LAHORE: The new Indicative Generation Capacity Expansion Plan (IGCEP-2024-34) disproportionately excludes cost-effective variable renewable energy (VRE) – solar and wind power – from the planned generation mix, relies massively on hydropower and breaches the policy that new projects will be added on a competitive and least-cost basis.

While lack of transparency in data and analytic methodology, the absence of an unconstrained least-cost modeling and a low share for VRE in violation of local policy targets are especially concerning, the Renewable Energy Coalition and Alternative Law Collective note, in their separate comments on the NTDC’ planned power generation capacity expansion, that the 10-year integrated system plan (ISP) has many loopholes.

They point out that there are several weaknesses in the approach to demand forecasting and demand side management as well as limitations in the transmission expansion planning, which requires attention and redress. These oversights reflect a lack of synergy within the planning process, they emphasise in their comments submitted to the nation’s power regulator, National Electric Power Regulatory Authority (Nepra).

Stakeholders point out loopholes in the plan tilted towards hydropower instead of renewable energy

Reduced share of renewable energy

The VRE share has been reduced from 30pc projected in the previous IGCEP to 12.9pc in the new document in violation of the Alternative & Renewable Energy (ARE) Policy 2019. This also breaches the least-cost principle laid down in the National Electricity Policy 2021 and the National Electricity Plan 2023-27, says the coalition.

“As a result, the ISP is misaligned with Pakistan’s existing policy frameworks – particularly the ARE policy, National Electricity Policy 2021, National Electricity Plan 2023-27, NEPRA Act, and the Grid Code,” notes the collective.

The coalition, a group of organisations and individuals supporting growth of renewable energy in Pakistan and fostering implementation of goals set by the ARE policy, Paris Climate Agreement and updated Nationally Determined Contributions of Pakistan, argues that the Diamer-Bhasha hydropower project and Chashma nuclear plant (both expected to come online around 2030) are the major reason behind the reduced share of renewable energy.

Meagre quantity of optimization

The coalition underlines missing evaluation criteria and cost estimates for strategic projects.

“The new IGCEP designates a number of technologies as strategic and thereby commits a total of 16.7GW of capacity, excluding them from the optimisation process. These include the Gwadar coal project on imported coal and Chashma Nuclear. These strategic commitments have reduced the optimisation potential of candidate projects, resulting in only 87MW of capacity being optimised in the base case,” the Renewable Energy Coalition says.

“Allowing for such a meagre quantity of optimisation makes a mockery of the entire generation modeling exercise. Why no scenarios are provided which give an insight into what a truly least-cost model would look like? It is understood that projects have to be committed for a number of reasons. However, an assessment of costs related to committing these projects should be provided to help the policymakers strategise with more clarity.”

While the NEP stipulates that strategic projects may be added to the national grid based on an evaluation criteria, no evaluation criteria has been provided for them. Moreover, according to the NEP, the incremental cost (beyond the least cost) of each strategic project must be borne by the sponsoring federal or provincial government. It also restricts committed additions by requiring stringent criteria for justification and mandatory case-by-case assessments. Committed projects are conceived of as the exception and not the norm but the new IGCEP, it is the overwhelming norm.

“Thus, the IGCEP must provide exact numbers for these incremental cost figures for each strategic project being committed and taken out of the optimisation process,” the coalition demands.

More reliance on costly hydro despite delays

The generation capacity expansion plan massively relies on hydropower despite construction delays. More than 10GW of hydel capacity has been considered ‘committed or strategic’ in the current IGCEP, which is by far larger than the shares committed for any other technology. “Given the fact that the timelines and capital expenditures of hydropower projects vary significantly, as is evident from previous data, this reliance on such schemes is unjustified and reduces the share of cheaper sources of electricity–wind and solar,” it underlines.

An Institute for Energy Economics & Financial Analysis report says nearly 14GW of hydropower capacity is supposed to come online in Pakistan by 2030. However, it expects only 15pc of the planned hydropower capacity in time, estimating cost overruns to shoot from the current $31bn to $49-61bn.

In light of IEEFA’s findings, the Renewable Energy Coalition calls for more clarity in IGCEP-2024 and detail on cost mismatches in view of historical data and account for cost of renovation/refurbishing, schedule overruns, uncertainty in indexation and contingencies such as experienced in the case of Neelum-Jhelum and Mohmand Dam.

“We request that all such cost considerations should be included and made publicly available to provide further confidence to stakeholders in the national power planning processes,” the coalition comments, adding that demand forecasting in the latest IGCEP version has seen a significant reduction compared to its previous iteration.

“In the base case scenario, for example, the cumulative average growth rate of energy for the entire horizon has dropped down to 2.8pc from 3.75pc projected in the previous IGCEP. The same holds true for medium and high demand scenarios,” the coalition highlights, adding the rationale and detailed elaboration on macroeconomic assumptions and indicators are missing from IGCEP.

Need for transparency and data

The coalition points out, the latest IGCEP involves a number of other issues which raise questions over transparency and reliability of the document, and prevent it from being a truly least-cost electricity generation and capacity expansion plan. The IGCEP starts with the acknowledgement that the document ‘extensively relies on data inputs from a wide range of entities’. This data, provided by various institutions, has a significant role in defining the overall direction and outputs of the planning process.

“It is therefore pertinent that the data used in this manner should be made publicly available on the relevant websites along with rationale and methodologies to ensure transparency and public scrutiny. Without the public availability of such data, the content of the IGCEP presents a major hurdle to independent attempts to verify and improve the planning process by research institutions and think tanks,” insists the group.

Likewise, the coalition complains that data – such as costs and tariffs, demand forecasts, etc – related to existing, committed, and candidate projects, especially hydel schemes, is also missing from the plan. It suspects that K-Electric is seeking extension in the PPAs of two of its costly thermal power plants, BQPS1-U1 and BQPS2-U2, whose retirement year has been changed to FY-25 from the previous FY-24 without giving a rationale. That is not justified, given the fact that even KE’s cheaper thermal power plant is not being utilised due to the increased supply of cheaper electricity from NTDC in FY-24 to2050MW.

Clean, reliable energy need of the hour

The plan also doesn’t address a scenario where the need for clean and reliable energy becomes critical for export-oriented industries in Pakistan to remain competitive in the international market with the implementation of the Carbon Border Adjustment Mechanism (C-BAM) and increased accountability for emissions. Nor does it discuss a scenario where the impact on the generation plan can be assessed if industries cease using their captive power plants and opt to connect with the NTDC system.

The coalition is of the view that given their importance for the future of electricity, the battery-aided wind and solar hybrid projects should be facilitated under the framework of ARE policy and incorporated into the IGCEP to reap their benefits to ensure their accelerated deployment at large scales. The IGCEP itself acknowledges that the hybridization of variable renewable energy projects – combination of solar PV and wind with battery storage – has beneficial impact on the grid and generation.

The coalition urges Nepra that calculations related to potential cost savings through practices of peak shaving, peak shifting and peak management with alternative energy sources should also be made part of the IGCEP report.

Published in Dawn, June 26th, 2024