Money Matters

Policy fallacy

Money Matters
By Hussain Ahmad Siddiqui
Mon, 12, 19

The Alternative and Renewable Energy Policy 2019 targets development of projects mainly wind and solar photovoltaic (PV), excluding hydroelectric, for achieving 20 percent share in overall power generation mix by the year 2025, and 30 percent share by 2030.

The Alternative and Renewable Energy Policy 2019 targets development of projects mainly wind and solar photovoltaic (PV), excluding hydroelectric, for achieving 20 percent share in overall power generation mix by the year 2025, and 30 percent share by 2030.

At present, the share of renewable energy in the total installed capacity at national level is nominal, at about 5 percent, with existing 1,809 megawatt (MW) compared to country’s total power generation capacity of 35,979MW, using all energy resources.

The draft policy was authorised by Cabinet Committee on Energy (CCoE) in February this year, and approved by the Federal Cabinet in November, but the policy is yet to be launched. As the power generation subject now rests with the provinces that have understandably been given lead role under the Policy, it has to be approved finally by the Council of Common Interests (CCI). Till then the nation remains without a policy as the last renewable energy policy of 2006 is invalid since March 2018 and therefore not applicable any longer.

At the outset, the 38-page policy document appears to be flawed and deficient in various aspects, and is considered unworkable for a number of reasons. Its vision is blurred, strategic goal is deceptive, and the ways and means to achieve the ambitious objectives are sketchy and conditional. In other words, a serious action plan for the implementation of the Policy framework is lacking.

First, the predetermined targets are not meaningful as these are simply in percentage and not relate to addition of installed capacity in megawatts during the term of the policy. In the absence of any set goals in megawatts, it is not possible to progressively achieve the set targets in the next ten years. In fact, there is a need to give year-wise breakdown for projected addition of installed capacity, also categorising the source of energy/type of technology of renewable energy.

Omar Ayub Khan, Federal Minister for Energy, however, in his press conference, had indicated that about 8,000MW total installed capacity for renewable energy would be attained by 2025, which would increase to 20,000MW by 2030. Taking into consideration these figures, share of renewable energy by 2025 works out to be 13 percent, and not 20 percent as claimed in the policy document.

At the outset, the 38- page renewable energy policy document appears to be flawed and deficient in various aspects, and is unworkable for a number of reasons. Its vision is blurred, strategic goal is deceptive, and the ways and means to achieve the ambitious bjectives are sketchy and conditional

Total power generation capacity at national level is projected at 60,183MW by 2025 National Transmission & Despatch Company (NTDC) projections. Likewise, total renewable energy projected as 20,000MW by 2030, with 30 percent share in total power generation capacity is impractical. Even considering the projected capacity at national grid system, i.e., excluding the K-Electric system capacity additions, the defined targets are far from being realistic.

The NTDC’s Indicative Capacity Expansion Plan 2018-40 projects an addition of renewable energy (RE) capacity to over 3,100MW by 2025, with cumulative installed capacity of 6,140MW, thus contributing 12 percent to overall NTDC system capacity of 49,003MW by then. Renewable energy power plants (wind and solar) to come on stream by 2025 are also listed by the NTDC.

According to this document, there will be no further addition to renewable energy capacity by 2030 when its share will reduce to 11 percent to projected overall NTDC system capacity of 57,572MW. The renewable energy installed capacity will further add only during 2031-35, with its cumulative installed capacity of 12,440MW with 16 percent share in overall NTDC system capacity by then.

On the other hand, the vast renewable energy resources are considered technologically viable and can be effectively exploited commercially. Efforts are made to create an enabling environment as the Policy offers various financial and fiscal incentives to encourage investment in renewable energy projects. Tariff for new projects is to be re-determined.

There will be, however, transmission constraints. The Alternative Energy Development Board (AEDB) will process solicited as well as non-solicited projects. Indeed, the development of renewable energy resources optimally will help bridge the gap of energy deficit in the coming years as a number of old and inefficient thermal power plants will retire.

Seen in the backdrop of poor implementation of the National Energy Security Plan 2005-30 and the Policy for Development of Renewable Energy for Power Generation (December 2006), one may not be very optimistic that the proposed policy would bring the desired results. The Plan had anticipated adding 700MW to the national grid by 2010 and 1,680MW by 2015, which could not be achieved.

The AEDB, mandated to develop renewable energy, was created in July 2003. The AEDB issued hundreds of LOI (Letter of Interest) for various projects to local and foreign prospective investors for identified wind, solar and small/mini hydropower projects on Build, Operate, Own and Transfer (BOOT) basis.

Sadly, none of these projects, which were mostly the wind-power, could achieve milestones within the given time schedule and therefore could not obtain LOS (Letter of Support) in time. Three windfarm projects, which were scheduled for completion in June 2005, were rescheduled a number of times. It is a shocking history of poor performance due to lack of political will as well as inadequate capacity and capability of the AEDB to develop renewable energy resources for power generation, in spite of financial and technical support of the international donor agencies including Asian Development Bank (ADB) and GIZ (German Corporation for International Cooperation).

The projects also suffered many delays on various accounts such as problems in the allocation of land, unreliable wind data, tariff issues and non-seriousness of prospective investors. The pioneering renewable energy project, a windfarm in Jhampir, District Thatta, Sindh, could come on stream in 2013, whereas construction period for such a windfarm is two years in other countries. In fact, Zorlu Enerji of 56MW capacity is the pioneering windfarm project but could achieve commercial operations in July 2013, two months after the FFC Energy windfarm of 50MW capacity, both operating in Jhimpir. Currently, there are twenty-one wind-power (total 1,078MW), six solar PV (total 430MW) and seven biomass/bagasse (total 301MW) plants in operation, whereas National Electricity Power Regulatory Authority has issued license to other dozens of companies in the renewable energy subsector.


The writer is retired chairman of State Engineering Corporation