Unsustainable Policy Confusions

In August 2020, the PTI Government had announced the Alternative and Renewable Energy Policy (AREP) 2020 aimed at raising the share of renewable sources (wind and solar) within Pakistan’s total power supply mix to 20% by 2025 and 30% by 2030 from the existing five percent. However, last year, the PTI Government also approved the 10-year Indicative Generation Capacity Expansion Plan (IGCEP) 2021- 2030 aimed at adding new power generation capacity in the next decade in order to meet future demand in a systematic manner and avoid the creation of excess generation. IGCEP was developed by the National Transmission and Despatch Company (NTDC), which is responsible for operating and maintaining Pakistan’s electricity supply network. The plan suggested an energy mix focused around hydropower (approximately 50%) and fossil fuels (approximately 25%) with renewable energy sources, such as wind and solar, at less than 15% of the total power supply and clearly contravenes the 30% minimum variable renewable energy (VRE) share proposed by AREP, as well as the higher than 30% VRE share recommended by the World Bank’s (WB) Variable Renewable Energy Integration and Planning study in 2020. IGCEP also contradicts the findings of the same WB study, whereby the achievement of the “least cost electricity mix in Pakistan would require a rapid expansion of VRE” which has become the fastest-growing source of electricity globally. 

According to the Alliance for Climate Justice and Clean Energy (ACJCE) and the Rural Development Policy Institute (RDPI), the shift to a VRE based mix, led by solar, wind, bagasse and hybrids, is at the heart of Pakistan’s energy transition ambitions. Yet, IGCEP effectively discourages VRE development and will consequently have a devastating effect on the realisation of the goals set in AREP.

Ironically, IGCEP approval was rushed through the Cabinet Committee on Energy (CCoE) as well as the National Electric Power Regulatory Authority (NEPRA), in order to meet a prior action condition to secure the first $400 million tranche of a WB loan under the Pakistan Programme for Affordable and Clean Energy (PACE), despite the fact that the generation mix in this plan is dominated by expensive and dirty fossil fuels, including adding about 8,500 MW of coal, and 10,000 MW of LNG and gas over the next decade. The plan also does not take into account its devastating impact on climate and human health besides ‘endangering interprovincial harmony’. It completely circumvents the requirement of a competitive assessment between candidate technologies by forcing through several non-renewable sources as pre-committed projects. As a result, the planned generation mix is now dominated by expensive and dirty fossil fuels at the cost of green technologies which have been allocated a meagre share in the mix.

These potential outcomes of IGCEP also defeat the key goal of the NEPRA Act to make special provision for the development of renewable electricity markets in accordance with Pakistan’s international commitments and its responsibility to support and encourage measures to mitigate the adverse effects of climate change and manage conflicts of interest in relation to the development of the electric power market of Pakistan. 

Defending IGCEP, Manzoor Ahmad, the acting in charge of the office of the NTDC Managing Director, says the majority of the projects included in IGCEP 2030 had already been ‘committed’. By committed, he means the projects have either been given the go-ahead for construction, are at an advanced stage of regulatory approval, or fall within the category of the government-to-government schemes. “All the hydro and thermal projects included in IGCEP 2030 have been committed and this gives us space to add just 15% renewable energy. However, we intend to gradually raise the share of renewable energy to 30% as we move forward.” 

Most energy sector experts agree that Pakistan has excellent renewable energy resources (wind and solar); they are already the cheapest source of new power generation and will be even cheaper in the 2030s and 2040s. Yet, IGCEP has totally ignored this fact, choosing to focus on expensive dirty fossil fuel imports. 

“IGCEP has failed to live up to the PTI Government’s assertion that the future power plan would be based on the principles of sustainability and affordability,” says a former PTI official, who did not want to be identified. Hussain Asad, a RDPI official, further states that “AREP clearly underscores Pakistan’s resolve to raise the share of renewables in its energy mix. As former prime minister Imran Khan had on numerous occasions and at different international forums, underlined that wind and solar were expected to be scaled up to 30% of the energy mix by 2030. This attracted massive investor interest and put Pakistan on the map in terms of future potential markets and renewable energy initiatives. Sadly, IGCEP has eroded this goodwill by massively reducing the volume of renewable energy while the share of VRE as defined in the AREP document has been limited to 10% to 12%.”

In a letter addressed to the WB Pakistan’s Country Director, the ACJCE, an alliance of academics and environmentalists, expressed serious concern over the approval of IGCEP as a way to meet the government’s loan obligations towards the WB. “In its present shape and form, the IGCEP is a flawed plan that has strategised Pakistan’s energy future around expensive fossil fuels and risky hydel projects. It flouts the ‘least cost’ principle, endangers inter-provincial equity and harmony and is premised on a reckless disregard for environmental and ecological sustainability,” states the letter. It further adds that “the IGCEP plan flagrantly violated the very aim and purpose of the government and the WB. The Bank’s PACE programme either negligently assumes or recklessly pretends that the AREP includes hydel as a renewable source, despite the fact that it explicitly and pointedly excludes it as such. Under pressure to meet the 66% target for renewables defined by the WB as including hydropower, and set as part of a prior action condition, the IGCEP has now been forced to add a number of large hydropower projects into the mix, without any preparatory impact assessments or the development of adequate mitigation strategies.”

In Asad’s opinion “by ignoring the AREP, IGCEP has failed to incorporate government policies in its energy planning activity.” According to him, the WB study shows that the optimum electricity mix would require greater additions – a total of 27,400 MW of VRE by 2030. “If this were achieved, the VRE share would represent 30% to 33% of the total installed generation capacity of 85,000 to 88,000 MW by 2030. Yet, IGCEP, by building on committed projects that will either turn idle or run at inefficient capacities, ignores the least cost methodology and a secure energy future for Pakistan.” In his view, by massively reducing the volume of wind and solar in the mix, any chances of developing a domestic market for solar panels and wind turbines as proposed by IGCEP will go out of the window. “India has increased renewable energy volumes, leading to locally made panels, but Pakistan, under the current IGCEP plan stands to lose out on this opportunity.”

With the entire world moving away from expensive and dirty fossil fuels and towards cheaper renewable solar and wind power technologies, it is imperative that the government and NEPRA direct the NTDC to revise IGCEP in line with the targets set by the ARE policy.

Nasir Jamal is Bureau Chief, Dawn Lahore. nasirjamal65@gmail.com