Global Editions

Demystifying Pakistan’s energy crisis

Demystifying-Pakistan’s-energy-crisis

A brief analysis of the real issues plaguing Pakistan’s energy sector.

By Jawwad Rizvi

PAKISTAN has been suffering from power outages. The Ministry of Water and Power has developed a power policy to support the current and future energy needs of the country, (as defined in the Economic Survey of Pakistan, 2013-14). To achieve the long-term vision of the power sector and overcome its challenges, the government has set nine goals.

  1. Build a power generation capacity that can meet Pakistan’s energy needs in a sustainable manner.
  2. Create a culture of energy conservation and responsibility.
  3. Ensure the generation of inexpensive and affordable electricity for domestic, commercial, and industrial use by using indigenous resources such as coal (Thar coal) and hydropower.
  4. Minimize pilferage and adulteration in fuel supply.
  5. Promote world class efficiency in power generation.
  6. Create a cutting edge transmission network.
  7. Minimize inefficiencies in the distribution system.
  8. Minimize financial losses across the system.
  9. Align the ministries involved in the energy sector and improve the governance of all related federal and provincial departments as well as regulators.

The ministry has also set a few targets. These are: to fully eliminate load shedding, to decrease the cost of generation from 12 cents per unit to 10 cents per unit, to decrease transmission losses from 25 percent to 16 percent and to improve collection of bills to 95 percent.

The ministry is aggressively pursuing its policy of energy conservation and responsibility. One example of their seriousness seems to be the inauguration of Pakistan’s largest solar power plant (1,000 MW) located in Bahawalpur, the Quaid-e-Azam Solar Park which is already producing 100 MW since May 2015.

The Power Players

The current power structure is quite complex.

i) Power Generation
There are three public corporate entities responsible for electricity generation in Pakistan. Water and Power Development Authority (Wapda) which handles only energy produced from dams, Pakistan Atomic Energy Commission (PAEC) which handles energy produced from nuclear resources, and Pakistan Electric Power Company (Pepco). The private sector also participates in energy generation – there are the independent power producers (IPPs), small Power producers (SPPs), and captive power producers (CPPs).

Wapda, Pepco and PAEC all report to the Ministry of Water and Power. There are two other public entities that also report to the Ministry of Water and Power, Private Power and Infrastructure Board (PPIB) and Alternate Energy Development Board (AEDB).

ii) Power Transmission
All these energy producers sell their energy to a single buyer, the Central Power Purchasing Agency (CPPA) which in turn transmits this energy through the national grid or the National Transmission and Dispatch Company (NTDC).
NTDC reports to Pepco.

energy_pk_1

iii) Power Distribution
There are 10 distribution companies (Discos) that also report to Pepco and an independent K-Electric that is responsible for distribution of the energy in the port city of Karachi. The 11 units are referred to as Lahore Electric Supply Company (Lesco), Gujranwala Electric Power Company (Gepco), Faisalabad Electric Supply Company (Fesco), Islamabad Electric Supply Company (Iesco), Multan Electric Power Company (Mepco), Peshawar Electric Supply Company (Pesco) and Tribal Areas Supply Company (Tesco), Hyderabad Electric Supply Company (Hesco), Sukkar Electric Supply Company (Sepco), Quetta Electric Supply Company (Qesco) and K-Electric (KE) respectively.

iv) Independent Regulatory Authority
National Electric Power Regulatory Authority (Nepra) is an autonomous regulatory body – it’s main role is to improve the efficiency and availability of electric power services by protecting the interests of investors, operators and consumers with a view to promoting competition and deregulating the power sector.

History of Power Generation

Analyzing the figures given in the report issued by NTDC, the Power Systems Statistics 2013-14, 39th Edition, there is a lack of consistency. For the first 12 years, Pakistan generated electricity through both thermal and hydropower means with thermal dominating the system. There was a mixed pattern for the next 15 years (with the construction of indigenous dams). There was a sudden increase in thermal power generation in the year 1976 but the next 10 years were again dominated by hydropower generation. However, from 1989 to date, a total of 26 years, Pakistan has again generated more power through thermal means (based on imported fuels). A similar oscillating pattern emerges if the line losses data is analyzed.

energy_pk_1

1947 – 1959, Thermal Dominant Era: The total power generation of Pakistan till 1959 was 119 MW, out of which 52 MW, (44 percent) was generated from hydropower, and 67 MW, (56 percent) from thermal/Gencos. The line losses were at 18.6 percent.

1960 – 1963, Hydropower Dominant Years: A look at the figures of the year 1960 reveals that hydropower was 253 MW (69 percent), thermal was 113 MW (31 percent), and line losses were 18.6 percent.

1964 – 1968, Back to Thermal: Total power generation was at 599 MW, 332 MW from thermal (55 percent), 267 MW from hydropower (45 percent), and the line losses were at 22.8 percent. For the year 1968, the total power generation was 1,140 MW, thermal was 573 MW (50 percent), and hydropower was 567 MW (50 percent), and the line losses were 28.2 percent.

1969 – 1975, Hydropower Years: In 1969, the total power generation was 1,234 MW, out of which 667 MW (54 percent) was hydropower and 567 MW (46 percent) was thermal, the line losses were at 30.3 percent. In 1975, power generation reached 1,740 MW, out of which 867 MW (50 percent) was hydropower, 873 MW (50 percent) thermal, and the line losses were 33.7 percent.

1976 – 1976, Thermal Dominant Year: Hydropower remained stagnant at 867 MW (45 percent), thermal raised to 1,068 MW (55 percent) and the line losses were at 34 percent.

1977 – 1988, Hydropower Dominant Period: In 1977, the total power generation was 2,635 MW, out of which hydropower was 1,567 MW (59 percent), thermal was stagnant at 1,068 MW (41 percent), and the line losses were at 35.7 percent, which by the way, were the highest recorded in the energy history so far. This pattern continued for another 10 years. For example, in the year 1980, the total power generation was 2,685 MW, of which 1,567 MW (58 percent) was hydropower, 1,118 MW (42 percent) was thermal, and the line losses were 31.2 percent. Here’s another example, for the year 1985, the total power generation was 4,339 MW, of which 2,897 MW (67 percent) was hydropower, and 1,442 MW (33 percent) was thermal, and the line losses were 25.1 percent. The same pattern continued till the year 1988, hydropower was stagnant at 2,897 MW (52 percent), thermal increased to 2,652 MW (48 percent), and the line losses were 23.3 percent.

1989 – 2012, Thermal Dominant Era returns: In the year 1989, total power generation increased by 400 MW reaching 5,949 MW, out of which hydropower was 2,897 MW (49 percent), thermal was 3,052 MW(51 percent), and the line losses were at 22.6 percent. However, hydropower generation began to reduce its share in total power generation which was decreased to 49 percent in 1989 and 31 percent by the year 2014.

For example, in 1997 with IPPs induction, the total power generation was at 12,956 MW, out of which 4,825 MW (37 percent) was from hydropower, 5,070 MW (39 percent) from thermal Gencos, and 3,061 MW (24 percent) from thermal IPPs and the line losses were 22.3 percent. Here’s another example, for the year 2001, the total power generation increased to 15,534 MW, hydropower (WAPDA) reached 5,009 MW (32 percent), while the first private sector hydropower started production with 30 MW (0.2 percent) and first nuclear energy power plant added 325 MW (2.1 percent) to the total mix, thermal Gencos were reduced to 4,740 MW (31 percent), while thermal IPPs share increased to 5,430 MW (35 percent), the line losses were at 24.3 percent.

In the year 2005, the total power generation increased to 17,395 MW, hydropower (Wapda) was 6,463 MW (37 percent), hydropower from the IPPs was at 30 MW (0.2 percent), thermal Gencos were 4,834 MW (28 percent), thermal IPPs were at 5,743 MW (33 percent), nuclear power plant added 325 MW (1.9 percent), and the line losses were at 22.9 percent.

In the year 2010, the total power generation increased to 18,892 MW, hydropower (Wapda) remained unchanged at 6,444 MW (34 percent), thermal Gencos were 4,829 MW (26 percent), hydropower private increased to 111 MW (0.6 percent), thermal IPPs increased to 7,183 MW (38 percent), and nuclear energy remained unchanged at 325 MW (1.7 percent), and line losses were at 20.9 percent.

In the year 2012, the total power generation increased to 20,499 MW, out of which 6,516 MW, (32 percent) was hydropower (Wapda), 4,841 MW (24 percent) were from thermal GENCOs, hydropower IPPs added 111 MW (0.5 percent), thermal IPPs added 8,381 (41 percent) to the total mix, nuclear was 650 MW (3.2 percent) and the line losses were at 20.5 percent.

2013 – 2022, tapping Alternative Energy Sources: In the year 2013, Pakistan added 50 MW from wind power and in 2015, 100 MW from solar power as Pakistan’s focus shifted to include energy generated from renewable sources as well.

In 2014, the total power generation reached at 22,104 MW, hydropower (Wapda) increased to 6,902 MW (31 percent), thermal Gencos were at 5,458 MW (25 percent), hydropower from IPPs increased to 195 MW (0.9 percent), thermal IPPs added 8,793 MW (40 percent), while wind energy also contributed 106 MW (0.5 percent) in the mix, nuclear power got doubled to 650 MW (2.9 percent), and the line losses were 19.6 percent.

Energy Mix

Looking at 2014-15 figures, Pakistan’s total energy mix is: – Thermal, 65 percent; hydropower, 31.5 percent; nuclear, 3 percent; wind and solar, 0.5 percent. The public sector’s contribution is 58.5 percent in this mix including thermal (fossil fuels and nuclear) and hydropower, while private sector’s thermal (fossil fuels), hydropower and wind energy is 41.5 percent. Breaking this down further, public sector contributes 31 percent from hydropower, 25 percent from Gencos, 3 percent from nuclear while private sector IPPs contribute 40 percent from thermal, 0.5 percent from wind and only 1 percent from hydropower generation. By the way, nuclear energy is also a form of thermal energy; therefore, Pakistan’s current energy mix relies on 68 percent thermal energy resources and only 32 percent from renewable resources like hydropower, solar and wind when all is said and done.

If we analyze the government figures for the period of 2015 to 2018, Pakistan plans to add 10,400 MW to the system via liquefied natural gas (LNG), coal fire, wind, solar and hydropower projects. The current installed capacity is 22,571 MW (based on February 2015 figures), out of which 7,097 is based on hydropower generation and 15,474 on thermal generation. The additional 10,400 MW should take Pakistan up to 32,971 MW installed capacity by the end of year 2018. This should effectively end load-shedding if all goes according to the plan.

The new energy mix would get 52 percent from renewable (solar, wind and hydropower), and 48 percent from thermal (LNG, coal and nuclear) by the year 2018. Yes, this would be totally sustainable. However, if the energy policy doesn’t get derailed, by the year 2022, the energy mix again would tilt towards 70 percent from thermal resources, and only 30 percent from renewable with total installed capacity of around 53,000 MW. The installed capacity would be in surplus, however, the energy per unit will not be cheap. Currently, the consumers are paying between PKR 12 to 18 on an average. Would the cost be about the same or higher? This is the million dollar question that has all the put energy pundits in a frenzy.

energy_pk_1

Alternate Energy

Wind
The Pakistan Metrological Department (PMD) has identified a wind corridor in Sindh covering an area of about 9,700 square kilometers with gross wind power potential of 43,000 MW and keeping in view the area utilization constraints; the exploitable electric power generation potential of this area is estimated to be about 11,000 MW.

Micro Hydropower (MHP)
The Pakistan Council of Renewable Energy Technologies (PCRET) is working on micro hydropower (MHP) technology in Pakistan. It’s the national focal point for the development and dissemination of renewable energy technologies in Pakistan, especially in the field of development and promotion of mini/micro hydropower plants in isolated/neglected areas of the country.

The PCRET has been demonstrating and disseminating MHP Technology after indigenization, on micro level in the far-flung, inaccessible and remote hilly areas of the Khyber Pakhtunkhwa (KP), Gilgit–Baltistan, Fata and AJK since 1976.

In pursuance of rural electrification program of the federal government the major objective of the MHP program has therefore been rural electrification of the areas which are away from the national grid, and where restoration of ecological balance along with protection of environment is imperative.

The council has so far successfully installed 538 decentralized MHP plants with consolidated installed power generation capacity of 8 MW. Out of 538 MHP plants, 152 plants have been installed through launching various Public Sector Development Program (PSDP) schemes in the off-grid, far-flung and remote areas while 280 MHP plants have been installed in collaboration with individuals/communities. Whereas 106 plants have been installed in collaboration with various government organizations, Non-Government Organizations, Volunteer-Based Organizations providing technical assistance and post-installation supervision.

Solar
The government of Pakistan has set a target of having at least 5 percent of the total power generation of the country (9,700 MW) through alternative energy by 2030 that would have a decent share coming from solar power.

Availability of sunny days is one of the major parameters that need to be looked at before implementing solar energy projects. The data indicates that in most parts of the country, availability of sunny days is between 185 – 290 days in a year. The targeted sites of the project have around 215 sunny days in a year. This renders better prospects for the technology implementation for rural electrification, economical equipment, design and better operation.

The National Renewable Energy Laboratory (NREL), Golden, Colorado USA, in collaboration with USAID, PMD and AEDB, has carried out detailed analysis to determine solar energy potential in various regions of Pakistan and has solar maps of Pakistan.

Pakistan lies on Sun-belt. The mean global irradiation falling on horizontal surface is about 200 to 250 watt per m2 per day. About 1,500 to 3,000 sunshine hours and 1.9 to 2.3 MWh per m2 per year. Balochistan province is particularly rich in solar energy.

It has an average daily global insulation of 19 to 20 MJ/m2 per day with annual mean sunshine duration of 8 to 8.5 hours a day and these values are among the highest in the world. For daily global radiation up to 23MJ/m2, 24 consecutive days are available in this area.

Keeping in view the fact that the benefits of solar energy for power generation can be attained in the areas where abundant barren land is available and no other development activities like agriculture, livestock, industry, etc., are possible. Such areas include the following: most parts of Balochistan province, Thal Desert in Punjab, Thar Desert in Sindh, and Cholistan area.

The Way forward – Smart Grids

Continuous and expanded growth of the share of renewables in centralized and decentralized grids require an effective new approach to grid management, making full use of “smart grids” and “smart grid technologies”.

According to a report of the International Renewable Energy Agency (IREA), there is a growing evidence in many countries that high levels of renewable energy penetration in the grid is technically and economically feasible, particularly as solar and wind technologies increasingly reach grid parity in economic terms.

Existing grid systems already incorporate elements of smart functionality, but this is mostly used to balance supply and demand. Smart grids incorporate information and communications technology in every aspect of electricity generation, delivery and consumption in order to minimize environmental impact, enhance markets, improve reliability and service and reduce costs and improve efficiency.

These technologies can be implemented at every level, from generation technologies to consumer appliances. As a result, smart grids can play a crucial role in the transition to a sustainable energy future in several ways: facilitating smooth integration of high shares of variable renewables; supporting the decentralized production of power; creating new business models through enhanced information flows, consumer engagement and improved system control; and providing flexibility on the demand side.

This report is intended as a pragmatic user’s guide on how to make optimal use of smart grid technologies for the integration of renewables into the grid.

Smart grid technologies are divided roughly into three groups:

1. Well-established: Some smart grid components, notably distribution automation and demand response, are well-established technologies that directly enable renewables and are usually cost-effective, even without taking into consideration the undeniable benefits of sustainability related to renewable energy integration.

2. Advanced: Smart inverters and renewable forecasting technologies are already used to increase the efficiency and productivity of renewable power generation, yet tend to entail additional costs. These devices start to help noticeably when capacity penetration for renewables reaches 15 percent or more (on any section of the grid) and become essential as this capacity penetration approaches 30 percent, although there is little downside to choosing smart inverters even at low penetration levels.

3. Emerging: Distributed storage and micro-grids are generally not “entry level” smart grid technologies and thus are less well-developed. Most utilities focus on other technologies first, except in special circumstances (such as with grant funding, high reliability requirements, or remote locations).

This shows that a range of enhanced smart grid technologies is already available to improve grid performance and enable higher penetration levels of renewable energy. Furthermore, the use of smart grids is cost-effective when installing new grids or upgrading old ones. Examples of cost-effective smart grid technologies include “smart meters”, which can measure and track the output of a rooftop photovoltaic (PV) system and send that data back to the utility operating the grid, and “smart transformers” that will automatically notify grid operators and technicians if the transformer’s internal temperature exceeds normal limits.

energy_pk_1

Applications of smart grid technologies can be found across the world, from isolated islands to very large integrated systems. For developed countries, smart grid technologies can be used to upgrade, modernize or extend old grid systems, while at the same time providing opportunities for new, innovative solutions to be implemented. For developing and emerging countries, smart grid technologies are essential to avoid lock-in of outdated energy infrastructure, to attract new investment streams, and create efficient and flexible grid systems that are able to accommodate rising electricity demand and a range of different power sources.

Smart grid technologies are already making significant contributions to electricity grid operation in several countries. Case studies from Denmark, Jamaica, the Netherlands, Singapore, and the United States (New Mexico and Puerto Rico) highlight the successful combinations of smart grid technologies with renewable energy integration. Yet, as these case studies also show, the successful implementation of smart grid technologies for renewables requires changes in policy and regulatory frameworks to address non-technical issues, particularly with regards to the distribution of benefits and costs across suppliers, consumers and grid operators.

With renewable power shares sure to continue increasing, smart grid technologies in combination with appropriate supporting policies and regulations will be essential to transform the electricity system and create the grid infrastructure to support a sustainable energy future.

Conservation

The first national energy conservation policy was developed and approved by the government of Pakistan in 2006. The policy provided a broad guideline to promote conservation in all sectors of economy. The national energy conservation center (Enercon) was established in 1987. The strategy adopted by Enercon for promoting energy conservation spans a whole spectrum of activities, starting from identification of energy conservation opportunities and including technology demonstration, to undertaking pilot projects, information and outreach, training and education, and development of plans and policies for promoting energy efficiency.

Real issues facing Pakistan’s energy sector

Nisar Ahmad Bazmi, former general manager (Planning) Wapda says that it is an incorrect perception that existing transmission system cannot handle more electricity. “The same transmission line can hold 30,000 MW load with a little more investment in the existing system.”

Quoting an example, Bazmi says if a 500 kV transmission line length is 80 kilometers (km) it can take a load of 2,400 MW. If length is increased to 180 km, the load is reduced to 1,600 MW. Further increase in length to 250 km, load would be reduced to 1,200 MW. Now to maximize the utilization of the transmission lines, power houses and grid stations, distribution network needs to expand and improve which will enhance the capability of the existing transmission network.

Mentioning the example of Lesco, he says that for the first time this summer, company distribution network handled 4,500 MW load as the network was improved by encircling it with a distribution ring which enables it to handle more load. Consequently, power outages duration has been reduced this summer on the Lesco system.

Bazmi says that the system modification is a continuous process and it cannot be stopped at any point of time otherwise system will collapse. Giving Saudi Arabia’s example, he says that when a grid station reaches the limit of 60 percent of load, another one is planned, by the time the previous grid station goes up to 80 percent, a new grid station is already in place to share the system load. On the other hand, in Pakistan, such decisions get delayed which causes system failure.

The same point has been raised in the report on National Power System Expansion Plan 2011-2030 prepared by SNC-Lavalian International Inc. (Canadian firm) in association with National Engineering Services Pakistan (Nespak) private limited commissioned by the NTDC. The report states that, “Pakistan is geographically a longitudinal country, i.e., more like a vertical rectangle and the same is true for the primary network of the NTDC. The 500 kV network runs from Peshawar in the north to the Hub Power Company Limited (Hubco) near Karachi in the south. The maximum load is concentrated in the middle of the country where local generation potential is limited because of lack of fossil fuel resources and mega hydropower potential in the plains. Hydropower generation potential is located in the north and thermal power generation sources are mainly in the south.”

“The least cost Generation Plan developed for this Expansion Plan Study also envisages maximum hydropower generation located up in the North whereas the major thermal power plants based on indigenous and imported fossil fuel are located in South,” continues the report. “Therefore during high water months when hydropower is at the maximum the power flows from the North to South, whereas in low water months when the thermal power in the South is run at its maximum, the power flow is reversed to be from the South to North. Long High Voltage Alternating Current (HVAC )(500 kV or above) and High Voltage Direct Current (HVDC) lines are required to pump power from far North and far South to mid country where the maximum load is concentrated.”

“With insignificant local generation in mid-country, the huge reactive power Mega volt-amperes reactive (MVAR) demand would not be advisable to be supplied from power plants in the far North and far South as excessive flow of Volt-ampere Reactive (VARs) would cause severe voltage drop across long and heavily loaded lines, therefore sufficient VAR sources would be required to be installed in terms of shunt capacitor banks at distribution level and, if required, at transmission level as well.

Other dynamic VAR compensation devices such as Static VAR Compensators (SVCs), Surface Volume Surface (SVS), and other FACTS devices might be required to be installed at appropriate locations in mid-country.”

“In high water season when power flows mainly from hydropower plants in the North, the HVAC circuits in the South would be lightly loaded because of low dispatch of thermal power from the South and vice versa. The lightly loaded HVAC lines generate excessive VARs due to their high charging current and would require sufficient amount of shunt reactors, line connected or bus connected depending on the requirement.

Therefore very careful levels of compensations, inductive and capacitive, are to be studied and planned.” According to the report “Pakistan is required total $27.010 billion investments for the upgrading the transmission of NTDC by 2030 out of which $5.35 billion by 2017-18 plans, $7.118 billion for project proposed from 2017-2020 and $14.542 billion for the project proposed from 2021 to 2030.”

Technical Losses and Theft

On technical and line losses, Bazmi says that Nepra, through an independent consult, conducted analysis of line and technical losses. Based on their findings, the NTDC technical losses are 2.86 percent while Iesco’s are 6.6 percent. On the basis of the finding, it has been established that technical losses are always not more than 7 to 8 percent for the Discos and 3 percent for the NTDC. Therefore, Nepra can ask the Discos to bring down their line technical losses and separate theft with it. He believes that the technical losses of any distribution and transmission network are always in single digit while more than that is electricity theft. Former Managing Director Pepco Tahir Basharat Cheema is of the view that, “the system losses stand at 20 percent of total power generated and distributed, out of which some five percent is electricity theft from the system, while another five percent is the result of outdated system. Remaining, 10 percent is technical losses, which in accordance with the total power sector infrastructure size of Pakistan is negligible. Globally, every power system has technical losses which depends upon infrastructure base of the system. Big system has more losses. So, PKR 100 billion losses will always exist as the total power sector billing size is about PKR 1 trillion out of which 20 percent losses are equal to about PKR 200 billion.”

Suggesting the best energy mix and affordable power, Cheema believes that coal could solve the issue of cheap energy in the medium term while hydropower is the solution for the long term. But cheap coal power is only possible by installing coal-based power generation plants at the coal producing areas and coastline.

It is an incorrect perception that existing transmission system cannot handle more electricity. The same transmission line can hold 30,000 MW load with a little more investment in the existing system.
NISAR AHMAD BAZMI FORMER GM PLANNING WAPDAMIT

Installation of coal power plants other than the coal producing areas and coastline will not be helpful in achieving cheap or rather affordable energy solution as the transportation cost of coal will add into the power tariff. Other than this, strong reliable rail network will be required to move coal from the seaport or coal producing areas such as Thar to coal plants as planned by the Punjab government in Sahiwal and Rahim Yar Khan districts.

Currently, the number of private sector producers have installed or converted their furnace and diesel thermal plants to coal in order to reduce their operational costs and to keep their products competitive in international markets. A leading private sector power producer’s coal requirement alone is almost 750 trucks a day. Thus, to make coal-based power plants, both private and public sector require a reliable rail network which reduces their transportation cost from sea to plant sites. The cement sector in the recent past has also tried to get access to rail track in order to bring imported coal to cement plant sites in Chakwal which were not entertained by the railways.

Cheema goes on to say that initially these plants should be launched on 80/20 ratio of domestic and imported coal mix which can be gradually increased to 100 percent indigenous coal. At the start, domestic coal production won’t meet the requirements of the power plants due to limited extraction. With the passage of time it can be increased to meet domestic power plants demand.

Cheema thinks that in the long run, hydropower generation is the only solution. But the public should be made aware of the fact that costs of hydropower generation will not be any cheaper at least for the first decade. However, after the first decade it will start declining drastically. As of today, if the Bhasha dam starts power production, per unit cost will be PKR 14.70 per unit at least. There is no such thing as ‘cheap’ hydropower in the beginning. It’s a total myth. Hydropower generation based on dams also requires huge investments which is not a possible undertaking for the government alone. They need a consortium of investors. The private sector should be invited for this as well like Three Gorges Dam China which was also built by a private company.

Another former insider who served as Member Power Wapda since its very beginning, Tanzeem Hussain Naqvi, suggests adaptation of the golden principle of Economic Dispatch Order (EDO) to minimize the energy mix costs. The EDO is a principle which defines the power generation should be obtained first from the most efficient generators minimizing the transmission and operational cost of any power system.

Naqvi says that Pakistan has also committed with USAID to follow the US Economic Dispatch Model in 2012 as it has been supporting Pakistan to improve the efficiency of the power sector of the country. Interestingly, the EDO is not a new concept for power sector of Pakistan, as in the past, the country has followed this principle to ensure maximum output of power generation in limited resources.

Naqvi, sharing his experience, disclosed that in his tenure he strictly followed the EDO principle. If the energy managers follow this rule, the most efficient generators would run to generate electricity which would be more cost-effective. The government needs to run Gencos (that were closed due to continued negligence of the government authorities) as these plants were installed near the main transmission and distribution network. These are also cost-efficient as compared to the IPPs. You get the added advantage of reducing line losses as the Gencos are nearer to the lines.

Recalling those times, Naqvi mentions that during his Member Power Wapda tenure he even didn’t have to use the number of the IPPs power plants and bear capacity charges. “Wapda was in profit even after paying the capacity charges, as the selling cost of power unit was higher than the (energy) generation cost,” he said.

Explaining the advantages of timely upgrades in the system, Naqvi discloses that in General Former Zahid Akber Chairman Wapda’s tenure (1989 to 1993), PKR 35 million were allocated for the replacement of conductors of 116 kVA transmission lines of Lahore area. The system was upgraded by replacing the dog conductors to panther conductors, thus line losses were reduced by half in only six months.

“Still, Lahore area system is using the same panther conductors that were introduced in the early 1990s while no one has seriously anticipated the future loads on the system to upgrade accordingly,” he comments. Naqvi believes that a good administrator can get the work done from even an incompetent and corrupt worker by fixing performance targets by reward and punishment policy.

energy_pk_1

Pakistan power system losses are divided in three categories according to Naqvi, technical losses, theft and inefficient system. Technical losses occur when more power is supplied from a limited capacity system. This could be controlled by timely expansion of power transmission and distribution system. Similarly, inefficient system is replaced with the efficient one.

For theft control, head of the Discos should be well aware of area-wise total consumption of the electricity in the company. The recovery targets should be given to the divisional heads and asked to ensure 100 percent recovery from industrial and commercial users. Electricity theft of one industrial and commercial user is usually equal to the theft of a complete residential area of a division. Once 100 percent recovery is ensured from the industrial and commercial users on the basis of its approved load, more than 80 percent theft will be controlled automatically, he asserts.

Controlling the meter readers is another aspect to check the theft. Meter readers should be given exemplary punishment when found involved in wrongdoing like meter reversing and incorrect reading. Similarly, non-reversible meters should be installed, he suggests.

“The future of cheap energy lies in the hydropower, and coal-based power generation while solar and wind is high cost clean energy source,” Naqvi says.

Due to high country risk, and project finance cost, the cost of production of wind and solar projects is very high in Pakistan. The price per unit for solar energy is calculated over PKR 21 per unit and wind energy PKR 15.5 per unit. Due to 20 percent losses, this would not remain feasible.

However, solar energy globally is considered the best off-grid solution used for street lights, public, private buildings, commercial plaza, and small home-based solutions. On the other hand, the Punjab government has planned the world’s largest photovoltaic solar field of 1,000 MW in Bahawalpur, out of which 100 MW power generation became operational in May 2015. On the basis of the 20 percent line losses calculation, out of 1,000 MW, 200 MW will be converted into losses. In such a scenario, if the Punjab government focuses on off grid solar power solution and invests in these resources and encourages private sector to develop cheap small solar technology solutions, recommend waiver of duty and taxes to the central government from the equipment and solutions of solar plants, much better results can be achieved.

Naqvi believes that electricity cost will not be reduced by year 2022 on the basis of projected power sector energy generation plans. If the government starts with the coal and hydropower generation projects first, followed by solar and wind generation, only then can cheap energy be produced as the output MW of earlier projects is higher than the later projects. Other than this, coal generation will cost around PKR 8 to 10.7 per unit as compared to wind which is PKR 15.5 per unit and solar which is over PKR 21 per unit.

The government should also rehabilitate the existing power plants of the Gencos which will also add into the system in one-and-half years’ time as replacement of generators’ is mainly required in these plants. These plants are established near the transmission and distribution system. The Gencos plants will also cost almost PKR 6 per unit cheaper than other sources except hydropower. Initially, hydropower generation will be expensive but after the first decade or so drastic decline will come in its rates as the project will complete Internal Rate of Return (IRR).

The private sector and international institutions will be ready to invest in the mega hydropower generation projects of Pakistan as they are well aware of the projects’ returns, Naqvi asserts.

ENERGY 101

– THE BASICS

TO understand energy, you have to start at the source. Energy can’t be created or destroyed, it can only be changed from one form to the other. The earth provides the natural resources that are used to harness power. For example, plants convert solar energy by a process of photosynthesis. There is no difference in the energy released from a substance whether it is eaten as food or burned as fuel.

From coal to natural gas, from ocean tides to waterfalls, from mountain winds to biofuels, the energy we require first must be harnessed, mined or collected from the earth. Some of these resources have a limit – for example, fossil fuels like oil, coal and natural gas. Some are renewable like water, wind and the sun.

For every energy resource, chemical or mechanical processes are required to turn it into usable electricity. Every day researchers work to find innovative ways to use our limited resources, process raw materials, harness renewables more efficiently and find entirely new energy sources.

Electricity that is generated by burning up a fuel of some kind to heat water till it produces steam which in turn powers turbines and generates electricity is referred to as thermal – fuels like coal, natural gas, diesel, furnace oil, petrol, biomass, and uranium are all examples of thermal energy fuels. It’s the generator inside the turbine that converts mechanical energy into electric energy and creates electricity. Steam is an efficient method of producing electricity because the water can be recycled and reused as it changes back and forth between liquid and gaseous states.

Transporting electricity from the power plant to your home is an entirely different process. Current technology can’t cost-effectively store large amounts of electricity so significant challenges exist when it comes to transferring that electricity across long distances. Just enough electricity has to be generated to meet demand at all times and can be transmitted through power lines to your light switch. Too much or too little power can crash transmission system and can cause a blackout. That’s why a complex mix of logistics, management and infrastructure is needed to transmit electricity from power generators to consumers.

The regional networks of power plants and transmission lines carry electric energy and high voltage in their area to local utilities. For electricity to move through the grid, its voltage must be increased by a device called transformer then the electricity can travel long distances across high voltage transmission lines. These high voltage lines are generally strung between giant metal transmission towers. They stretch for miles from power plants to local substations in each neighborhood. The substations’ job is stepping down electric voltages levels from as high as 765,000 volts to closer to 110 volts used in your home. The electricity power line in your street passes through to another transformer which steps down the voltage once more and then it travels along the line into your house. From there the electricity enters your breaker box and it is then distributed into light sockets and outlets.

Jawwad Rizvi is Senior Economic Correspondent at The News, a leading English Daily.

Authors
  • zain.mehmood

    Very informative

  • osama ali

    i am working on solar cells and i found this article very helpful regarding the basic demand and supply needs of pakistan keep it up ITU you people are doing a great research work

  • mpk

    Very comprehensive read!

  • ZK_KHATTAK

    Really liked Demystifying Pakistan’s Energy Crisis by Jawwad Rizvi. It makes clear the electricity situation in Pakistan and all the related issues.But…….there are real questions whether Pakistan will have enough water in the future to produce hydropower. Pakistan’s minister for water and power, Khwaja Asif, recently warned Pakistan will face severe water shortages.” WRONG There is s shortage of stored water during the lean non-monsoon season. Solution -> build more dams!!!!!!!!!!

  • ozzzy

    a very good initiative … kudos to the editorial team … all the articles are really informative and well written through research … keep up the good work (y) …

  • FlipppppFloppppCarrot

    Nothing will come of it
    Pakistan’s energy crisis cannot be solved without constructing KBD.

    n

  • javeria Khursheed

    Excellent………. 🙂 Let build our Pakistan, no problems only solutions. INSHALLAH

Top