Corporate Responsibility and Climate Change
Aisha Khan makes the case for aligning private finance with net zero.
☰
“Batteries are the future; they are the core missing piece in the energy transition puzzle”
SOPHIA KHAN: When and why was Reon Energy established?
MUJTABA HAIDER KHAN: Reon Energy was established in 2012 as part of the Dawood Hercules Group in partnership with Engro Energy. Reon is an energy company that solves energy problems for commercial and industrial customers. We do not serve individual consumers but focus on large industries in Pakistan and the Middle East. We have integrated more renewable energy compared to other players in sectors like telecommunications, cement, steel, automobiles and textiles.
SK: How do you envision the transition to renewable energy methods?
MHK: Energy dictates how the world is run; wars have been fought over energy – it drives basic economics. To build anything, you need energy, materials and labour. In Pakistan, the problem is access, distribution and inequity. We don’t lack energy; we have hydropower, solar, wind, gas and coal. During the Industrial Revolution, we transitioned from wood to coal and then to oil and gas. Now, we are facing the most difficult transition of all – towards renewables. Typically, transitions take 100 years to achieve, but this one needs to be completed in 30 years, and even then it may be too late.
The technology to effect a 100% transition to renewables doesn’t exist; it is being developed as we move forward and it will be expensive. It’s like learning how to make steel without carbon emissions or cement without coal – difficult but necessary.
SK: In Pakistan, what is the scope for investment that encourages the transition to renewable energy systems?
MHK: A large number of the coal-based power plants established in Pakistan between 2013 and 2017 were funded by Chinese businesses. A lot of resources globally are being aligned to invest in renewable energy technology projects. Although Pakistan may not be a big emitter, there are innumerable business opportunities to become meaningful contributors towards this energy transition. The green economy is huge. This investment can be divided into adaptation and mitigation. Energy falls under mitigation, as you are offsetting carbon. Adaptation involves reaching out to farmers and informing them about the imminent changes in crop cycles, building flood protection, constructing resilient housing and protecting the mangroves.
SK: What part does Reon play in Pakistan’s overall energy landscape?
MHK: Since the power grid is so unreliable, local industries use generators that are not environmentally friendly. To offset this, we offer services whereby customers pay for technology and expertise in turnkey projects. Through energy financing, we provide energy as a service, based on long-term contracts. We also have an energy management platform developed in-house by our product team in Riyadh.
SK: What is Reon’s custom energy management platform?
MHK: Spark started as a basic monitoring tool of our integrated energy systems, but now it provides real-time optimisation using machine learning and AI. It helps customers manage complex energy sources like generators, solar, batteries and wind, optimising their energy mix to reduce costs. It has the ability to troubleshoot and sound an alert if a system is not operating smoothly and generate live recommendations. If demand is expected to be a certain amount in the next hour, it might suggest switching off an engine that is not needed, thereby increasing the efficiency of the other engines. It calculates the amount of solar power available and adjusts the power from other engines accordingly. It is a beautiful piece of technology and we are very proud of it. It is not just being used in Pakistan; we are also exporting it.
SK: What sets Reon apart from other energy companies in Pakistan?
MHK: We are more holistic in our approach. We are obsessive problem solvers. Five years ago, we introduced industrial-scale lithium batteries in Pakistan – the same type of batteries used in mobile phones, specifically lithium iron phosphate (LFP) batteries, which are incredibly stable and useful. Batteries are the future; they are the core missing piece in the energy transition puzzle.
The issue with the energy transition is that when the wind blows and the sun shines, we have plenty of solar and wind power, but when the wind stops blowing and the sun sets, we are left with none.
SK: What is the benefit of battery-based solutions?
MHK: Renewable energy is heavily reliant on the predictability of our climate and batteries can store the energy when it is abundant and store it when there is limited solar or wind power. Reon introduced industrial-scale lithium batteries in Pakistan in 2020, with a three megawatt battery. To put this into perspective, a typical household uses between five to 10 KW of power a day in an urban setting, so a three megawatt battery provides a lot of power. We initially introduced them to solve a problem for a client manufacturing polyester fibre who were suffering heavy losses due to frequent power breakdowns. Since then, we have commissioned several large batteries and today, 100% of all large industrial batteries are designed, commissioned and operated by Reon.
SK: What major projects has Reon completed?
MHK: We have undertaken some of the largest industrial projects not only in Pakistan but in the region. Every year we set new standards. For instance, in 2018, the largest project we completed was a two megawatt solar installation, which was the largest in Pakistan at the time. The same year, we completed our first 12 MW project for a cement company; it was the largest solar project for a cement plant anywhere in the world. In 2020, we signed our first 50 MW-plus deal with Bestway Cement, and as of today, we have completed about 80 MW worth of projects for them. We also hold the record for integrating the largest battery-based microgrids – three megawatts in 2020 for Lucky Cement.
SK: Have you faced any resistance from traditional utility systems?
MHK: As a disruptor, you are bound to step on some toes. The traditional business model relies on a distribution grid to build a monopolistic business where only one entity can sell power. A competitive market needs to be encouraged. In Pakistan, power prices are very high, indicating that something is wrong with the system. Historically, the government buys all the power, leading to expensive rates from private power producers. The government is the single biggest buyer and seller of power. The entire chain is not competitive and carries with it significant losses.
For every dollar spent on buying power, only 78 cents are recovered; the remaining 22 cents are lost to theft and pilferage, with additional technical losses of 15 to 20 cents due to inefficiencies in the system. When you add all this up, the losses in the power system are close to around 50%. The model has to change.
SK: According to a New York Times article, Pakistan has increased its electricity capacity by 30% due to solar power. Is this true?
MHK: Over the last 12 years, we have graduated from a situation of extreme deficit to extreme surplus. Between 2013 and 2017, Pakistan added more power than any other country in the world and became the largest buyer of turbines. The fundamental flaw was that we added far more power than what we needed. As a result, we have close to 45 GW of installed power capacity. Our peak summer demand is close to 14 GW and the winter demand is around eight gigawatts.
SK: How can this surplus energy be better utilised?
MHK: The reason our energy bills are so high is because we have all this power and too few consumers. To counter this, the government is trying to implement certain initiatives and attempting to renegotiate with the power plant owners on the tariff. In my opinion, we should encourage the companies generating this excess power to sell directly to industry and eventually export it. They can also set up new industries since a lot of them are industrialists themselves.
SK: How can the government better support companieslike Reon?
MHK: The government needs to avoid overregulating the market. There have been whispers about changes in the net metering policy. The government should not tinker with such policies and let market forces take hold and encourage an open market model.
For feedback: aurora@dawn.com
Read Comments
Related Stories
SK: In Pakistan, what is the scope for investment that encourages the transition to renewable energy systems?
MHK: A large number of the coal-based power plants established in Pakistan between 2013 and 2017 were funded by Chinese businesses. A lot of resources globally are being aligned to invest in renewable energy technology projects. Although Pakistan may not be a big emitter, there are innumerable business opportunities to become meaningful contributors towards this energy transition. The green economy is huge. This investment can be divided into adaptation and mitigation. Energy falls under mitigation, as you are offsetting carbon. Adaptation involves reaching out to farmers and informing them about the imminent changes in crop cycles, building flood protection, constructing resilient housing and protecting the mangroves.
SK: What part does Reon play in Pakistan’s overall energy landscape?
MHK: Since the power grid is so unreliable, local industries use generators that are not environmentally friendly. To offset this, we offer services whereby customers pay for technology and expertise in turnkey projects. Through energy financing, we provide energy as a service, based on long-term contracts. We also have an energy management platform developed in-house by our product team in Riyadh.
SK: What is Reon’s custom energy management platform?
MHK: Spark started as a basic monitoring tool of our integrated energy systems, but now it provides real-time optimisation using machine learning and AI. It helps customers manage complex energy sources like generators, solar, batteries and wind, optimising their energy mix to reduce costs. It has the ability to troubleshoot and sound an alert if a system is not operating smoothly and generate live recommendations. If demand is expected to be a certain amount in the next hour, it might suggest switching off an engine that is not needed, thereby increasing the efficiency of the other engines. It calculates the amount of solar power available and adjusts the power from other engines accordingly. It is a beautiful piece of technology and we are very proud of it. It is not just being used in Pakistan; we are also exporting it.
SK: What sets Reon apart from other energy companies in Pakistan?
MHK: We are more holistic in our approach. We are obsessive problem solvers. Five years ago, we introduced industrial-scale lithium batteries in Pakistan – the same type of batteries used in mobile phones, specifically lithium iron phosphate (LFP) batteries, which are incredibly stable and useful. Batteries are the future; they are the core missing piece in the energy transition puzzle.
The issue with the energy transition is that when the wind blows and the sun shines, we have plenty of solar and wind power, but when the wind stops blowing and the sun sets, we are left with none.
SK: What is the benefit of battery-based solutions?
MHK: Renewable energy is heavily reliant on the predictability of our climate and batteries can store the energy when it is abundant and store it when there is limited solar or wind power. Reon introduced industrial-scale lithium batteries in Pakistan in 2020, with a three megawatt battery. To put this into perspective, a typical household uses between five to 10 KW of power a day in an urban setting, so a three megawatt battery provides a lot of power. We initially introduced them to solve a problem for a client manufacturing polyester fibre who were suffering heavy losses due to frequent power breakdowns. Since then, we have commissioned several large batteries and today, 100% of all large industrial batteries are designed, commissioned and operated by Reon.
SK: What major projects has Reon completed?
MHK: We have undertaken some of the largest industrial projects not only in Pakistan but in the region. Every year we set new standards. For instance, in 2018, the largest project we completed was a two megawatt solar installation, which was the largest in Pakistan at the time. The same year, we completed our first 12 MW project for a cement company; it was the largest solar project for a cement plant anywhere in the world. In 2020, we signed our first 50 MW-plus deal with Bestway Cement, and as of today, we have completed about 80 MW worth of projects for them. We also hold the record for integrating the largest battery-based microgrids – three megawatts in 2020 for Lucky Cement.
SK: Have you faced any resistance from traditional utility systems?
MHK: As a disruptor, you are bound to step on some toes. The traditional business model relies on a distribution grid to build a monopolistic business where only one entity can sell power. A competitive market needs to be encouraged. In Pakistan, power prices are very high, indicating that something is wrong with the system. Historically, the government buys all the power, leading to expensive rates from private power producers. The government is the single biggest buyer and seller of power. The entire chain is not competitive and carries with it significant losses.
For every dollar spent on buying power, only 78 cents are recovered; the remaining 22 cents are lost to theft and pilferage, with additional technical losses of 15 to 20 cents due to inefficiencies in the system. When you add all this up, the losses in the power system are close to around 50%. The model has to change.
SK: According to a New York Times article, Pakistan has increased its electricity capacity by 30% due to solar power. Is this true?
MHK: Over the last 12 years, we have graduated from a situation of extreme deficit to extreme surplus. Between 2013 and 2017, Pakistan added more power than any other country in the world and became the largest buyer of turbines. The fundamental flaw was that we added far more power than what we needed. As a result, we have close to 45 GW of installed power capacity. Our peak summer demand is close to 14 GW and the winter demand is around eight gigawatts.
SK: How can this surplus energy be better utilised?
MHK: The reason our energy bills are so high is because we have all this power and too few consumers. To counter this, the government is trying to implement certain initiatives and attempting to renegotiate with the power plant owners on the tariff. In my opinion, we should encourage the companies generating this excess power to sell directly to industry and eventually export it. They can also set up new industries since a lot of them are industrialists themselves.
SK: How can the government better support companieslike Reon?
MHK: The government needs to avoid overregulating the market. There have been whispers about changes in the net metering policy. The government should not tinker with such policies and let market forces take hold and encourage an open market model.
For feedback: aurora@dawn.com
Read Comments
Related Stories
SK: What is the benefit of battery-based solutions?
MHK: Renewable energy is heavily reliant on the predictability of our climate and batteries can store the energy when it is abundant and store it when there is limited solar or wind power. Reon introduced industrial-scale lithium batteries in Pakistan in 2020, with a three megawatt battery. To put this into perspective, a typical household uses between five to 10 KW of power a day in an urban setting, so a three megawatt battery provides a lot of power. We initially introduced them to solve a problem for a client manufacturing polyester fibre who were suffering heavy losses due to frequent power breakdowns. Since then, we have commissioned several large batteries and today, 100% of all large industrial batteries are designed, commissioned and operated by Reon.
SK: What major projects has Reon completed?
MHK: We have undertaken some of the largest industrial projects not only in Pakistan but in the region. Every year we set new standards. For instance, in 2018, the largest project we completed was a two megawatt solar installation, which was the largest in Pakistan at the time. The same year, we completed our first 12 MW project for a cement company; it was the largest solar project for a cement plant anywhere in the world. In 2020, we signed our first 50 MW-plus deal with Bestway Cement, and as of today, we have completed about 80 MW worth of projects for them. We also hold the record for integrating the largest battery-based microgrids – three megawatts in 2020 for Lucky Cement.
SK: Have you faced any resistance from traditional utility systems?
MHK: As a disruptor, you are bound to step on some toes. The traditional business model relies on a distribution grid to build a monopolistic business where only one entity can sell power. A competitive market needs to be encouraged. In Pakistan, power prices are very high, indicating that something is wrong with the system. Historically, the government buys all the power, leading to expensive rates from private power producers. The government is the single biggest buyer and seller of power. The entire chain is not competitive and carries with it significant losses.
For every dollar spent on buying power, only 78 cents are recovered; the remaining 22 cents are lost to theft and pilferage, with additional technical losses of 15 to 20 cents due to inefficiencies in the system. When you add all this up, the losses in the power system are close to around 50%. The model has to change.
SK: According to a New York Times article, Pakistan has increased its electricity capacity by 30% due to solar power. Is this true?
MHK: Over the last 12 years, we have graduated from a situation of extreme deficit to extreme surplus. Between 2013 and 2017, Pakistan added more power than any other country in the world and became the largest buyer of turbines. The fundamental flaw was that we added far more power than what we needed. As a result, we have close to 45 GW of installed power capacity. Our peak summer demand is close to 14 GW and the winter demand is around eight gigawatts.
SK: How can this surplus energy be better utilised?
MHK: The reason our energy bills are so high is because we have all this power and too few consumers. To counter this, the government is trying to implement certain initiatives and attempting to renegotiate with the power plant owners on the tariff. In my opinion, we should encourage the companies generating this excess power to sell directly to industry and eventually export it. They can also set up new industries since a lot of them are industrialists themselves.
SK: How can the government better support companieslike Reon?
MHK: The government needs to avoid overregulating the market. There have been whispers about changes in the net metering policy. The government should not tinker with such policies and let market forces take hold and encourage an open market model.
For feedback: aurora@dawn.com
Read Comments
Related Stories
SK: According to a New York Times article, Pakistan has increased its electricity capacity by 30% due to solar power. Is this true?
MHK: Over the last 12 years, we have graduated from a situation of extreme deficit to extreme surplus. Between 2013 and 2017, Pakistan added more power than any other country in the world and became the largest buyer of turbines. The fundamental flaw was that we added far more power than what we needed. As a result, we have close to 45 GW of installed power capacity. Our peak summer demand is close to 14 GW and the winter demand is around eight gigawatts.
SK: How can this surplus energy be better utilised?
MHK: The reason our energy bills are so high is because we have all this power and too few consumers. To counter this, the government is trying to implement certain initiatives and attempting to renegotiate with the power plant owners on the tariff. In my opinion, we should encourage the companies generating this excess power to sell directly to industry and eventually export it. They can also set up new industries since a lot of them are industrialists themselves.
SK: How can the government better support companieslike Reon?
MHK: The government needs to avoid overregulating the market. There have been whispers about changes in the net metering policy. The government should not tinker with such policies and let market forces take hold and encourage an open market model.
For feedback: aurora@dawn.com