Business

Taking a new line: Focusing on LNG, govt bans new solar and wind projects

Admits they are expensive compared to conventional energy sources.

Zafar Bhutta April 21, 2015

200MW is the capacity of three wind power projects initiated with the cooperation of China. PHOTO: REUTERS

ISLAMABAD:

As the focus rapidly shifts towards liquefied natural gas (LNG)-based power plants, the government has slapped a ban on new solar and wind energy projects, saying they are unfeasible because of being expensive compared to conventional electricity production projects.

The decision was taken in a meeting of the cabinet committee on energy on April 8. The government has admitted for the first time that these renewable energy sources were expensive compared to the conventional means.

Among the various sources of energy, hydroelectric power has the highest share of 34% in total electricity production, followed by furnace oil-based power generation that contributes 33%, gas 21%, diesel 1.8%, wind energy 0.63% and coal 0.31%.

Already three wind power projects with a combined generation capacity of 200 megawatts have been initiated in cooperation with China under the China-Pakistan Economic Corridor and one solar project of 900MW capacity. Apart from this, work is continuing on a 950MW solar plant.

The Ministry of Water and Power told the energy committee that power generation through solar and wind plants would be pricey because of their high tariffs compared to conventional energy projects. Therefore, no new solar and wind projects should be proposed and sponsored until a further decision on the issue, it suggested.

Following the deliberations, the energy committee, chaired by Prime Minister Nawaz Sharif, agreed that no new solar and wind power projects would be proposed and sponsored by the time a further decision was taken on the issue.

The committee also discussed in detail the use of LNG in power plants. Officials stressed that there was a dire need for improving the gas supply network in order to clear the way for LNG supply to planned 3,600MW power projects in Punjab.

They emphasised the need for establishing a capacity payment mechanism to make it abundantly clear who would make such payments in the absence of gas supply.

Water and power secretary briefed the meeting about the progress on building LNG-fuelled power plants.

The National Engineering Services of Pakistan (Nespak) has been engaged for preparing the project cycle (PC-1) for the proposed schemes. Preliminary studies for the selected sites have been completed and the Punjab government has been requested to facilitate the land acquisition efforts.

The water and power secretary also spoke about short- and medium-term measures aimed at energy conservation. In the short term, energy will be saved through enforcement of energy discipline in government offices, a public awareness campaign, daylight saving and enforcement of commercial operation timings.

It was proposed that strict energy-saving measures should be undertaken in offices of the federal and provincial governments to economise the consumption of electricity.

Published in The Express Tribune, April 22^nd, 2015.

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COMMENTS (17)

Shah Kamal | 8 years ago | Reply this is nothing other than what he is doing is some thing under the table. many cases of corruptions are still pending.

Ali | 9 years ago | Reply Interestingly, China is adding 45mw of solar power to its energy basket every single day! Food for thought.

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MUHAMMAD ISHAQ BHATTI | 9 years ago | Reply The renewable energy , specially solar energy, is the cheapest and most reliable. India in AllahAbad has auctioned at 5.75 cent a kwh. Dubai recently auctioned at 5.85 cent a kwh. We are making contract at 22 cent. Where this gap is? Is this gap in the pocket of poor people of Pakistan or in the pocket of elite of the Government. In case of doubt please contact with me 03214441400.

Musleh Uddin Ahmad | 9 years ago | Reply Investment cost of both Solar and Wind Energy is continuously coming down with the advancement in technology and production. Right now the cost of panel is about one third and the life, with little maintenance, is now about 20 years. So by all standard, one time investment may be higher, but shorter time of installation, quick local distribution of energy, early availability of power supply to industry are few of the positive points. The only advantage of the other sources of energy, like Gas, Furnace Oil, LNG and others just ensure steady flow of kickbacks. So why should one sacrifice personal interest for national interest?

Rizwan | 9 years ago | Reply LNG price and Oil price will decrease in future so LNG is feasible .

AB | 9 years ago | Reply u people tend to accept everything that is written anywhere. Financial close of Sachal wind power (50MW), Jhimpur wind power (100MW), and Dawood wind power (50MW) has only been achieved yesterday with cheaper financing from Chinese. Tanaga Generasi 50MW plant achieved its financial close a week or two back. The only change that has happened is that govt has changed the tariff from 13.5c/KW to 10.8c/KW after several wind projects have taken off. This is much more inline with the objective of achieving a cheaper energy mix. 10-20% of wind/solar is good, but more than that is just not affordable for a low income country like ours at prevailing rates.

Shah(Berlin) | 9 years ago | Reply @S.R.H. Hashmi: As being a lead Research Engineer in energy sector in Germany. Sorry solar and wind are the most expensive energy source. The fact is correct..... There is a whole technical background which makes free Sun and Free wind, still an expensive source...nothing to do with conspiracy theories etc...!!! Solar and wind needs to be handled very sensitively...Although banning such projects is just being lunatic...Regards

Concerned Pakistani | 9 years ago | Reply This is just so sad. I have no issues with LNG projects being set up in Karachi but this PML N leadership is planning to develop LNG projects in Punjab. Billions of dollars will be spent on first developing a LNG pipeline from karachi to Punjab. Further, billions of dollars from our foreign exchange will be spent on importing LNG. Mr. Shahbaz sharif have you ever read even an article on macroecnomics and do you have any idea that LNG price is linked to crude oil price? LNG is cheaper these days but even the dumbest person on the earth will realize that costs of crude oil will double in the coming years because of no new wells being developed which means that supply will dwindle hence the price will rise. Solar and wind may seem more expensive per unit but globally the costs are decreasing and even in Pakistan the tariff of solar has decreased from 18 cents to 14 cents. So new year we can expect the upfront tariff of solar to decrease to around 12 cents which makes it nearly equivalent to LNG tariff after incorporating the increase in LNG costs and effect on Pakistan foreign exchange. Another thing to note is that LNG tariff does not include the capital costs of the LNG transportation infrastructure being developed. It is high time that educated people are hired in the planning departments and are given autonomy and Independence from the government.

Parvez | 9 years ago | Reply This brings to mind the story that during BB's time she was asked to decide between cheap electricity from hydro power or expensive imported oil based units......and she chose the latter and the rest is history.

Kashif | 9 years ago | Reply Most of the time our foreign policy is dictated by the need for dollars to keep balance of payments under check and most of our foreign currency (mainly dollars) goes to oil import(around $15 billion each year) so instead of going for reducing oil imports we are banning anything which can replace that. Doesn't look wise.

Pakistani | 9 years ago | Reply thats when we Pakistanis wish that Army or some other reasonable dictator take over this country , because this democratic leaders just make no sense. How come perpetual energy resource is better that imported high rate fuel ?

Javed | 9 years ago | Reply This is height of stupidity. The calculations are based on the current gas prices like they have done in 1994. The solar and wind installations are getting cheaper day by day.

Talking Point | 9 years ago | Reply @Anver: Well the truth is bottled . While China may have put up 21 GW of wind power online ,the issue is one of capital spent. In a state sponsored , controlled economy capital spend is a given with no considerations for payback period , IRR etc. The US or to a lesser extent India ( with a capacity of 22644 MW) would be a true barometer of the commercial attractiveness of the project. That said , it is like going back in time to rely on petroleum gas based resources. Ideally a total life cycle cost vs accrued benefits analysis of both options with a govt.subsidy ( reduced taxes , import duties ) should have been given to support this fledgling industry.

Anver | 9 years ago | Reply This can only happen in Pakistan. Please read the article following this comment to see how out of sync with contemporary trends Government of Pakistan is. China alone put in a massive 21 gigawatts of new wind power in 2014, half of all the wind power installed in the entire world that year and four times as much as the US http://www.juancole.com/2015/02/renewable-skyrocketing-powered.html Renewable Energy skyrocketing, From Solar Mosques to Wave-Powered Naval Bases

S.R.H. Hashmi | 9 years ago | Reply One can appreciate reasons behind the government's decision to ban new wind and solar power projects and its preference for LNG-based projects. While wind and solar power projects will bring commissions only once at the time of their building, the LNG-based power-generation units will ensure life-long flow of commissions on the supply of fuel, and not only at the time of building of the projects. Admitted, wind and solar power projects have higher initial set-up costs but the subsequent supply of fuel - air and sunshine- is free, at least for the moment and is likely to stay that way. Also, with the rapid advancement in technology, the main cost of solar power based projects: the solar panels has come down substantially in recent times and China is a leading world supplier of both wind and solar power components which could benefit us considerably. China could help us by supplying components for the solar and wind power systems at concessional rates or even assist in establishing manufacturing facilities for these items in Pakistan. This could also help people by enabling them to buy small house-based systems at reasonable price to bring them immediate relief. We also do not hear much about generation of electricity with gasification of abundant coal reserves in Thar or vast potential for small hydel power projects in Khyber-Pakhtunkhwa. Also, solar power and wind based systems are ideal for off-grid, remote locations in addition to being quicker in bringing electricity within a year of initial start as compared to LNG-based and other systems which have much longer from initiation to fruition But I suppose there is wisdom in not banning solar and wind power based projects even for these remote locations because if these greedy people are offered electricity, they may start demanding other facilities as well in order to bring them forward from medieval ages to at least early nineteenth-century facilities, which are almost readily available to most Pakistanis Karachi

Khan | 9 years ago | Reply Can our government get any more stupid? Just for the sake of big kickbacks from LNG imports they have banned Solar and Wind projects!!

F Khan | 9 years ago | Reply Is this a trade off?

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