- Thar coal reserves a sustainable solution to Pakistan’s energy crisis
Pakistan has been grappling with a severe energy crisis for years, relying heavily on expensive imported fossil fuels. This dependence has strained the economy and hindered competitiveness. However, beneath the expansive Thar Desert lies a potential solution – Thar coal.
Thar coal is one of the world’s largest untapped coal reserves, estimated at over 175 billion tonnes of lignite coal. This vast resource could transform Pakistan’s energy landscape, offering a sustainable and cost-effective power generation solution.
Spread across vast expanses, Thar coal primarily comprises lignite, a lower-rank coal abundant in the region. The epicenter of development is Thar Block I & II, the coal fields with immense potential to contribute significantly to Pakistan’s energy needs. Recognising the value of indigenous energy, the Thar coal project has become a linchpin in the country’s strategy to diversify its energy mix and enhance security.
Initiated in collaboration with local and international partners, various projects in Thar aim to unlock this potential. The Thar Coal and Energy Board oversees these endeavors, providing crucial regulatory support. The successful exploration and utilisation of Thar coal align with Pakistan’s commitment to sustainable energy solutions.
Despite challenges in infrastructure and water availability, the progress in developing 2,640MW power projects in Thar reflects a substantial leap towards unlocking indigenous energy. Beyond ensuring energy security, these projects bring economic prosperity to the region by generating jobs and supporting local communities.
One of the most promising aspects of Thar coal is its compatibility with Pakistan’s existing GENCOs and Independent Power Producers. Many IPPs were established under various policies, such as the 1994, 2002, and 2015 policies, with a collective capacity that can be converted to Thar coal, estimated to be approximately 4,000 MW. These power plants are currently reliant on imported fossil fuels, making them vulnerable to volatile global energy prices.
The transition of these IPPs to Thar coal presents a compelling solution. In the next three years, Thar coal is predicted to be available at an affordable price of US$ 25 per tonne, making it a cost-effective alternative to imported fuels. Additionally, considering local freight costs of around PKR 5,000 per tonne and a dollar exchange rate of PKR 300 per US$, Thar coal becomes an economically attractive choice.
Assuming an average plant efficiency of 35%, the EPP would result around PKR 11.70 per kWh, factoring in Ash & Lime costs of 0.3 per kWh. The conversion to Thar coal could yield substantial savings.
The cost of installing the new coal boilers is estimated to be approximately US$ 0.30 per MW, making it a cost-efficient conversion. Taking into account this investment cost and factoring in the impact of additional capacity payments on an 85% capacity factor, there would be an additional PKR 3.4 per kWh. The total cost of energy would be PKR 15 per kWh (EPP + additional CPP), positioning it in the merit order at around fifteen. This transition ensures a dispatch rate of around 90% per annum, providing a stable and affordable energy supply.
While transitioning existing IPPs to Thar coal is a significant step forward, the real game-changer lies in the conversion of combined cycle power plants to Thar coal. Pakistan currently faces rising prices of imported RLNG. This surge in RLNG costs translates into expensive electricity, which directly affects consumers and industries.
A strategic solution to this problem is to use the steam turbines of these combined cycle power plants to operate on Thar coal boilers. These plants are strategically located across Pakistan, including interior Sindh, south Punjab, and central Punjab. Among them, four were installed under the 2002 policy, and four were added under the 2015 policy. Importantly, one of these plants has recently retired from the PPA, presenting a favorable moment for conversion. This approach effectively utilizes existing infrastructure, minimizes environmental impacts, and provides a significant boost to Pakistan’s energy capacity.
Thar coal represents a beacon of hope for Pakistan’s energy sector. Its vast reserves, cost-effectiveness, and compatibility with existing infrastructure make it an ideal choice to address the country’s energy crisis. Transitioning existing IPPs and converting combined cycle power plants to Thar coal can yield an additional 30,000 GWh of cost-effective and sustainable power generation capacity.
The expected savings from this transition are substantial, with the cost of Thar coal significantly lower than imported fuels. This not only ensures a stable energy supply but also boosts Pakistan’s economic competitiveness. With an average system marginal price of PKR 25 per kWh, this transition promises savings of PKR 10 per kWh, translating to an annual saving of 300 billion to Pakistan. It is high time that Pakistan capitalises on this golden opportunity beneath the Thar Desert and embarks on a journey towards sustainable and affordable energy for all.
The authors can be reached at twitter @farhan6309902