Speaking to Khaleej Times on the sidelines of the Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC 2019) recently, Special Assistant to our Prime Minister on Petroleum, Nadeem Babar, announced that the government was targeting 64 percent of green power in the national grid by 2025. While it isn’t a target beyond reach, the government will have to pursue it very carefully because without the supporting transmission and distribution (T&D) networks, imaginative tariffs, and facilitative institutional capacity, it could add to the nation’s already-serious energy woes, also hurting the very cause of otherwise a laudable goal of securing sustainable energy and power supplies for the nation.
While there’s no denying that “to make a big dream come true, one first needs to dream big”, but it’s also a fact that in the absence of careful planning, necessary funding, and enabling conditions in place, a dream will most likely remain so, that is, a dream. For a number of reasons, a few of which are discussed below, the government’s above target appears rather ambitious. It’s an example of aiming “too much, too soon”. Caution is, therefore, called for to eliminate any unintended consequences and associated costs.
Let’s first be clear as to what constitutes “green” power. As clarified by the Special Assistant himself during the ADIPEC event, the green generation portfolio will include solar, wind, biomass, and hydro capacities (53 percent collectively by 2025); add to it nuclear plants (10 or 11 percent) and the total reaches 64 percent. Even though one can dispute the decision to include nuclear plants under the “green” umbrella due to the still unresolved issues of safe disposal of nuclear wastes, let’s ignore it for the time being.
Though the targets of 20 percent by 2025 and 30 percent by 2030 have been previously announced by the government and are also stated in the draft Alternative and Renewables (ARE) Policy 2019 (currently at an advanced stages of approval), these are not reflected in the capacity expansion plan that the National Transmission and Despatch Company (NTDC) has prepared and is currently being reviewed by the National Electric Power Regulatory Authority (NEPRA). These targets may have been announced after the preparation of NTDC’s strategic plan for the power sector.
NTDC’s Indicative Generation Capacity Expansion Plan (IGCEP) 2018-40—a key document to guide the future power sector development in the country—specifies addition of only 4,250 MW of renewables (solar, wind, and bagasse) and 6,423 MW of hydro capacities in the grid by 2025, raising their respective totals to 6,140MW (12 percent) and 16,155 MW (33 percent). Together, these add up to 22,295 MW by 2025, or 45 percent in the total generation capacity of a little above 50,000MW.
While it’s not impossible to raise the renewable capacity level from the present 12 percent envisaged in the NTDC’s Plan to 20 percent announced by the government, the cause of concern isn’t this possibility, but the provision of the other requisite T&D infrastructure, facilities, and technical and institutional capability in the country that will be imperative to derive the full range of benefits that renewable power generation hold for the country. There will be multiple constraints in the way to achieving such an ambitious target so quickly, and if one goes by the achievements of the government in the past 15 months, the future is not very difficult to predict.
According to the NTDC’s IGCEP 2018-40, most new generating capacity projects are already committed till 2025 and are at various stages of development. It is not clear whether the additional renewable capacity that is being envisaged by the government will displace some of the already committed plants or will be on top of these. In both the cases, it’s a cause for worry, as it will not come without considerable penalties. In the former case, due to their intermittent and variable nature, renewable plants can pose serious threats to maintaining the reliability in the grid. In the latter case, due to their zero fuel costs, electricity produced from renewable plants will displace that from some existing plants, thus negatively impacting on the existing capacity and fuel-related contractual commitments with the owners of these conventional plants.
Fast track renewable generation capacity additions will necessitate developing of requisite T&D facilities also, in sync with these additions, requiring considerable funding and technical capacity, not to mention the time that will be required to plan and build these networks. Most likely, these renewable projects will be developed without any allied storage facilities since, despite considerable reduction in their cost, electricity storage is still very expansive. Question is, where the capacity to back up the intermittent and variable energy from solar and wind plants will come from? If from the existing plants, it will certainly have technical and financial implications. We hope that the government has considered this aspect and has prepared requisite plans to effectively deal with these issues.
According to a recent study by LUMS Energy Institute in Lahore, the capacity component of the average supply cost in Pakistan, currently around 50 percent, will grow to 70 percent by 2025. For properly planned and effectively managed electric utilities, the capacity component in consumer tariffs should not exceed 10 percent. Currently, these are around 6 percent in Spain and the UK. For the systems in the north-eastern part of the United States, these are somewhat higher but still within 10 to 20 percent range. The government must realize that electricity tariffs have already crossed the affordability threshold of most consumers, and its new policies for promoting renewables must not lead to any extra burden on end consumers; in fact, these should be brought back to acceptable levels.
The Special Assistant stated that solar and wind projects will be developed as hybrid systems on common locations to alleviate their intermittency and variability characteristics. We hope his team has done proper homework to establish the synergies that hybrid development of solar and wind on the same location can provide, and not on speculation alone. Generally, the solar irradiance and wind peak at different times of the day and their availabilities are believed to be negatively correlated with each other. Hybrid development of solar and wind plants at a common site may offer some benefits in terms of avoiding transmission system investments upstream but the gain has to be sufficient to offset the loss that is inevitable when trying to co-optimize the solar-wind hybrid system.
It is also not prudent to focus on the supply side of the system only. The forecast of electricity demand in the country must also be factored in the equation. To maximize the utility of green power (64 percent by 2025), we will not only need considerable demand growth in the country but a significant change in its daily and seasonal profiles also. Electricity demand in the country is currently on the decline and the NTDC predicts it to remain below 5 percent during the next decade. Its profile has also been worsening(becoming more peaky) over the past decade, meaning in simple words that the system now requires more peaking capacity to cater to this portion of demand that comes on the system only a fraction of time, thus adversely affecting on the power supply costs.
The government must target to shift consumer electricity demand to times of maximum green power availability, meaning that load shape will need not only flattening but shifting to peak solar and wind production periods also. Efforts to improve system load factors (an indicator that reflects the average utilization of production capacity, the higher the better) will thus require tireless campaigns by the relevant entities and may require many years to materialize. The government’s plan to develop new industrial zones in the country is a good decision towards this goal, but will also require considerable time to realize.
The above are just a few of the critical issues that the government will need to address while going for a rapid and high-share of green power generation capacities in the national grid. Focusing on generating plants alone and ignoring the balance of system requirements and costs that are indispensible with these choices can have serious technical and financial consequences, both for the energy sector as well as the nation, and must be avoided.
Our present leaders in the energy sector, therefore, must evaluate their policies in a comprehensive context, by identifying all the short, medium, and long-term consequences these policies will have on the economy and society. They must also ensure, as much as is possible, that their policies and plans do not ignore any critical aspect in the supply- demand balance because the cost of their sub-optimal policies and plans will have to be ultimately borne by the citizens of this country, and if one goes by the previous records, often vey dearly.