Shortcomings in IGCEP 2024-34: call for reassessment

The Integrated Generation Capacity Expansion Plan (IGCEP) 2024-34, prepared by the National Transmission and Despatch Company (NTDC), aims to provide an optimal generation expansion strategy. However, several significant shortcomings in the plan warrant a closer examination.

The current IGCEP 2024-34 exhibits a notable reduction in demand forecasting compared to the previous IGCEP 2022-31. The base case scenario shows the cumulative average growth rate of energy dropping to 2.8 per cent from 3.75 per cent. This trend is consistent across medium and high demand scenarios. Unfortunately, the plan lacks a detailed explanation of the macroeconomic assumptions and indicators underlying these forecasts.

Hydropower constitutes the largest share of committed projects, with major initiatives like Dasu (2,160MW), Mohmand Dam (800MW), and Diamer Bhasha (4,500MW) scheduled for completion between 2025 and 2030. However, the plan overlooks potential construction delays and cost overruns that frequently plague large hydropower projects.

For instance, about 2,200MW of hydropower capacity deemed committed in the previous IGCEP 2022-31 has now been reclassified as candidate projects, with an average CAPEX increase of 28 per cent and timeline delays of 2-3 years. Thus, considering 10,177MW of hydropower as committed is unjustified and sidelines cheaper renewable sources like wind and solar.

The IGCEP 2024-34 mentions the retirement of K-Electric’s power plants BQPS1-U1 and BQPS2-U2 in FY25, whereas the previous IGCEP 2022-31 scheduled their retirement for FY24. The plan does not provide any rationale for this extension, even though the capacity factors for these costly plants remain zero throughout the entire planning horizon.

With the increased supply from NTDC in FY-24, utilization rates of KE’s cheaper thermal power plants, such as BQPS-3, have significantly reduced. This raises the question of whether it is justified to consider extending PPAs for BQPS1 U1 & 2.

The share of renewable energy in the generation mix has plummeted to a mere 9.5 per cent (excluding net metering) in the IGCEP 2024-34, down from the previous 20 per cent. This decline is primarily due to the commitment of projects like Diamer Bhasha and C-5. If delays in these hydropower projects are considered, the share of renewables could increase to 12 per cent. Any unforeseen delays could lead to a shortfall and higher generation costs due to the reduced contribution of cheaper renewable sources.

Given the current state of natural gas availability and subsidized rates for industrial consumers in Pakistan, the IGCEP should have included scenarios assessing the impact of industries shifting from captive power plants to the NTDC system. Additionally, with the implementation of the Carbon Border Adjustment Mechanism (C-BAM) and heightened accountability for Scope 2 and Scope 3 emissions, the demand for clean and reliable energy is critical for export-oriented industries to remain competitive globally. Unfortunately, the IGCEP 2024-34 does not address these issues.

The IGCEP 2024-34, while comprehensive, contains several critical shortcomings that need to be addressed for a more effective and forward-thinking energy strategy. A scenario based on a purely economic merit order and the unconstrained addition of renewable energy sources should be prioritized, given their potential to reduce the country’s overall generation costs.

The rationale behind the assumptions used in the IGCEP must be thoroughly elaborated, especially for demand forecasting. The detailed explanations of the assumptions and methodologies used for load forecasting, particularly for KE, should be made available, including key factors like the quantum of net metering.

Considering the IGCEP is a crucial 10-year generation plan, the number of scenarios and sensitivities analyzed should not be limited. There should be scenarios assessing the impact if industrial consumers operating in captive mode decide to connect to the grid. Additionally, the inclusion of innovative technologies like battery energy storage systems is vital, given their significant price reductions and increasing feasibility for deployment in Pakistan.

Lastly, the ARE policy and clean energy targets, which mandate that the country’s generation mix should reach 30 per cent renewables by 2030, must be respected and integrated into the planning process.

Addressing these shortcomings will ensure a more robust, sustainable, and economically viable energy future for Pakistan.

The writer is a programme associate (Power Markets) at Renewables First.