Despite an evolving energy mix in the past few years, Pakistan still utilizes a paltry share of renewable energy. This is despite the sharp decline in tariffs across the renewable spectrum for both solar and wind energy.
There have been various reasons at play including the illogical base-load argument by the ministry of water and power officials, the lethargic attitude of Alternative Development Energy Board (AEBD) in coming up with a competitive bidding framework for renewable projects and resistance by the National Transmission and Dispatch Company (NTDC) in providing grid evacuation arrangements. (Read: “Pitiful case for renewables” published on 8 August, 2018)
However, one reason in particular is the lack of a consistent and comprehensive renewable energy policy which clearly sets out the vision of where the country wants to be in the next decade when it comes to usage and development of renewable energy.
The previous policy called Alternative and Renewable Energy Policy 2011 had a highly un-ambitious target to begin with and the incentives awarded in the policy were not implemented by the relevant institutions mentioned above. In addition, the market and cost dynamics of solar and wind technology have changed massively over the past five years so a new policy is in order anyways.
The government back then put the target for at least 5 percent of total commercial energy supplies through alternative and renewable energy by 2030. This is already pretty much set to be achieved and is far less than what neighbouring countries like China and India aimed for. For example, India wants to induct 100GW of solar capacity and 75GW of wind energy by 2022.
A shared consensus by energy experts puts the potential of renewables in the overall energy mix at least 25 percent with the right direction by the government and seriousness on the part of relevant organisations, particularly the AEDB and the NTDC.
The previous government also decided to do away with take-or-pay contracts for renewable energy projects but decided to keep the mechanism for the energy projects under CPEC and federal government projects. This is discriminatory treatment and has the potential to discourage investment by the private sector. (Read: “Power sector: Contrary ambitions” published on 19 Dec, 2017)
The PTI government is expected to come out with its own renewable energy policy which should ideally learn from the mistakes of the past. For starters, a realistic assessment of the renewable potential should be undertaken after which an achievable target should be set.
The economics makes sense now given that renewable tariffs are one of the lowest in history. In addition, the policy structure should be developed in such a way that incentives provided do not need to revoked or modified. Investment in the renewable sector has been decent and the interest is certainly there.
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