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Analysis: Taking the wind out of alternative energy’s sails
THE exit from the Karachi-Hyderabad M9 motorway at Nooriabad leads one to a narrow road, which connects Thatta’s coastal town of Jhimpir to the highway. For the first few kilometres, nothing stands out from the landscape. But if one keeps going, white windmills start coming into view on both sides of the road.
Huge rotor blades mounted on tubular towers make for a surreal sight in this otherwise less-developed part of Sindh. The optics hint towards efforts to produce clean energy. However, one thing that stands out is that only a few of these plants seem to be functional.
Behind the motionless windmills is a tale of infrastructure constraints, administrative bottlenecks and inconsistent policies, which mean that the full potential of wind power remains untapped, leaving investors disillusioned.
‘The wind corridor’
There are 36 wind power producers (WPPs) that have set up electricity generation plants along the Gharo-Jhimpir ‘wind energy corridor’ of Thatta and Jamshoro. These plants, with a combined capacity of around 1,845 megawatts, were installed between 2013 and 2022 under the Renewable Energy Policy 2006.
Wind corridor along Sindh coast boasts abundance of clean energy, but infrastructure and administrative issues mean even installed wind turbines are not running at full capacity
According to several studies, this ‘wind energy corridor’ can produce thousands of megawatts of clean energy, since windmills neither run on fuel nor emit any pollutants. Wind power, in the words of a former senior officer of the National Electric Power Regulatory Authority (Nepra), “could rescue the country from the present electricity morass”.
The investors who lined up a decade ago to set up WPPs plants for tapping this power generation potential now “feel betrayed” by officials as their plants are mostly shut.
One such investor told Dawn on condition of anonymity that they are regularly “advised” by the National Transmission and Dispatch Company (NTDC) to cut their electricity generation.
NTDC, a federal government entity, is tasked with constructing, maintaining and operating a transmission network and evacuating power from the plants.
The WPP owner had set up his plant in 2019 to sell electricity to the national grid at Rs14 (or 4.6 US cents) per kilowatt-hour on a “take & pay” contract, where the government only pays for the electricity used in the national grid.
The NTDC’s directive means the plant remains shut for longer durations while administrative and maintenance costs mount without any payment from the government.
Experts have also questioned the NTDC’s advisory as the ‘take and pay’ model of these WPPs can otherwise address one of the biggest issues faced by the power sector — capacity payments.
Independent energy expert Aslam Uqaili says that in the case of wind energy, the government only pays for the power it buys, unlike ‘capacity charges’ and wonders why the government “prefers those plants where capacity charges are to be made irrespective of the power used”.
Infrastructure constraints
Another WPP owner told Dawn that the NTDC does not have transmission infrastructure to evacuate electricity from the wind generator to the national grid.
The investor, who wished to remain anonymous and not risk their relationship with the government, claimed that WPPs can supply 1800MW of electricity to the national grid during summers when the demand is high.
“However, we are told to curtail generation to 1,200MW which is part of around 4,500MW-4800MW of energy produced from coal, nuclear and REs in Sindh,” he adds. As a result, “our plants remain shut even in the April-September period” when electricity demand is at its peak and weather conditions are ideal for producing wind energy.
Dawn reached out to the NTDC spokesperson for comment on the issue, but no response was received despite repeated requests. “We can’t offer any answer. You may write the story as you like” was the response from the company’s media wing.
Mr Uqaili also contends that the transmission infrastructure has problems in evacuating wind energy from Sindh. “When the system doesn’t have capacity, how will the energy be evacuated regardless of NTDC’s commitment to power producers”? asks Mr Uqaili, who is the former vice-chancellor of Mehran University of Engineering and Technology and also served on Hesco’s board.
Another WPP representative accuses government departments of not following up on their commitments. He claims that when these plants were being established, the power regulator, Nepra, said their tariff would only be approved after confirmation from the NTDC that it would take 100 per cent of the electricity they produced.
According to the WPP representative, the confirmation was provided by NTDC after which Nepra approved their tariff.
“Yet, electricity we can produce is not being fully evacuated to the grid.”
The issue, as per the WPP representative, is because the power generation in the country’s southern region has rapidly increased. “[It] outpaced the development of NTDC’s grids that can carry electricity from south to north. This has resulted in transmission bottlenecks which, in turn, limit NTDC’s ability to evacuate power”.
On its part, NTDC claims the variation in electricity generation from WPPs — due to seasonal changes — makes its grid unstable.
To address this issue, the government has planned to construct a 500kV transmission line to link Matiari in Sindh with Rahim Yar Khan in Punjab.
According to the Ministry of Planning and Development, the Rs189 billion project has been approved, with Rs17bn allocated in the budget for the fiscal year 2024-25.
Mounting liabilities
Liabilities and dues are also a prevalent concern among the WPP owners, who claim that they haven’t even been paid for electricity used in the national grid.
According to one WPP owner, a 50MW wind power plant bills the government Rs2.5 billion for energy sold in four to five months.
The Central Power Purchasing Agency (CPPA) — which purchases electricity from these plants on behalf of the government — usually doesn’t make full payment, and the amount “keeps accumulating”.
He explains that “delayed interest” as per the energy purchase agreements signed with the government are not paid either.
Dawn made several attempts to contact CPPA Chief Executive Officer Rehan Akhtar for comment. A questionnaire was also sent to him via email, but remained unanswered for a week, until the filing of this report.
Stuck in bottlenecks
While these are the issues faced by investors whose plants have been installed, several other projects have not even reached this stage and are awaiting government approvals.
According to the Sindh Energy Department, at least 27 renewal energy projects, with a cumulative capacity of 1,875MW, are at different stages of approval with the government.
One of the bottlenecks stalling approvals is the inconsistent policies of subsequent governments.
Five of these projects — with a combined capacity of 275MW — were approved under the 2006 policy. However, the PTI government, which came into power in 2018, asked the investors to participate in an open bidding process before their tariff could be notified.
The ‘one-time competitive’ bidding was introduced by the PTI government in its Alternative Renewable Energy Policy (ARE) 2019, much later than the projects were first approved, a Sindh Energy department official said.
Mustafa Abdullah, the chief executive officer of Moro Power, one of the five stalled projects, says a big problem with ARE 2019 is the “unrealistically low tariffs”.
“No investor will invest at a tariff lower than 5.5 US cents per kilowatt hour,” he says, arguing that the policy “discourages” investment.According to him, the government plans to add 1,000MW of wind electricity to the national grid by 2030, but given the persistent issues, “this target will be very difficult to achieve”.
Published in Dawn, September 30th, 2024
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