Power generation has recently come under intense scrutiny, with attention focused on contractual arrangements and the costs of generation. Questions about efficiency have also been raised, which is justified as the sector’s improvement depends on enhancing production capabilities.

Since August 2023, the CPPA petition for fuel charge adjustments (FCA) has differentiated coal-based generation between local and imported coal. The highest generation continues to come from hydel sources, with RLNG and other fuels following in line with the economic merit order.

So even on a national level there appears to be an interest in diversifying the fuel mix so that older or more expensive plants are gradually phased out. There are also global examples where countries are setting up thermal fuel-based “peaking” power plants completely anew to balance the potential intermittent availability of renewable energy.

Peaking power plants are understood to be generation units that are sparingly used at times of highest electricity demand, when the grid requires a full throttle supply to maintain stability. But it is also understood that these plants are not baseload plants that operate around the clock. Perhaps this classification could also be useful in Pakistan, informing a deeper understanding of power generation, capacity payments, and long-term planning.

Reports from India indicate that 2024 peak generation is expected to reach 260 GW, or 260,000 megawatts, a 7 percent increase from 2023. As a last resort, the government invoked regulations to ensure that all gas-based generation operated during the crunch period.

While the cost of this generation was acknowledged to be high, it was also deemed necessary, as the alternative would have been excessive load shedding. However, due to the structure of our existing system, comparisons of generation costs between KE and the national grid are inevitable, with the former often criticized for being more expensive.

However, this criticism overlooks the addition of high-efficiency generation capacity since privatization. During the company’s hearing on the generation tariff petition, each percentage point improvement was linked to Rs3 billion in savings for the national exchequer.

These savings have come from the addition of new plants and the phasing out or relegation of old plants to “peaking” status. It is also well known that work is underway to enhance interconnections between KE and the national grid, enabling the offtake of more electricity from national generation capacity.

Considering the generation surplus in the country, these interconnections offer a valuable opportunity to stimulate demand and utilize the available capacity more effectively. There is also growing interest in KE’s renewable energy projects. The first set of 150 MW projects in Balochistan received 15 bids, and recent reports suggest that the solar/wind hybrid plant has received 7 bids.

The investor’s confidence can be further boosted by fast-tracking the process to identify successful bidders, which involves the regulator as well. This would help quickly integrate cheaper generation into the mix and embed flexibility into the grid.

At all levels, power generation will always be a fine balancing act between supply, demand, and the effective and efficient allocation of fuel sources. Long-term solutions will require utilities to focus on integrating renewables and driving further sustainability, including electricity storage.

This presents a renewed opportunity for the government, regulators, and other stakeholders to create an enabling environment to expedite the transition, allowing older power plants to be phased out.