national wind power policy- pakistan

7/31/2019 National Wind Power Policy- Pakistan

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MASTERS IN WIND POWER PROJECT MANAGEMENT

National Wind Power

PolicyPakistan

Haseeb Ahmad

1/30/2012

Submitted to Liselotte.Alden


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Spatial Planning for Wind Power Development

Table of Contents1. Introduction .......................................................................................................................................... 1

2. Current Energy scenario of Pakistan ..................................................................................................... 1

3. Renewable Energy and Pakistan ........................................................................................................... 1

4. Institutions in the Power Sector ............................................................................................................ 2

5. Policy for Development of Renewable Energy for Power Generation ................................................. 4

6. Renewable Energy Policy Challenges .................................................................................................... 5

7. Addressing Policy Challenges ................................................................................................................ 6

8. Pakistan Renewable Energy Policy Chart .............................................................................................. 9

Bibliography ................................................................................................................................................ 10


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1. IntroductionThe first and the latest renewable energy policy, developed in 2006, have aimed

specifically at the promotion of renewable energy power projects. Wind power has a very vital

part in the policy however no separate policy regarding wind power development exists. Since,

there is no wind power development in the previous years; the policy is still under

implementation mode. So the challenges and barriers are going to be discussed, and more

importantly some suggestions will be presented to address these challenges. In the following

discussion, Renewable Energy Technologies (RETs) will be discussed jointly.

2. Current Energy scenario of PakistanPakistan has been plunged into severe energy crisis. In Pakistan, the primary energy

source is fossil fuel which contributes 60%, while bio-fuels in the form of wood, agricultural and

animal waste contribute 36% of total the supply.

Now if we look down for electricity in particular, the thermal power (fossil fuel),

hydropower and nuclear power produce 64%, 33% and 2.4% of the total the electricity. (Fossil

Fuel Overview, 2007) On the demand side of electricity, we can see the largest consumer of

electricity is household sector which take 44.2 per cent of total electricity consumption followed

by industries 31.1 per cent, agriculture 14.3 per cent, other government sector 7.4 per cent,

commercial 5.5 per cent and street light 0.7 per cent. (Haq, 2008) In 2004-05, the electricity

consumption per capita was 425 kWh which is almost six times lower than that of world average.

(An IEA Fact Sheet, 2006) But the gap between energy supply and demand is increasing rapidly

due to industrial growth. The growth of electricity consumer has been recorded 83% over the last15 years. (Economic Survey of Pakistan, 2005-06) So at present the electricity demand has

increased about 23000 MW and the short fall is about 5000 MW. (WAPDA, 2011)

3. Renewable Energy and PakistanPakistan, like other developing countries of the region, is facing a serious challenge of

energy deficit. Renewable Energy resources can play an important role in bridging this deficit.

More importantly, Renewable Energy can take electricity to remote rural areas, where power

transmission becomes too expensive. The Government of Pakistan aims that all localities not

planned to be connected with national grid in next 20 years are earmarked for Renewable Energy

resources and the solar/ wind energy related technologies be indigenized in next decade through

national/ international collaboration. According to the Government of Pakistan,

"Government of Pakistan is putting greater emphasis on Renewable Energy and has set a

target of 10% renewable energy or 2700 MW in the Country's energy mix by 2015. (Power &

Alternative Energy Sector in Pakistan, 2011)


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4. Institutions in the Power SectorBefore explaining the energy policy of Pakistan, it is important to discuss the following

institutions. These are relevant in facilitating electricity generation, transmission, and distribution

in Pakistan.

Ministry of Water and Power

The federal Ministry of Water and Power is the Government of Pakistans executive arm

for all issues relating to electricity generation, transmission and distribution, pricing, regulation,

and consumption in the country, and exercises this function through its various line agencies as

well as relevant autonomous bodies. It also serves to coordinate and plan the nations power

sector, formulate policy and specific incentives, and liaise with provincial governments on all

related issues. (Ministry of Water and Power, 2011)

National Electric Power Regulatory Authority

The National Electric Power Regulatory Authority (NEPRA) was established under an

act of the Parliament (Regulation of Generation, Transmission and Distribution of Electric Power

Act, 1997, also known as the NEPRA Act) to function as an independent regulator and ensure a

transparent, competitive, commercially-oriented power market in Pakistan. The Authoritys main

functions include, inter alia, issuing licenses for generation, transmission and distribution of

electric power; establishing and enforcing standards to ensure quality, safety, and proper

accounting of operation and supply of electric power to consumers; approving investment and

power acquisition programmes of the utility companies; and determining tariffs for bulk

generation and transmission and retail distribution of electric power. (NEPRA, 2011)

Alternative Energy Development Board

The Alternative Energy Development Board (AEDB) was established as an autonomous

body with the aim of promoting and facilitating the exploitation of renewable energy resources in

Pakistan so as to achieve the Government of Pakistans RE deployment targets. The AEDB is

tasked with implementing government policies and plans, developing projects, promoting local

manufacturing, creating awareness and facilitating technology transfer, channeling international

assistance, and coordinating all associated activities as the national facilitating agency for the

development of renewable energy in the country. It has also been designated as a one-window

facility for processing RE power generation projects (of all capacity sizes except hydel projects

larger than 50 MW; for hydel projects below 50 MW capacity, consultation with and

concurrence of the provinces is mandatory).

Provincial and Azad Jammu Kashmir Agencies

Provincial and Azad Jammu and Kashmir (AJK) governments support the

implementation of renewable energy projects within their geographical jurisdiction, either on

their own or in collaboration with the AEDB, such as by expediting and facilitating allocation of

land use rights (e.g., for wind farms), permitting, creating awareness of RE use, and removing

other impediments which may hinder progress in their development. Irrigation and Power (I&P)


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Departments exist in each of the four provinces and in AJK, whose prime function is to manage

water resources for agriculture and small power generation units of less than 50 MW. In the

Northwest Frontier Province (NWFP), the Sarhad Hydro Development Organization (SHYDO),

and I&P Departments in the Punjab, Sindh and Balochistan, are the key institutions. In the

Northern Areas, the concerned organization is the Water and Power Department, Northern

Areas. Each of these departments has a Chief Engineer, Power Cell, who heads the departments

technical management capacity with respect to provincial power projects.

Power Utilities

Electricity utilities in Pakistan comprise nine separately corporatized distribution

companies (DISCOs: Lahore, Gujranwala, Faisalabad, Islamabad, Multan, Peshawar,

Hyderabad, Quetta, and Tribal Areas) serving different regions of Pakistan and a private

integrated company, the Karachi Electric Supply Corporation (KESC), serving the Karachi

metropolitan area. In addition, there are four generation companies (GENCOs: Southern,

Central, Northern, and Lakhra) and the Water and Power Development Authority (WAPDA)

Hydel Wing. Control of power transmission and dispatch is allocated to the National

Transmission and Dispatch Company (NTDC).The institutional and functional organization of Pakistans powersector is depicted in the

following figure


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5. Policy for Development of Renewable Energy for Power GenerationPakistan has abundance of RE resources but these resources have not been utilized yet.

There is tremendous potential of solar power in Pakistan, and some of the coastal areas are

blessed with wind power as well. The Pakistan Meteorological Department has installed met

masts in the coastal areas and northern areas of the country. Wind speeds from 5 m/s to 7 m/s

persist in these areas. (PMD, 2011) Currently, large hydro dams are supplying electricity to

Pakistan but there is a need to promote wind power, solar power and small hydro dams.

According to renewable energy policy, the statement, renewable energy (or RE) includes the

following technologies:

Small hydro of 50 MW or less capacity

Solar photovoltaic (PV) and thermal energy for power generation

Wind power generation

Some other renewable energy technologies like biomass, wave, tidal, geothermal energy is also

included in the policy. The objectives of the policy are toIncrease the deployment of renewable energy technologies

Promote private sector investment in RETs through incentives and by developing

renewable energy markets

Develop measures to mobilize financing

Facilitate the development of a domestic RET manufacturing industry (thereby lowering

costs, improving service, generating employment and improving local technical skills)

Increase per capita energy consumption and social welfare, especially in remote and rural

areas where poverty can be alleviated and the burden on women collecting biomass fuel

can be reduced

Promote environmental protection and awareness (Policy for Development of Renewable

Energy for Power Generation, 2006)

While the benefits of tapping the available renewable resource potential specially wind

power in the country as a low-cost, clean option have long been recognized in strategic planning,

specific steps for promoting and developing these small-scale options have not been given due

priority in the face of more pressing concerns with the overall national energy situation.

Following are the barriers to investment and adoption of renewable energy on a national scale.


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6. Renewable Energy Policy ChallengesLack of Competition with Conventional Power Generation

Renewable energy has higher cost than fossil fuel counterparts despite tax exemption. In

case of wind power, the reasons are higher initial cost, absence of domestic manufacturing

industry and subsidies on fossil fuels.

Market Barriers

As a result of the competitive disadvantage of RETs, the dominance of non-renewable

power producers, and market prices which do not reflect external costs and benefits of

technologies, the market penetration of RETs is small. (Mirza, Umar K., Nasir Ahmad, Khanji

Harijan, and Tariq Majeed, 2009) Limited market penetration can also be attributed to limitedmarketing (for example, through promotional campaigns) and a lack of previously successful

business models. (Mirza, Umar K., Nasir Ahmad, Khanji Harijan, and Tariq Majeed, 2009)

Financial Barriers

Another important challenge is that there is a lack of adequate financing for renewable

energy projects in Pakistan, particularly for small-scale projects. (Mirza, Umar K., Nasir Ahmad,

Tariq Majeeda, and Khanji Harijan, 2007) Part of this difficulty stems from a lack of awareness

regarding RETs, a high risk perception of investment and also uncertainty about the reliability of

resource assessments (for example, unreliable wind speed projections). Additionally, the

relatively higher capital cost of RETs discourages financers.Poor Infrastructure

The infrastructure for RETs is quite poor in Pakistan. The transmission network is poor in

rural areas. Another infrastructure challenge is the decentralized natures of RETs particularly

wind power while Pakistan has centralized power system. So it is quite hard to mingle two

systems. Market-support infrastructure is also required. Market-support infrastructure refers to

networks of dealers and manufacturers, after-sale services and support technologies.

(COMSATS, 2005) Such infrastructure will result in market growth, increased sustainability and

lower renewable energy project costs.

Institutional Barriers

Pakistan has a history of poor coordination and cooperation between governmental

agencies. No governmental body was responsible for the planning and development of renewable

energy policies in Pakistan prior to the founding of AEDB. A lack of coordination andcooperation between government agencies, institutions, ministries and stakeholders continues


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today. Efficiency losses are incurred and progress is delayed as a result. R&D efforts are often

duplicated where information sharing would have been far more efficient.

Poor Information & Technology Access

Limited access to RET-related information and technology is also prohibitive to

renewable energy project development in Pakistan. There is a shortage of technical informationwith respect to resource assessment such as wind and water flow data. The availability of such

data is vital for supporting investor interest and project development. Technical knowledge

regarding the potential of mature technologies is also largely unavailable as a result of deficient

resource assessment databanks and a lack of understanding about relevant technical and cost

considerations.

Lack of Capacity & Training

A skilled workforce is also required for the successful deployment and development of renewable

energy projects. At present, there is lack of both trained personnel and training facilities for the

installation, operation, and maintenance of RETs. Skilled individuals from a wide range of academicdisciplines are also required for R&D activities. Without an adequate indigenous skilled and semi-skilled

workforce, a sustainable renewable energy industry in Pakistan is difficult to achieve.

Lack of Social Awareness & Acceptance

Finally, there are a number of social challenges which renewable energy policies must

manage. There is a considerable lack of awareness regarding renewable energy technologies and

the benefits they can provide to communities. This is largely due to inadequate awareness

programs aimed at educating the general public about the advantages of RETs, especially for

those in rural and remote areas. (Mirza, Umar K., Nasir Ahmad, Khanji Harijan, and Tariq

Majeed, 2009) Land availability is another social barrier of potentially significant consequence.

Ideal locations for renewable energy projects, such as wind energy projects, are often located on

traditional lands. Gaining community confidence and acceptance can result in extensive

negotiations and can require significant compensation payments. (Mirza, Umar K., Nasir Ahmad,

Khanji Harijan, and Tariq Majeed, 2009)

7.Addressing Policy ChallengesThe previous section detailed key policy challenges facing renewable energy project

development in Pakistan. Moving forward, it is necessary to identify possible approaches to

address these challenges for future energy policies. Strategies for improvement are discussed

below.

Energy Subsidy Transfers

It is a bold but necessary step for the government to consider transferring subsidies from

fossil fuels to RETs in order to bridge the competitive gap between them (COMSATS, 2005).


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The transfer of subsidies from fossil fuels to RETs could significantly increase RET

competitiveness.

Feed-In Tariffs

The implementation of feed-in tariffs (FITs) is another important policy tool that can be

used to increase the deployment of RETs and improve competitiveness. A feed-in tariffguarantees payment to renewable energy developers at a set rate for electricity production over a

given period of time (usually 15 to 20 years). Grid operators are typically required to provide

grid access and to purchase 16 all of the electricity produced within their service area. The FIT

rate is also reduced over time in order to promote innovation (DeMartino, Samantha, and David

Le Blanc., 2010)

Accounting the externalities

A good approach to bridge the competitive gap between renewable energy and fossil

fuels is to account for the negative and positive externalities associated with each. The negative

externalities associated with fossil fuel combustion include health and environmental costs andthe positive externalities associated with RETs include reduced air pollution and biomass

combustion in rural areas. Accounting for the external costs associated with fossil fuels results in

a higher price and reduced output, placing these conventional technologies at a disadvantage

compared to RETs.

Public Sector Involvement

Market expansion is vital for the growth of the renewable energy industry in Pakistan.

The public sector can play a significant role in this respect. One simple measure to increase the

market penetration of renewable energy, for example, is to utilize RETs on public buildings.Germany and Australia have successfully utilized such measures.

Institutional Cooperation

It is vital for different groups, working for the promotion of RETs, to cooperate by

sharing information and coordinating efforts in order to increase efficiency and progress. By

good coordination, they can each contribute unique skills and insights by working together,

enabling them to effectively achieve common goals.

Financing for Renewable Energy Projects

It is also vital that sufficient RET financing is made available to stimulate and encourageproject development in Pakistan. Financing arrangements to support investment in RETs must be

developed at the local, national, and international level in order to encourage technology

adoption. Aside from government subsidies, innovative funding programs should be developed,

particularly for small RET project investors (Mirza, Umar K., Nasir Ahmad, Khanji Harijan, and

Tariq Majeed, 2009). One study has suggested that the government can provide banks with funds

from donors and international financing institutions for IPP projects. Banks would then lend


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funds to renewable energy IPPs; however, it is suggested that the banks share the credit risk by

lending at least 20% of their own funds in order to avoid irresponsible lending behavior (Bhutta,

2008). Another study has suggested that the government develop a financing scheme for RETs

similar to the system successfully implemented for thermal and hydro projects in Pakistan

(Mirza, Umar K., Nasir Ahmad, Tariq Majeeda, and Khanji Harijan, 2007).

Improving Information & Technology Access

Improving access to RET-related information and technology is crucial to the success of

renewable energy project development in Pakistan. Foremost, a central information database

should be established which is both comprehensive and accessible. This system should document

field experience gained through the installation, operation and maintenance of RET systems.

Such information serves as an essential learning tool enabling developers to improve and adapt

RETs for specific environmental conditions. Additionally, resource-assessment databanks are

needed which should include regional wind speed and water flow data, for example. The

development of resource-assessment tools, as well as monitoring and evaluation tools are alsovital in this process.

Increasing Capacity & Training

It is necessary to recruit and train a semi-skilled and skilled workforce in Pakistan in

order to increase domestic capacity to support RETS development. Educational facilities should

be established to train semi-skilled workers on the installation, operation and maintenance of

RETs. Universities should develop programs to educate scientists and engineers in the field of

renewable energy.

Generating Social Awareness, Acceptance and Interest

The general public must be educated on the availability and benefits of renewable energy

technologies, particularly in remote and rural areas. It was noted earlier that the availability of an

accessible information system will help to spread general awareness, acceptance and interest in

RETs. The media can play a significant role in this respect as well. Broadcasting media can be

effectively utilized in order to spread awareness about the existence of RETs and their associated

benefits. In areas lacking access to such media outlets awareness can be spread through

demonstration projects which actively involve members of the community.


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8. Pakistan Renewable Energy Policy Chart

Energy Policy of Pakistan

Renewable Energy Policy

of Pakistan

Lack of Competition with

Conventional Power

Generation

Market Barriers

Financial Barriers

Poor Infrastructure

Institutional Barriers

Poor Information &

Technology Access

Lack of Capacity & Training

Lack of Social Awareness &Acceptance

No Considerable

development in the RETs

Political Instability and

security concerns in

some parts of the

country

Energy Subsidy Transfers

Feed-In Tariffs

Accounting the externalities

Public Sector Involvement

Institutional Cooperation

Financing for Renewable Energy

Projects

Improving Information &

Technology Access

Increasing Capacity & Training

Generating Social Awareness,

Acceptance and Interest

Significant growth in

RETs

Barriers

Proposed Solution to

the Barriers


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Bibliography(2011). Retrieved 01 23, 2012, from WAPDA: http://www.wapda.gov.pk

(2006).An IEA Fact Sheet. International Energy Agency Statistics.

Bhutta, N. (2008). Wind Power Projects and Role of Government. World Wing Energy Conference.Islamabad: Energy Wing, Planning Commission.

COMSATS. (2005). Renewable Energy Technologies and Sustainable Development. Islamabad:

Commission on Science and Technology for Sustainable Development in the South (COMSATS).

DeMartino, Samantha, and David Le Blanc. (2010). Estimating the Amount of a Global Feed-in Tariff.

DESA Working Paper, New York: United Nations Department of Economic and Social Affairs.

(2005-06). Economic Survey of Pakistan. Islamabad: Finance Division, Government of Pakistan.

(2007). Fossil Fuel Overview. Pakistan: Ministry of Petroleum and Natural Resources.

Haq, D. N. (2008). Energy crisis in Pakistan.

Ministry of Water and Power. (2011). Retrieved 01 23, 2012, from http://www.mowp.gov.pk/

Mirza, Umar K., Nasir Ahmad, Khanji Harijan, and Tariq Majeed. (2009). Identifying and Addressing

Barriers to Renewable Energy Development in Pakistan. Renewable and Sustainable Energy Reviews ,

927-931.

Mirza, Umar K., Nasir Ahmad, Tariq Majeeda, and Khanji Harijan. (2007). Wind Energy Development in

Pakistan. Renewable and Sustainable Energy Reviews , 21792190.

NEPRA. (2011). Retrieved 01 23, 2012, from NEPRA: http://www.nepra.org.pk/

PMD. (2011). Retrieved 01 24, 2012, from Pakistan Meteorological Department:

http://www.pakmet.com.pk/wind/Wind_Project.html

(2006). Policy for Development of Renewable Energy for Power Generation. Islamabad: Government of

Pakistan.

Power & Alternative Energy Sector in Pakistan. (2011). Retrieved 01 23, 2012, from PowerAsia:

http://powerasia.com.pk/introduction.htm

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