ISLAMABAD: The ‘Energy Outlook 2030’ published by the Central Asia Regional Economic Cooperation (CAREC) says Pakistan’s energy sector presents significant investment opportunities because of its efforts to transition to a more competitive energy market structure, its continued support for private projects, and the government’s commitment to significantly develop renewable energy sources in the future.

At the same time, Pakistan needs to address several challenges to introduce a more favourable investment climate, including circular debt issues, and the overall condition and coverage of the transmission and distribution (T&D) grid, according to the report made available by the Asian Development Bank.

To further unlock Pakistan’s energy market for private companies, several challenges must be addressed. One of the key challenges is the lack of clarity regarding the categorisation of resources.

Report says Pakistan needs to address challenges for favourable climate investment

Considering the 30pc renewable energy target in 2030, it would be hardly possible to reach this level only via wind and solar PV sources. If hydropower were to be included in the definition of renewable energy sources, it would make reaching the stated target and introducing stronger competition more realistic.

The report says another challenge is the lack of a detailed energy plan for the energy sector. Although the National Energy Policy has been approved, the corresponding division of roles in policymakers who would assign policy areas to all relevant stakeholders has not been completed yet.

In addition to the development of renewable energy and alternative sources, such as nuclear power, priority investments in Pakistan include the introduction of smart metering and smart grids, as well as energy efficiency measures.

Further development of the T&D network is crucial for the country, as 25pc of the population is not grid-connected and thus it has no access to the electricity network.

The outlook report says total investment needs for the energy sector vary significantly across all three scenarios — from $62 billion to $155bn.

The country has vast renewable energy resources, with total technical potential reaching 2,900 gigawatts for solar, 340GW for wind, and 60GW for hydropower.

Total installed power generation capacity in Pakistan is 34.5GW, and consists mostly of thermal generation, reaching around 66pc of the total. The significance of thermal generation is expected to decrease in the future, since the government has set a course to shift toward increasing renewable energy (including hydropower) generation. Pakistan’s massive renewable energy potential — about 3.0 terawatts — is one of the key drivers of this shift.

Published in Dawn, December 24th, 2022