June 11 - 17, 20

Pakistan's economy has been growing at an average rate of almost three per cent for the last four years and demand of energy is increasing rapidly. Now, the demand exceeds supply and hence load-shedding is a common phenomenon reflected in frequent power shutdowns.

There is a shortfall of about 3000-4000MW per day in the country. This shortage is badly affecting industry, commerce, and daily life of people. Pakistan, historically a net energy importer, is confronting serious imminent energy shortages as its economy and population grow while global fossil fuel prices continue their upwards spiral.

Country has been facing an unprecedented energy crisis since the last several years. It is meeting almost 65 per cent of its power needs through thermal means. Due to shortage of natural gas, low calorific value of the domestic coal, and lower water levels in rivers, most existing thermal power projects are imported furnace oil based, which is the most expensive mean of electricity generation in Pakistan.

The government of Pakistan (GoP) has realization that most of the thermal plants in the country run on fuel oil, which besides being an expensive means of electricity generation, also produce considerable amount of pollution. Therefore, government is taking all possible measures to diversify its energy mix on a fast track basis to ensure energy security, sustainable development, social equity, and environmental protection. In this regard, government has given due attention to the fast track development of alternative/renewable energy resources in the country.

The alternative energy development board (AEDB) was established as an autonomous body with the aim of promoting and facilitating the exploitation of renewable energy in Pakistan so as to achieve the GoP's RE deployment targets. The AEDB is tasked with implementing government policies and plans and developing projects. It has also been designated as a one-window facility for processing RE power generation projects.

AEDB issued Policy for Development of Renewable Energy for Power Generation (RE Policy) in 2006. The policy includes all (alternative renewable energy) technologies including wind, solar, hydro, biogas, cogeneration, waste-to- energy, and geothermal, providing extremely attractive financial and fiscal incentives to both local and foreign investors while offering them a level playing field. It has also updated the RE Policy in consultation with the provinces and other stakeholders.

Many sources of energy are renewable and considered to be environmentally friendly. These sources of energy provide an alternate cleaner source of energy, helping to negate the effects of certain forms of pollution. All of these power generation techniques can be described as renewable since they do not eat up any resource to create the energy. While there are large-scale renewable energy projects, renewable technologies are being used to small off-grid applications, sometimes in rural and remote areas, where energy is often crucial in human development.

Alternative or renewable energy sources also show significant promise in helping to reduce the amount of toxins that are by-products of energy use. Not only do they protect against harmful byproducts, but using alternative energy helps to preserve many of the natural resources that we currently use as sources of energy.

WIND POWER: The government intends to harness power from renewable resources with the full participation and collaboration of the private sector. Therefore, wind energy is envisaged as an important component of its future energy mix. Keeping in view the huge potential and the anticipated future energy needs, the GoP has set a target of at least five per cent of the total national power generation capacity (i.e. 9700 MW) to be generated through renewable energy technologies, especially through wind energy by the year 2030.

Coastal areas and mountains with high wind potential are considered most suitable for wind energy utilization. The coast of Pakistan is about 1,120 kilometer long and has a population of about 10 million people. It is very expensive to connect small villages to the national electric grid because of the huge infrastructure costs involved. Coastal areas can provide year-round wind power.

Wind energy has the advantage that it can be utilized independently, and deployed locally in rural and remote areas. Thus, the location far away from the main grid finds wind suitable for generating electricity and pumping water for irrigation purpose.

Pakistan is gifted with immense wind resource. The wind map of the country was developed after extensive analysis carried out by national renewable energy laboratory (NREL), USA in collaboration with USAID, PMD, and AEDB. The Gharo Jhampir Keti Bander Wind Corridor, spreading approximately 60 Km along the coastline of Sindh Province and more than 170 Km deep into the hinterland alone has a potential to generate over 60,000 MW of electricity.

Two wind projects of 50MW each have achieved the financial close in last 12 months and a number of wind power companies are near financial close. One of the projects achieved financial close has been honored to receive "Middle East Renewable Deal of the Year" for 2011 by Project Finance Magazine. Construction of a 50MW wind farm in under way and will be added in the national grid in 2012.

SOLAR POWER: It is produced through sunrays. New technologies are developing at a rapid pace. Solar cells are becoming more efficient, transportable, and even flexible, allowing for easy installation. It can be used to power small and medium-sized applications. Pakistan has a potential to generate over 2.324 million megawatts electricity per annum through solar thermal and photovoltaic systems, and investors should enter this promising sector. Though solar panels are expensive presently, commercial manufacturing would make them cheaper and viable for all consumers. There is a need to manufacture components of solar system locally in order to make them viable for the local. In addition, it can also be a source of revenue generation through exports.

HYDROELECTRICITY: It is generated through water currents, i.e. the production of power through use of falling or flowing water. Once a hydroelectric complex is constructed, the project produces no direct waste. There is a need to build small-scale hydro or micro-hydro power in Pakistan, especially in remote areas where other power sources are not viable. Small-scale hydropower systems can be installed in small rivers or streams with little or no discernible environmental effect or disruption to fish migration. Project like small hydro plants can be built quickly, and will provide electricity long before large hydro plant or most kinds of fuel-burning generators. Small hydro projects are labor-intensive and well suited to operate by local people. Though hydropower stations cost more to be built than coal, oil, or natural gas burning plants but once they are built, the energy to run them is free, while thermal generation plants cause recurring cost of fuel.

BIOMASS: As a renewable energy source, it refers to living and recently dead biological material that can be used as fuel for industrial production. Biomass can be used to generate electricity from for example trash such as dead trees and branches, yard clippings and wood chips biofuel, and it also includes plant or animal matter used for production of fibers, chemicals or heat. Waste to energy is a growing industry as interest in sustainable fuel sources is growing. The existing commercial biomass power generating industry in the United States produces about 0.5 per cent of the U.S. electricity supply.

LIQUEFIED NATURAL GAS (LNG): The use of LNG and its demand worldwide has increased manifolds because it is cleaner and less carbon intensive than oil or coal. LNG also has many advantages for storage and distribution over natural gas. Pakistan has the world's second largest pipeline network of the natural gas after the United States.

LIQUEFIED PETROLEUM GAS (LPG): It is being used by cars, pickups, rickshaws, and even motorcycles in area where CNG is not available due to the absence of natural gas distribution network.

COMPRESSED NATURAL GAS (CNG): In order to reduce pollution caused by vehicles using oil, growing number of vehicles have been converted to CNG power by the private sector to take advantage of the relatively low price of CNG fuel. According to an estimate, around 30,000 vehicles are converted to CNG every month whereas Pakistan has already become second largest user of CNG. Due to severe shortage of gas in the country, CNG sector is in deep trouble these days.

Alternative energy options enable the local institutions to manage their own energy needs and also provide rural development opportunities. This situation encourages the decentralized decision making, which has far-reaching implications from the governance perspective. In addition, commercialisation of energy-efficient devices and alternatives to conventional fuels can do the following:

* Provide better lighting - Better lighting enables the poor to stretch their period of economic activities; their children can help them in daily chores and then study in the evenings.

* Help the environment - Efficient use of conventional sources of energy or use of renewable energy helps save the environment from further degradation and gives it an opportunity to regenerate.

* Provide sustainable fuel systems - Afforestation and agroforestry, combined with the introduction of energy-efficient devices, can help to create a sustainable fuel-use system within the rural community and sustain the ecological balance of a region.

* Benefit human health - The improved cook stove, for example, can save considerable amount of energy. Use of improved cook stoves and biogas plants, for example, helps reduce or eliminate health problems associated with using conventional cook stoves including respiratory diseases and eye irritations.

* Enhance income - Alternative energy sources will generate employment opportunities in industries worst affected because of power outages and can lead to expansion of manufacturing base of renewable energy equipments.

Pakistan is blessed with abundance of renewable energy potential but so far, this potential has not been harnessed except for large hydroelectric projects. Thus, Pakistan needs to initiate a sustained, long-term transition towards greater use of renewable energy, an indigenous, clean, and abundant resource whose considerable potential the country has yet to tap meaningfully.

The main hurdle in the supply of energy is colossal circular debt. The major problems, which cause accumulation of circular debt, were the partial transfer of tariff as determined by national electric power regulatory authority (Nepra), heavy line losses, incomplete corporatization, weak governance and costly fuel mix putting an extra financial burden on meeting the cost of fuel oil due to constant increase in the oil prices etc. The government is making all possible attempts to address this issue by making best efforts for 100 percent recovery of current electricity bills, reducing line losses from 20.4 per cent to 18 per cent and implementing best corporate governance practices.

There are many factors, which compromise the development of renewable energy in Pakistan:

Subsidies on fossil fuel-based energy coupled with insufficient access to finance the renewable projects make the adoption of renewable energy sources challenging.

* Given the low load factor and the high marginal cost of renewable energy plants (compared to other power plants), access to the electricity grid is also restricted.

* Inadequate regulatory environment further impedes the development of the renewable energy industry.

* Moreover, there is still a huge knowledge gap on the potential benefits of renewable energy and it is considered a less-reliable energy source compared to traditional fossil fuel power plants.

The renewable energy industry is capital-intensive, with heavy funding requirements for development. In order to catch up with other emerging countries that have succeeded in developing the renewable energy sector, the main priority for Pakistan would be to gain access to affordable and sustainable financing to develop the industry in its early stage. New innovative financing instruments and public-private partnerships will help stimulate investment in the renewable energy sector. This may require provision of incentivized tariff schemes by Nepra and adoptions of new regulations allowing for priority of access to the electricity grid.

The development of renewable energy sources is also necessary for the sustainable development due to depleting gas reservoirs, climbing oil prices across the world, and more pressure for reduction emission level by the World Bank and ADB.

Public awareness campaigns on the attractiveness and beneficial effects of renewable energy as a clean source of electricity should also be undertaken. Energy problem is a national problem. The government cannot do everything. Individual or cooperative efforts can do a lot.