According to the latest data from Bloomberg New Energy Finance, the global power generation capacity today is 5,865 GW, out of which 1,882 GW is attributed to renewable energy sources such as solar, wind, hydro, biomass and geo-thermal.
Furthermore, global renewable energy investments amounted to $266 Billion USD in 2015, whereas fossil fuel based investments stood at $130 Billion USD. Countries world over have set ambitious programs to generate electricity using clean or renewable sources.
Developing countries like Pakistan can also diversify the electricity mix to reduce reliance on expensive imported fossil fuels,enhance energy security,and resolve the chronic power shortage issue by integrating renewable energy power technologies into the power network.
A growing supply-demand gap is the root of an energy crisis in Pakistan. The country relies on costly and inefficient oil-fired generators.
The annual electricity consumption of Pakistan in 2015 is estimated to be 103TWH and 63% of the energy needs are met through conventional oil and gas power plants.
Reliance on imported fossil fuels has exacerbated the issue of circular debt in Pakistan-cheaper fuels are often used to run these power plants, which leads to frequent wear and tear and high operational expenses.
Although country meets 32% of its power needs through hydro power plants, this technology hasn’t been harnessed to its full potential. Solar, and wind resources haven’t been tapped either, indicating lack of policy making at the government level.
The meager renewables target of 5% by 2030 needs to be revised in light of the new technological advancements.
Solar energy uses sunlight as fuel to produce electricity, and is cheaper than retail electricity in Pakistan.Only 210 MW of solar projects are currently under operation, despite the abundant solar resource,whilst another 220 MW is under construction.The National Electric Power Regulatory Authority (NEPRA) has announced new ‘feed-in-tariffs’ for 2016, which is expected to boost the solar sector in the future.
Off-grid systems (isolated power generation systems not connected to the central grid) can help alleviate the short-term power crisis.
The off-grid market is growing fast via local entrepreneurs.Solar/diesel/storage based mini-grids and biomass power plants can meet the power needs of villages and rural areas.
These solutions are more cost efficient compared to expansion of central grid that would require investment worth billions or rupees.
As the government has approved net-metering,residential and commercial solar projects are expected to increase in the major cities.The electricity from a rooftop residential solar system can be used for self-consumption or be fed into the grid under this policy mechanism.There is tremendous room for entrepreneurship in this sector;innovative financing and leasing schemes could be used to ensure that even a layman can benefit from solar systems.
Elon Musk’s Solar City in USA is a prime example of one such company which signs Power Purchase Agreements with homeowners and guarantees cheaper electricity rates through installation of solar systems.
Battery and storage technologies can be combined with solar system to store excess power for use during night time when there is no sun. These services can be packaged together using novel financing schemes.
To ensure a smooth and swift growth of solar sector in Pakistan,following issues should be tackled by the government to attract foreign and local investments: Political instability,lack of transparency and uncertain incentives,rising land costs, and retroactive FiT cuts. Entrepreneurs should be encouraged to enter the solar industry,lengthy bureaucratic processes should over overhauled, and cheap financing should be made available to realize the full potential of this vibrant sector.
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About the Contributor:
Aun Mela has worked as an energy and power consultant in the Middle East for 5 years. He is currently focusing on techno-economic analysis of investment opportunities in the power sector of GCC.Aun holds a master’s degree in sustainable electrical energy from Georgia Tech, and a Bachelor’s of degree in Electrical and Computer Engineering from National University of Singapore and McGill University.