The Dilemma of Renewables and the RE Policy 2019

While the new Renewable Energy (RE) Policy, 2019 has finally seen the light of the day, the fate of renewable energy sector that has been hanging since so long in this country has still to see the same. The most notable deviation that this policy is making from its preceding counterparts is the outright exclusion of Feed in Tariff (FiT) and the negotiated or cost-plus tariff optionsbehind the reason of competitive bidding or auctions. That simply means that all the eggs have been put in the basket of energy auctions for the renewables, assuming it a risk free option which actually is not the case so far; especially in the face of recent failure of auctions at the globallevel. The framers of this policy failed to understand that it is not the provision of auction itself but the reduction in the cost of technology is the factor which actually reduces the tariff of RE worldwide.

As a logical corollary of this policy, if any auction fails in future, then the fate of renewables should wait for the another new policy to come. In that case, consensus building on new policy will likely to waste couple of more years as has been witnessed in the present situation when it cost almost two and a half years. Long or short, this new policy has visibly axed the government’s inviolable prerogative of exercising multiple tariff options, so the spoilage seems flagrant. This policy has only one comparable parallel in the history, and that was Power Policy 1998, which also excluded other tariff options except competitive bidding for the power projects. That policy remained miserable failure in the past but it seems no lesson has so far been learnt from that debacle.

Furthermore, the same pathway of auctions and competitive bidding was already well enumerated within the RE Policy 2006 in the form of ‘Solicited Projects’, which altogether defies the need for RE Policy 2019 and exposes the weakness within policy making process.

The RE Policy document itself advocates the exclusion of FiT (Feed-in-Tariff) and the option of negotiated tariffs, considering the wind and solar as mature technologies. If this is true, there are more mature technologies like RFO, Gas, LNG and Coal, then why not to follow the same policy doctrine in those cases. Why exclusive auctions are destined only for renewable energy? And why not for thermal projects? Presently when wind and solar tariff is already touching the tariff of below 5 and 4.5 cents per kwh in the country, the exclusive option of auctions had to be diverted for thermal projects.

The RE Policy 2019 document at the very onset is covered with a beautiful wrapper of anticipated targets i.e. 20% share of RE in the electricity mix by 2025 and 30% by 2030, which actually is labelled is nothing but a marketing chip. In contrast, these targets are not endorsed by the figures in the NTDC’s (National Transmission and Dispatch Company)own Indicative Generation Capacity Expansion Plan (IGCEP). In the face of COVID-19 and concomitant suppression of energy demand in the country, the RE targets seem hard to be achieved.

As a matter of fact, the term of the previous RE Policy 2006 has never been fixed at the time of its approval by ECC and in the same year. It was not until year 2013, when ECC while approving the Framework for Power Cogeneration 2013 (Bagasse/Biomass) as an addendum to the RE Policy 2006 extended the RE Policy 2006 for additional five years from the date of the decision, i.e. till March, 2018. Such a controversial decision has been unprecedented, rather unreasonable vis-a-vis the history and logic of policy making;fixing the validity of policy for five years ahead when such fixation of the term has never been demanded by the parent organization i.e. AEDB (Alternative Energy Development Board). How come the approving body can straight away predict the obsolescence of the policy afterthe next five years without seeking even its review and performance? In the absence of logic and technical sense, such master strokes of disconformity and confusion appear to lay the foundation of forthcoming flawed decisions which is truly regretful.

The above is the anomalous background of the decision for converging towards New Re Policy 2019. Quite interestingly, the decision to rescind the previous policy and to move for the new one has neither been proposed from the top side of the incumbent government nor from the AEDB(Alternative Energy Development Board). Hence, this policy shift isdistinctively devoid of any technical analysis anddue validation on record. As the matter of fact, anyshift towards new policy becomes only inevitable when the previous totally falls short towards achieving the desired ends and it becomes extremely necessary to change the course.This has never been the case with the previous RE Policy 2006, which was already on its way of achieving the yardsticks of desired outcomes and targets successfully.

Moreover, the specific availability of cost plus tariff mode only for the Government to Government (G to G) procurement of projects not only defies the norms of fair-play, rather seems to evaporate the trust of investors blatantly. With the visible and standing primacy of G to G arrangement in the RE Policy document, any unforeseen political bargain if strikes with any country may ultimately seal the fate of open market investment prospects; especially under the suppressed demand situation. Another drawback in the policy is the exclusion of the need for feasibility study for RE projects, which is rather incomprehensible.

While adding insult to injury, the “Mandatory Purchase” feature of renewable energy, the continuation of fiscal incentives for investors, and the simplicity of the procurement process have been significantly put on uncertain and unpredictable grounds, that leaves nothing but the bleak horizons for the uplift of RE sector in the country.In nut shell, although the RE Policy document seems to exhorts the preeminence of renewable energy in Pakistan, however a convoluted web of ifs and buts as well its glaring irrelevance with the ground realities seems to ruin this delectable narrative.