTDC. RF-PRIED introduced a unique “No Capacity Addition (NCA)” scenario, demonstrating that the existing generation fleet could meet future energy demand projections even without the addition of new generation plants.
This scenario assumes continued solarisation at the existing rates and a further decline in demand, presenting an alternative pathway for Pakistan’s power sector.
In the first sensitivity of the NCA scenario, a cumulative sum of 18GW of solar generation has been considered at the demand side for the next 10 years, labeling this sensitivity as aggressive solarisation.
The results suggest that the existing generation fleet of NTDC can effectively meet the demand during the entire planning horizon as a sizable chunk of demand vanishes from the demand profile due to solarisation. This also acts as fuel substitution.
One may argue about the demand that exists during the nighttime; for this, the existing thermal fleet, especially RLNG, that remains unutilised in the NTDC’s base case scenario, is contributing to shaving off the demand arising during the nighttime, solving the issues of unutilised capacity.
The total NPV cost in this case is around 36.8 billion USD, showing potential savings. Another important highlight is that with 18GW of Solarisation by FY 2033 along with other committed quantum of renewables, i.e., 3.5GW, the ARE Policy 2019 targets can be successfully met with no or minimal investment in the generation side.
Instead, the government should consider investing in the distribution side and grid modernization to accommodate rooftop solar additions. In the Transmission System Expansion Plan (TSEP) that came along with the IGCEP 2024, around 5.5 billion USD investment is suggested in the transmission system, this investment must also proportionate toward the distribution sector as well.
Making investments in the distribution sector have several benefits, one is to maximise the share of renewables by updating the distribution grids to cater more net metering quantum, additionally this will also yield efficiencies in the distribution sector along with reduction in electricity thefts by using advanced infrastructure hence improving recovery rates.
In the next sensitivity of the NCA scenario, a passive estimate of net metering, i.e., 10GW, is considered. The results of this sensitivity analysis suggest that the existing fleet can successfully meet the demand in the next ten years with a total system cost (NPV) of around 37.4 billion USD. The slight increase in the NPV shows that generation cost has increased due to increased utilization of RLNG-based power plants.
In the last sensitivity of the NCA, the committed generation capacity until FY 2027 is also considered along with the net metering quantum of 10GW. The results show that the total system cost (NPV) is around 56.4 billion USD, and this increased system cost shows that an additional 19 billion USD would be needed in the generation side for the projects that are committed until FY 2027.
Since the NCA scenarios suggest that no further capacity addition is required given the increased rooftop solar additions along with the adequacy of the existing generation fleet, the planning departments and ministry should consider the recommendations of these scenarios.
Given that Pakistan is already grappling with the issues of underutilisation of power plants and capacity payments, instead of making hefty investments in the generation side, the investment should be directed toward modernisation of the distribution grid where sufficient capability exists for absorbing renewable energy.
Investments in modernising the distribution grid has an added advantage that monitoring and control enables the overcoming of theft and losses other than the benefit of increased RE absorption.
Pakistan can successfully meet and even exceed the ARE Policy 2019 targets of having at least a 30% share of renewables without making significant investments.
Considering the current debate on the issue of the buy-back rate of net metering, even if the national average power purchase price is set at 11 Rs/kWh, it still makes more sense to encourage people to go for net metering as this will further become an economically viable option to meet ARE policy targets with minimal investments.
The issue of peak demand can also be effectively met by encouraging consumers to install battery energy storage systems so that peak demand that occurs at night can be met efficiently.
It is further proposed that the retiring power plants can be retained on a take and pay basis to provide ancillary services at strategic locations to cater for the intermittent of the increased RE share such as converting the generators into synchronous condensers.
For these robust Ancillary services regulations need to be devised by the regulator providing the system operator with space to perform its day-to-day functions competently.
These scenarios were made in consultation with Syed Faizan Ali Shah, a member of the Prime Minister’s Solarisation Committee.
The article does not necessarily reflect the opinion of Business Recorder or its owners
The writer is an Associate at Renewables First
Comments