Failure to harness our wind energy potential
Policies regarding energy generation are more than adequate, however, problem lies in its implementation.
For sustainable economic growth, there is a need to focus on renewable energy sources, which do not burden the national exchequer. Around two-thirds of the power sector in the country is dependent on fossil fuels which are non-renewable. This high dependency drains the national exchequer, whereas a mounting import bill continues to exert pressure on the trade deficit and our foreign exchange reserves.
The system has the capacity to generate almost 17,500 MW of electricity, but it is not working at its full capacity because many of the producers of power cannot afford the rising cost of electricity generation. This has been exacerbated by an acute shortage of gas and skyrocketing cost of imported furnace oil. The situation now is that if power plants run on oil, that only ends up further expanding an already massive circular debt and, otherwise, large-scale loadshedding is the only alternative. Clearly, Pakistan needs to explore low-cost power generation options.
Cheap, environment-friendly hydroelectricity should be among the top of such options. It is also best suited to the country, but the problem is that we have failed to expand our hydropower potential. Excluding hydropower, the contribution of renewable energy to the country’s energy mix is negligible.
As for government initiatives, it did set up an institution in 2002 called the Alternative Energy Development Board (AEDB), especially for this purpose. The Pakistan Meteorological Department, with assistance from USAID, carried out a wind-resource study of Pakistan and developed a precise and accurate detailed map, showing the potential available in the country for harnessing wind energy. According to it, the country has a total potential of 35,000 MW, which it can produce from wind power. The study found that from one place alone, the Gharo-Keti Bandar wind corridor in coastal Sindh, several thousand megawatts can be produced.
On this issue, Pakistan has also been extended help by other donors. For example, the latter helped in the formulation of an investor-friendly renewable energy policy in 2006. It offered various incentives for independent power producers, including guarantees to purchase electricity, and concessions such as a zero sales tax and no import duty. As a result, 73 letters of intent (LoI) were issued for a total of 4,650 MW of energy to be produced. In view of this large-scale interest, the Planning Commission of Pakistan fixed a target for the AEDB to complete wind projects of 900 MW capacity till 2010.
Fourteen of the 73 wind-generated projects completed feasibility studies. By 2007, the National Electric Power Regulatory Authority (Nepra) had issued power generation licences to five companies and they were to start operation by early 2010.
Regrettably, all of this came to nothing. All the investors abandoned their projects, leaving behind their security with the AEDB and Nepra. Media reports at that time suggested that the investors were unhappy about some of the demands made by the government bureaucracy, particularly Nepra.
Compare this failure with India where the renewable energy sector has managed to produce about 14,800 MW, which is a quarter of the entire wind potential of India. Moreover, in the last five years, up to March 2010, India has added 8,213 MW by electricity generation from its wind resources. In Pakistan the AEDB claimed its first success story, when a project with the capacity of 40 MW was inaugurated at Kalar Kahar hills in Punjab in April 2009. However, the very next month, the blades of the turbine could not sustain the wind pressure, and flew away — literally! Now, only two blade-less wind towers stand as a monument to the AEDB’s so-called ‘success story’.
Recently, the first-ever financial closure of a wind power project was achieved, but the tariff at which the power would be bought was an abnormally high Rs16.95 per unit. This is what it would cost consumers, after counting line losses, wheeling charges and the operational expense of distribution. One question that needs to be asked is whether the cost of obtaining an energy performance certificate was rationalised and compared with wind power tariffs in other countries. Besides, the tariff is much higher than for electricity provided through hydropower generation, which usually has a lower plant factor. In India, the tariff for power produced by wind energy projects is between two and four rupees per unit. And the reason it is low is because of genuine market competition, strict regulations and the honest leadership of the minister looking after renewable energy. One of the reasons for delay in installing wind power turbines, as officially stated by AEDB, is the rise in their cost. This, however, is contrary to facts, since the capital cost of producing wind turbines has fallen steadily over the past 20 years. And this has happened because wind turbines are now mass-produced and the costs have come down because of economies of scale. For example, the cost of a turbine decreased from $1.22 million/MW in 2008 to $1.05 million/MW by 2010. If the AEDB was actually serious about facilitating the wind power projects it could have helped the investors obtain lower-priced wind turbines from India which has more than a dozen companies manufacturing the product. Furthermore, cooperation in wind energy between the two countries can open new avenues of regional friendship.
Of course, no one is saying that the renewable energy sector will be developed overnight, but, at the very least, an effort should have been made by now to lay down the foundations of this sector. That, regrettably, has yet to be done and hence there seems to be no promise in sight on this front. As always, the policies regarding energy generation are good and more than adequate. However, the problem lies in the failure to implement these policies. And, unfortunately, the impact of this failure is felt solely by the people of Pakistan who have to suffer acute power shortages and several hours of loadshedding daily. To reiterate, this dismal situation is not the consequence of an absence of or even lack of energy sources but a direct result of institutional failure, mal-governance and lack of political will to harness indigenous sources of alternative energy.
Published in The Express Tribune, September 15th, 2011.
The system has the capacity to generate almost 17,500 MW of electricity, but it is not working at its full capacity because many of the producers of power cannot afford the rising cost of electricity generation. This has been exacerbated by an acute shortage of gas and skyrocketing cost of imported furnace oil. The situation now is that if power plants run on oil, that only ends up further expanding an already massive circular debt and, otherwise, large-scale loadshedding is the only alternative. Clearly, Pakistan needs to explore low-cost power generation options.
Cheap, environment-friendly hydroelectricity should be among the top of such options. It is also best suited to the country, but the problem is that we have failed to expand our hydropower potential. Excluding hydropower, the contribution of renewable energy to the country’s energy mix is negligible.
As for government initiatives, it did set up an institution in 2002 called the Alternative Energy Development Board (AEDB), especially for this purpose. The Pakistan Meteorological Department, with assistance from USAID, carried out a wind-resource study of Pakistan and developed a precise and accurate detailed map, showing the potential available in the country for harnessing wind energy. According to it, the country has a total potential of 35,000 MW, which it can produce from wind power. The study found that from one place alone, the Gharo-Keti Bandar wind corridor in coastal Sindh, several thousand megawatts can be produced.
On this issue, Pakistan has also been extended help by other donors. For example, the latter helped in the formulation of an investor-friendly renewable energy policy in 2006. It offered various incentives for independent power producers, including guarantees to purchase electricity, and concessions such as a zero sales tax and no import duty. As a result, 73 letters of intent (LoI) were issued for a total of 4,650 MW of energy to be produced. In view of this large-scale interest, the Planning Commission of Pakistan fixed a target for the AEDB to complete wind projects of 900 MW capacity till 2010.
Fourteen of the 73 wind-generated projects completed feasibility studies. By 2007, the National Electric Power Regulatory Authority (Nepra) had issued power generation licences to five companies and they were to start operation by early 2010.
Regrettably, all of this came to nothing. All the investors abandoned their projects, leaving behind their security with the AEDB and Nepra. Media reports at that time suggested that the investors were unhappy about some of the demands made by the government bureaucracy, particularly Nepra.
Compare this failure with India where the renewable energy sector has managed to produce about 14,800 MW, which is a quarter of the entire wind potential of India. Moreover, in the last five years, up to March 2010, India has added 8,213 MW by electricity generation from its wind resources. In Pakistan the AEDB claimed its first success story, when a project with the capacity of 40 MW was inaugurated at Kalar Kahar hills in Punjab in April 2009. However, the very next month, the blades of the turbine could not sustain the wind pressure, and flew away — literally! Now, only two blade-less wind towers stand as a monument to the AEDB’s so-called ‘success story’.
Recently, the first-ever financial closure of a wind power project was achieved, but the tariff at which the power would be bought was an abnormally high Rs16.95 per unit. This is what it would cost consumers, after counting line losses, wheeling charges and the operational expense of distribution. One question that needs to be asked is whether the cost of obtaining an energy performance certificate was rationalised and compared with wind power tariffs in other countries. Besides, the tariff is much higher than for electricity provided through hydropower generation, which usually has a lower plant factor. In India, the tariff for power produced by wind energy projects is between two and four rupees per unit. And the reason it is low is because of genuine market competition, strict regulations and the honest leadership of the minister looking after renewable energy. One of the reasons for delay in installing wind power turbines, as officially stated by AEDB, is the rise in their cost. This, however, is contrary to facts, since the capital cost of producing wind turbines has fallen steadily over the past 20 years. And this has happened because wind turbines are now mass-produced and the costs have come down because of economies of scale. For example, the cost of a turbine decreased from $1.22 million/MW in 2008 to $1.05 million/MW by 2010. If the AEDB was actually serious about facilitating the wind power projects it could have helped the investors obtain lower-priced wind turbines from India which has more than a dozen companies manufacturing the product. Furthermore, cooperation in wind energy between the two countries can open new avenues of regional friendship.
Of course, no one is saying that the renewable energy sector will be developed overnight, but, at the very least, an effort should have been made by now to lay down the foundations of this sector. That, regrettably, has yet to be done and hence there seems to be no promise in sight on this front. As always, the policies regarding energy generation are good and more than adequate. However, the problem lies in the failure to implement these policies. And, unfortunately, the impact of this failure is felt solely by the people of Pakistan who have to suffer acute power shortages and several hours of loadshedding daily. To reiterate, this dismal situation is not the consequence of an absence of or even lack of energy sources but a direct result of institutional failure, mal-governance and lack of political will to harness indigenous sources of alternative energy.
Published in The Express Tribune, September 15th, 2011.