The energy sector in Pakistan remains one of the main roadblocks to economic expansion. Power sector growth and modernisation have been hindered by expensive fuel sources, reliance on imported energy products, chronic natural gas shortages, significant debt, aging and inadequate transmission and distribution systems. Worldwide help has assisted Pakistan with taking a few significant steps in resolving these issues yet without significant changes, the country’s energy future remained under testing.
According to the annual report for 2021 from the National Electric Power Regulatory Authority (NEPRA), Pakistan has a total installed power generation capacity of 39,772 MW. Of this, 63 percent of the energy comes from thermal (fossil fuels), 25 percent comes from hydro, 5.4 percent comes from renewable (wind, solar, and biomass), and 6.5 percent comes from nuclear. Resources for renewable energy (RE) have the potential to significantly contribute to reducing the deficit in the current scenario.
Planning and integration of variable renewable energy sources
Pakistan has a lot of potential for solar and wind power generation. The World Bank estimates that Pakistan’s current electricity needs could be met by utilising just 0.071 percent of the country’s surface for solar photovoltaic (solar PV) power generation.
There are nine and a half hours of sunlight each day in Pakistan. After the government introduced a set of support policies to encourage the development of renewable energy, solar power entered Pakistan’s mix in 2013. The Pakistan Economic Survey indicates that six solar power projects totaling 430MW have begun commercial operations and are currently supplying the grid with electricity.
As of late, the Government of Pakistan has distinguished new age necessities by limit, fuel innovation and using native assets for power age by reporting Characteristic Age Limit Development Plan (IGCEP). From the existing capacity of 9,000MW, this plan envisions developing hydropower projects by adding an additional 13,000MW of hydropower capacity until 2030, representing a 25 percent share of the total mix.
The World Bank has provided Sindh Solar Energy Project with $100 million in financing to support independent power producers in the development of 400MW of new solar power projects and provide partial grants to private sector businesses for the commercial supply of Solar Home Systems to 200,000 households to increase the proportion of renewable energy in Pakistan’s energy mix.
The wind is likewise a bountiful asset. In 10 percent of Pakistan’s windiest regions, the average wind speed is 7.87 meters per second, and the country has several well-known wind corridors. However, despite a number of successful projects, Pakistan’s installed solar and wind energy capacity, which is just over 1,500MW, represents only 4 percent of the country’s total capacity and approximately 2 percent of its total generation.
There are currently 26 private wind projects in operation, each of which generates approximately 1335MW. Likewise, 10 breeze projects with a total limit of 510MW have accomplished monetary close and are under development. The ambitious goal of generating 60 percent of Pakistan’s energy from renewable sources by 2030 is outlined in the Government of Pakistan’s Renewable Energy Policy. This presents a number of opportunities for the Pakistani wind energy market.
Conserving forex reserves by controlling energy imports
Pakistan’s limited foreign exchange reserves are further strained as a result of its reliance on imports for 49 percent of its primary energy requirements. The State Bank of Pakistan held $4.6 billion of Pakistan’s net reserves as of April 2023, with scheduled banks holding the remaining reserves. In addition, the total trade balance as of April 2023 was $21.99 billion.
Pakistan has total debt and liability of $125.7 billion as of March 2023. Nearly 77 percent of that, or $96.3 billion, is owed directly by the government to various multilateral and bilateral creditors, putting pressure on the government to pay it back. Pakistan must repay over $77 billion within three years.
The burden of this debt is significant given that Pakistan has a population of approximately 230 million people and an economy worth $376 billion. Because of the great degree of obligation and restricted unfamiliar trade saves, overseeing and diverting imports to more useful use is essential. Energy items contain the biggest piece of imports, representing around 30% of the nation’s absolute imports.
The energy import bill for petroleum products, such as LNG and LPG, was nearly $14 billion from July 2022 to April 2023, which is 18 percent less than the previous fiscal year. Nonetheless, this decrease was not because of productivity or requests from the board but rather because of less monetary action. Transport is the primary user of petroleum products, accounting for 78 percent of the 11.3 million tons consumed between July 2022 and April 2023. Road transportation made up 96 percent of this total.
Native renewable energy sources to reduce the cost of fuel imports
Since the energy import bill reached $23.3 billion in the previous fiscal year, the South Asian nation’s fragile economy has been severely impacted by its reliance on imported fuel for its energy requirements. The nation is battling to fight off an equilibrium of installments emergency, with its unfamiliar trade stores of $4.2 billion scarcely enough to cover imports of around three weeks.
The nation has made the decision to increase its installed energy capacity by more than 77 percent using indigenous resources in the midst of the economic crisis.
In addition, NEPRA has estimated that it will spend approximately $53 billion managing its new projects’ power generation, infrastructure construction, operations, and maintenance. The system’s peak demand is expected to reach 41,338MW in 2031, up from 26,945MW in 2022. Additionally, total energy consumption is expected to reach 228,505 gigawatt hours (GWh) in 2031, up from 153,866 GWh in 2022.
According to official data, the system’s installed capacity is currently 41,268 megawatts, and it will reach 68,667MW in 2031. This will include the system’s current capacity of 41,268MW and the 14,268MW of projects that have already been committed. In addition, candidate projects will generate 17,969MW and 3,330MW through net metering.
Hydel (8,192MW), local coal (2,280MW), imported coal (660MW), liquefied natural gas (1,263MW), and variable renewable energy, such as wind (100MW), solar (430MW), and bagasse (32MW), have all been taken into consideration by the IGCEP. Unless we invest in our transmission capacity to transfer the generation to our customers, the generation of electricity from renewable resources alone will not solve our issues.
Oil and gas companies contribution to the energy transition
As the third decade of the 21st century begins, the oil and gas industry is challenged by policymakers trying to simultaneously meet decarbonisation goals and anticipated oil and gas demand, as well as by a public that is extremely concerned about the impact fossil fuels have on the environment. Oil and gas companies demand, financial, and social futures are increasingly in doubt amid a global energy transition.
However, despite these challenges, oil and gas continue to play a significant role in the energy mix, particularly in developing regions. Both the Sustainable Development Scenario (SDS) of the International Energy Agency and the Shell Sky Scenario, both aggressive decarbonisation forecasts, indicate that oil and gas will continue to play a long-term role even if demand levels decrease from where they are currently at. The oil and gas industry faces the challenge of adapting to a shifting policy and investment landscape while also evolving in a manner that not only supports but also contributes to and may even lead efforts to decarbonise the energy system.
Carbon pricing and the Emission Trading Scheme of the European Union are two examples of policies that are beginning to discourage the use of fossil fuels and are, at the very least, gradually replacing those that have supported oil and gas production. Notwithstanding disincentives, numerous state-run administrations are empowering the utilisation of substitute innovation and fuel, particularly environmentally friendly power.
Through investing that is centered on Environment Social Governance (ESG), investors are also becoming a strategic drivers of decarbonisation action. They are becoming increasingly attuned to the demand horizon for hydrocarbons and shifting attention to the environmental impact of oil and gas production. As the energy mix of the future takes shape, shareholders are particularly concerned about the risk of stranded assets.
As a response, oil and gas companies are rethinking their business models and examining their locations and methods of operation in a decarbonising world. When it comes to participating in efforts to reduce carbon emissions, these businesses have access to a variety of tools that enable them to do so.
Pakistan’s approach to saving money and energy. Will it work?
According to the Variable Renewable Energy (VRE) Integration and Planning Study, for Pakistan to attain a share of at least 30 percent of total capacity by 2030, it must urgently implement a significant expansion of solar and wind power (also known as VRE).
As Pakistan tries to meet its growing electricity demand, its power generation capacity from all energy sources has significantly increased in recent years. However, a high level of import dependence on fossil fuels, the construction of contentious hydropower projects, and an increased reliance on out-of-date coal technology are not only reducing energy security but are also significantly stifling economic expansion.
Let’s take a look at the potential economic and environmental advantages of clean energy:
- Avoid using fossil fuels: Utilising almost limitless resources, we generate renewable energy. At the point when we utilize these normal assets, we’re permitted to preserve and expand our experience with non-inexhaustible petroleum derivatives, which are hazardously near exhaustion.
- Reverse climate change at the same time: In the United States, the production of electricity from fossil fuel power plants is the primary factor that contributes to carbon dioxide emissions. Climate change and global warming are largely caused by emissions of carbon dioxide and other greenhouse gases. Natural gas, coal, and other fossil fuels have much higher carbon footprints than alternative energy sources. By halting and reversing climate change, switching to renewable energy sources for electricity production will benefit the planet.
- Prevent death: By reducing air pollutants, switching solely to hydropower, wind energy, and solar energy has the potential to save up to 7 million lives annually.
- Cut down on severe weather: We can anticipate a decrease in extreme weather events like droughts, floods, and storms as a result of global warming if we can slow down and eventually reverse the effects of climate change.
- Reduce your dependence on fuel: By implementing the widespread use of large-scale renewable energy technologies and reducing our dependence on imported fuel, we can diversify our energy supply.
- Financial and work advancement: In addition to jobs in the installation and manufacturing sectors, as well as in the sustainable energy sector, the production of even more utility-scale energy systems has the potential to boost the economy.
The cost of alternative energy technologies is simultaneously decreasing. The potential to generate an energy reserve sufficient to meet global demand has been unlocked by solar and wind power. At the point when you take a gander at how reasonable, compelling, and financially cordial these forces to be reckoned with are, you start to perceive how we could dislodge petroleum products in the following 30 years.
The majority of customers agree that using alternative energy sources has many advantages over disadvantages. Additionally, new technologies are constantly being developed to address and eradicate the drawbacks of various renewable resources.