Gearing up for renewable power

Power generation from renewable sources such as solar and wind offers numerous benefits to the country but poses multiple challenges. Our government has set ambitious targets of 20 percent by 2025 and 30 percent by 2030 for their deployment in the country’s power grid. This is arguably a good first step as renewables can help powering our development dreams in a secure and sustainable way. Turning dreams into reality, however, requires that our government timely puts in place policy, institutional, and financial frameworks conducive for renewables. We don’t see such frameworks at present which raises concerns that we may miss these targets and our dreams may remain unfulfilled.

Renewable power generation technologies, especially those based on solar and wind, are making rapid headways into the power grids of the world. In its flagship Renewables 2021 Global Status Report, REN21, a global leader in compiling renewable energy statistics and policy initiatives, notes that despite the COVID-induced economic slowdown, 139 GW of PV and 93 GW of wind capacities were added in the global power grids during 2020 leading to a total photovoltaic (PV) capacity of 760 GW and wind capacity of 743 GW. The renewable power generation capacity outpaced the collective additions of both fossil fuel and nuclear power capacities.

The Renewable 2021: Analysis and Forecasts 2026 report, released by the International Energy Agency (IEA) in the first week of December 2021, also confirms that power generation from renewables will keep its thrust in the future as well. IEA expects a further addition of 1,800 GW by 2026 to reach a cumulative renewable capacity of 4,600 GW globally. IEA also feels that to achieve its “Net Zero by 2050” goals, the world must further accelerate its renewable ambitions by reinforcing its present efforts with new policy initiatives, institutional reforms, and renewable-friendly financing and system integration frameworks.

Ernst & Young (EY), a global consulting group, periodically publishes a Renewable Energy Country Attractiveness Index (RECAI) in which it ranks countries based on whether their policies are conducive for renewables’ adoption and whether essential components exist for this purpose? The key parameters EY uses include whether a country has: (i) sufficient energy demand; (ii) the right energy strategy, policy stability, and support mechanisms; (iii) suitable project development and management mechanisms; (iv) sufficient renewable resource and technology development potential; and (v) sufficient current and projected investment volumes. In its latest RECAI top-40 ranking (58th edition: October 2021), EY ranks the US, China, India, France, and the UK in the top-5 in that order; Pakistan appears nowhere in this list.

World Economic Forum (WEF) also ranks countries for their readiness for transition to an affordable, clean, and sustainable future. WEF’s Energy Transition Index (ETI) links a country’s energy system with the economic, political, regulatory, and social factors that determine its readiness for transition. It’s composed of two equally-weighted sub-indices: (i) the current energy system performance for its ability to support economic development, access to secure energy supply, and environmental sustainability; and (ii) the enabling environment for the energy transition which includes political commitment, a flexible regulatory structure, a stable business environment, incentives for investments and innovation. In its latest ETI issued in April 2021, WEF ranks Pakistan at the 104th position among the 115 countries surveyed.

In simplest words this means that we have not progressed much in setting the proper stage for adopting renewables beyond high-sounding ambitions. This is particularly disappointing because Pakistan had issued its first renewable energy development policy back in 2006 and should have in place by now the enabling legal, regulatory, institutional, financial, and technical frameworks and systems which are prerequisite for adopting renewable energy at any significant scale in the country.

In the ensuing paragraphs, we highlight some critical challenges the country will face in achieving its renewable power generation targets and also offer some pointers for handling these challenges. To keep the discussion simple and focused, we will assume that the government’s renewable targets are for the national power grid and exclude any standalone, behind-the-meter, or off-grid applications. We will need to think and plan backwards. To reach these targets by the stipulated date, what regulatory, institutional, financial, and technical frameworks and systems we must have in place and by when—reforming the existing ones or establishing new ones?

Our leaders and policymakers must realize that renewable power technologies are inherently different, and for a fair deal, require different treatment. In contrast to conventional technologies which rely on exhaustible stocks of primary resources, solar and wind technologies base on natural energy flows. Though ubiquitous, these flows are scattered, diffused, unpredictable, and variable. Planning, decision-making, and financing frameworks and operational practices that have evolved in the past century mostly around large-sized conventional projects in a centralized power grid are not conducive for embracing small-sized, distributed, and diffuse-resource based power generation schemes.

Adding renewable capacity in the grid in any significant levels poses both planning and operational challenges. Three key technical issues the planners face in developing long-term optimal plans are: first, how much firm capacity a renewable plant will contribute to their system to ensure that the selected portfolio is adequate for reliably serving the forecast demand; second, how much energy it will contribute in the forecast requirement; and third what support from the rest of the system they will need to cover the uncertain and variable nature of the renewables? All these factors contribute to capital and operating costs and any miscalculation easily leads to both allocative and productive inefficiencies for which the economy and consumers have to pay, often dearly.

We will need clarity on certain issues upfront like the following: (i) are these targets indexed to peak demand, generating capacity, or energy production? (ii) what mix of renewable technologies we envisage in these targets, solar (photovoltaic or concentrated solar power), small and mini-hydro (excluding large reservoir-based hydro), or wind? (iii) how we intend to deal with the uncertainty and variability of renewables? Will it be through backup from conventional plants, storage of some kind, dispersing renewables around the country, or by strengthening the grid to make it flexible and responsive to additional stress? These are critical questions and answers to these will influence the policies, frameworks, and systems required for the achievement of government’s targets for renewables.

As noted at the start, setting of renewable power generation targets is commendable, but achieving of these targets demands that the government also puts in place at least the following five enabling frameworks: (i) a legal umbrella (a set of laws, policies, and regulations); (ii) a decision-support, planning, and operational framework; (iii) a lean, interlinked, and responsive institutional setup; (iv) a supportive financial framework; and (v) an R&D setup targeted at promoting renewables’ adoption in the country. In the ensuing paragraphs, each of these frameworks are discussed in slightly more detail.

The NEPRA Act does not specify any specific requirements for deployment of renewables other than a passing reference to them in its preamble and in section 14A where it lists them as one of the many options. The National Electricity Policy 2021 recommends that renewables should be integrated into the power grid at increasing shares but also falls short of providing any concrete direction for this purpose. The Alternative and Renewable Energy Policy of 2019 can be termed at best a renewable project procurement policy but not a renewable resource development policy.

We often hear about the need of having integrated energy plans which is good but we also need a holistic, comprehensive and integrated energy policy carved out of a strategic national economic development plan. It is in such a plan where the nation’s strategic aspirations, objectives, and targets are to be defined, preferably with a clear roadmap and milestones. Our power sector policies should emanate from such a national energy policy and should contribute to attaining of the country’s strategic objectives. The present policies are disjointed and fragmented, and hoping them to blend seamlessly into a cohesive national energy policy like the pieces of a jigsaw puzzle is unrealistic and untenable.

The present decision-making frameworks, planning practices and tools, and operational protocols and procedures are all remnants from a bygone era of “the bigger, the better, and cheaper too” mindset. It has served its purpose well for over a century but is not cut for dealing with small-scale, distributed, and site and local weather specific renewables which demand a careful attention to local resource availability, distribution, operating environment, and demand to decide for the best renewable resource, technology, size, and deployment scheme. Planners will need to be trained and equipped with requisite tools and skills to deal with the issues, attributes, and demands of such data-intensive and analytically demanding renewable schemes.

System operation and control setup, protocols, and procedures also require a complete revamping as the share of intermittent and variable renewable power generation plants in the grid increases. The current operational planning and scheduling practices require radical changes. The system operator will need greater visibility about the dynamic conditions in the grid, availability and expected output from renewable plants, as close as possible to the real-time as well as during the actual system operation. A state-of-the-art supervisory control and data acquisition (SCADA) system embedded in an equally-sophisticated energy management system (EMS) and supported with an ensemble of renewable generation forecasts will provide the essential foundation for a stable, secure, and economic operation of the grid with higher shares of renewable power in it.

In sharp contrast to the conventional power plants, renewable plants require large tracts of land some of which may fall into protected, environmentally-fragile, or politically-sensitive regions. Prospective developers may be required to secure permits and authorizations from relevant government agencies which involve satisfying cumbersome administrative procedures and considerable time and effort. Such sites, and in particular those wind-rich, may also be located far away from existing transmission, sub-transmission, or distribution networks. Also, road access to such sites may not be available or not suitable. It’s always useful for the government to do some advanced homework about such issues and develop a mechanism to provide as much comfort to prospective developers as possible.

Financial frameworks, markets, and instruments also exist primarily to serve large-sized conventional power generation projects. Prospective developers of renewable power projects may find it difficult to secure financing for their relatively smaller, dispersed, and high-upfront cost projects due to the perceived higher risks and uncertain rewards associated with such projects. It’s also not unusual for potential sponsors of such projects to demand relatively higher returns on their investment backed up by long-term contracts and guarantees. Pakistan’s financial market is already marred by repeated disputes with private investors, forced re-negotiations, and reneging on signed contracts. As most of the investment for renewable power projects is expected to come from the private sector, our government will need to establish a renewable investor-friendly environment and stable policy on ground.

The need for establishing a supportive and facilitative R&D setup for upscaling of renewable power generation in the country cannot be overstated. There are numerous issues linked with the higher shares of renewable power in the power grid. Only a few of these are raised in this article. International experiences and lessons cannot be applied blindly in Pakistan. Renewable power generation schemes can be pursued in a country via multiple trajectories, each with its own pros and cons. It’s of critical importance to follow a trajectory that delivers the most value and benefits to our nation. This will be possible only if the efforts to upscale renewable power generation in the country is supported by the results of rigorous and intensive analytic studies and assessments at every step on the way.

The writer is a freelance consultant specializing in sustainable energy and power system planning and development. He can be reached via email at: [email protected]

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