Money Matters

Flawed planning

Money Matters
By Engr. Hussain Ahmad Siddiqui
Mon, 09, 21

Finally, the long-term energy plan, known as the Indicative Generation Capacity Expansion Plan-IGCEP 2021-2030 has been okayed by the Cabinet Committee on Energy (CCoE) on August 26. It is however yet to be agreed to by the Council of Common Interests (CCI) before its approval by the National Electric Power Regulatory Authority (NEPRA) for implementation.

Flawed planning

Finally, the long-term energy plan, known as the Indicative Generation Capacity Expansion Plan-IGCEP 2021-2030 has been okayed by the Cabinet Committee on Energy (CCoE) on August 26. It is however yet to be agreed to by the Council of Common Interests (CCI) before its approval by the National Electric Power Regulatory Authority (NEPRA) for implementation.

There have been protracted delays in developing the strategic document. In fact, National Transmission & Despatch Company (NTDC) had prepared the long-term plan, known as IGCEP 2018-2040, sometime in February 2019, but it ran into snags as NEPRA required its revision incorporating certain fundamental changes.

Accordingly, a revised draft was presented to NEPRA in September 2019. Again, there were objections and reservations, and then, the government intervened in April 2021 to decide having a 10-year plan instead. The recast plan IGCEP 2021-2030 was thus launched by NTDC in May 2021. The plan, required to be formulated and submitted to NEPRA in April 2020, is already late by more than a year. Resultantly, it has now been compressed to a 9-year plan as it will be effective from current fiscal year 2021-22, and not 2020-21, hopefully without major adjustments in future projections. Peak demand in 2020-21 is estimated 24,106MW, which is already outdated.

Under the IGCEP 2021-2030 it is planned to increase existing power generation capacity to meet country-wide demand load of 34,377MW in 2029-30 (excluding the areas under K-Electric system) to 53,315MW, or 184,900 GWh in terms of energy generation. The target capacity expansion by 2029-30 is to be achieved progressively over the plan period. This is based on normal GDP growth and demand scenario assuming about 4 percent Annual Compound Growth Rate (ACGR). The target is translated into over 90 percent increase from the existing installed capacity, considering present installed capacity of 34,100MW, which is currently de-rated to 32,385MW, whereas another 6,447MW of existing power generation capacity is to be retired during the plan period.

Seemingly, overall target is realistic and achievable since the committed power projects that are scheduled for commissioning during the period 2022-2030 are of 22,180MW cumulative capacity. Committed projects are those which are currently under construction or have achieved financial close or are of strategic importance. The plan has envisioned completion and commencement of commercial operations of all the committed projects according to agreed timelines.

Primarily, the integrated plan has two salutary objectives. One, to ensure least-cost electricity. Two, to seek optimal indigenisation of fuels. It also aims at promoting utilisation of clean and green energy resources, thereby reducing the carbon emissions substantially. For the purpose, net installed capacity of about 28,000MW will be added to the system. Total installed capacity at the end of plan period will comprise 23,035MW hydropower, followed by 3,635MW of nuclear power and 3,630MW through indigenous coal-based power generation, mostly in Thar (Sindh). Reliance on imported fuels will be reduced phase-wise as much as practical.

Thermal power plants based on imported coal will be limited to total 4,920MW, Re-gasified Liquefied Natural Gas (RLNG) to 6,786MW, and those using Residual Fuel Oil (RFO) to 1,220MW total installed capacity. Likewise, thermal power plants based on natural gas will be capped at total 2,582MW installed capacity. Renewable energy units consist of wind power projects of 3,795MW, solar of 1,964MW and others. Under the plan, overall energy mix at the end of plan period will become in favour of hydropower, with 43 percent share compared to existing 29 percent. The share of nuclear power will remain static at 7 percent, whereas wind power share will increase from present 3 percent to 7 percent, and solar from 1 percent to 4 percent by the year 2029-2030.

Eighteen existing generating units, being operated on RFO, RLNG and natural gas, of total 6,447MW cumulative capacity are to be retired during the plan period. The list however excludes, for some unknown reason, the oldest nuclear power plant KANUPP-I that is due for retirement next year.

A study of the plan, which is mandated to focus on adding nuclear power generation projects to the planned energy mix, reveals that future nuclear projects have not been incorporated in the document truly and appropriately. Only one project—KANUPP-IV, which is under construction at this stage, has been considered. According to the Energy Security Plan formulated in 2005 and being implemented since then, total nuclear power generation capacity will be of 8,800MW by 2030. Planning work on additional four nuclear power projects is in advanced stage; sites selected, and, reportedly, arrangements for technical and financial assistance from China is also indicated. Logically, these strategic projects, which are considered critical for energy security and sustainability, should have been accommodated in the IGCEP.

Another glaring omission perhaps is that renewable energy has also not been projected in the document to the level claimed by the government from time to time. Alternative and Renewable Energy Policy 2019 (ARE 2019) envisages increasing total generation capacity of renewable energy to 20 percent in overall energy mix by 2025 and 30 percent by 2030. Nonetheless, the IGCEP plans just achieving around 12 percent share of renewable energy by 2030. This is against the declared policies of the government that accord priority to the renewable energy projects. The IGCEP is required to be reviewed and updated regularly on yearly basis, and it is expected that the planners would increase the share of renewable energy and nuclear power generation in the revised version proportionate to ARE 2019 and Energy Security Plan, respectively. NTDC and NEPRA should also address the reservations made by the provinces during recent discussions accommodating their ongoing projects in the updated plan.

On the other hand, new coal-based power projects whether on imported coal or indigenous have been included, in spite of government’s directive to scrap or halt all such under-construction or committed projects in the wake of its commitment to international community to mitigate impact of climate change and limit carbon emissions.

Seemingly, the government has reneged on its policy, which however is understandable as these coal-based projects are being implemented under China-Pakistan Economic Corridor (CPEC) framework, and it is not feasible to stop work on these projects at this stage.

The IGCEP will serve as basis for developing the NTDC’s Transmission System Plan (TSEP), which will propose plans and schemes for evacuation of power and despatch optimisation from the projects covered under capacity expansion plan. NTDC is mandated to ensure reliable, continuous, and affordable delivery of electricity to consumers countrywide. However, this will not be possible if the IGCEP is flawed in terms of projected load demand and capacity expansion required to meet the energy needs during the plan period.

The writer is retired Chairman of the State Engineering Corporation