Reforming generation and transmission

NEPRA’s latest report exposes Pakistan’s power sector for what it is: a circus of inefficiency. Over 45,000 MW of installed capacity as of June 2024. Yet, reliable, cost-effective electricity remains elusive.

Over 82 percent of electricity costs come from generation. Why? Overcapacity. Plants stand idle or run at part-load because demand forecasting was apparently optional. IPPs get paid for availability, not output. Public plants? Outdated and still soaking up availability payments.

Thermal power is the backbone. But it’s creaking. Private plants sit idle due to the Economic Merit Order (EMO). Public relics wheeze past their design lifespan. Guddu power plant, supposedly efficient, runs in open-cycle mode. It guzzles fuel and taxpayers’ patience alike. Imported fuels like RLNG and HSD add unpredictability and cost.

Renewables make up 30 percent of installed capacity but face the same old story: intermittency. Wind and solar can’t control the weather. Transmission bottlenecks make things worse. Power sits stranded during peak generation. Battery storage may well be the way to go in the future. But that may still take a while, as commercial viability isn’t there just yet.

Geography adds another twist. Cheap, efficient plants in the south. Demand hubs in the north. Transmission infrastructure remains on an extended vacation. Costly plants near demand centers fill the gap, pushing tariffs higher. The story keeps repeating itself year after year, and the amount of investment that goes in the transmission system almost always pales in comparison to what is needed to correct the mess.

Neglecting transmission for a decade has been catastrophic. Capacity expansions happened, but the wires were largely forgotten. It gets worse. Public sector plants under GENCOs are relics from another era. Inefficient, outdated, and poorly maintained, these plants drain resources while delivering subpar performance. They operate on availability payments, forcing consumers to pay for electricity that isn’t even generated.

While the generation mix is much improved from yesteryears, international price fluctuations mean the sector is always on edge. On the other hand, Thar coal and nuclear energy offer stability and lower costs but remain underutilized due to operational inefficiencies.

Renewables could be the savior but are held back by grid issues. Solar and wind farms face evacuation problems. Transmission lines can’t carry power from remote sites to demand centers. During peak generation, power simply sits idle.

The Economic Merit Order (EMO) is supposed to prioritize cheap electricity. Yet, deviations cost billions in FY 2023-24. Plants are dispatched inefficiently, the gas supply is mismanaged, and line pack limitations exacerbate the chaos.

Solutions are glaring. Modernize the grid. Decommission old plants. Invest in efficient technology. Demand forecasting needs to be realistic. Boost grid demand to utilize idle capacity. Without this, tariffs will keep climbing, and the sector’s inefficiencies will keep haunting consumers.

Pakistan’s power sector doesn’t lack potential. It lacks action. Transmission upgrades, renewable integration, and fuel management aren’t luxuries—they’re necessities. Until reforms replace stopgaps, the sector will remain a paradox.