When it comes to maintaining a healthy energy mix, countries which are self-sufficient concerning indigenous fuel sources prioritize power generation strategically to maintain energy efficiency while ensuring affordability of energy prices as well.
Despite the global shift toward renewable energy, the need for baseload power remains critical for ensuring consistent electricity supply. Renewable sources like solar and wind are intermittent, as they depend on weather conditions while baseload power plants run continuously, providing a steady supply to ensure meeting the minimum demand. Rather than relying on imported fuel sources, countries which are self-sufficient in terms of unexplored indigenous fuel reserves need to invest in exploration and research to harness home-based resources effectively so that baseload requirements are fulfilled with minimal impact on the national exchequer.
Common fuels for baseload typically include coal, natural gas, nuclear, hydropower etc, the mix ensures grid stability even when renewable output fluctuates. Several countries that previously shifted away from coal are moving back to it due to various reasons.
For instance, the energy crisis caused by the Russia-Ukraine war curtailed natural gas supplies from Russia, leading Germany to reopen coal plants to ensure energy security, especially during winter. Similarly, the high demand for electricity and energy security concerns, coupled with economic growth, led to increased coal use in China, even as the country invests heavily in renewables. India too has ramped up coal-fired power generation to meet burgeoning electricity demand. Interestingly, in Poland, coal is still a major component of its energy mix, accounting for about 70 percent of its electricity production. The country has significant coal reserves, which it views as essential for reducing dependence on Russian gas and maintaining energy independence.
Thar coal energy costs are projected to decline as the expansion of Thar coal blocks gradually leads to economies of scale.
In Pakistan, around 47 percent of the energy supply is generated from imported fuel comprising furnace oil, re-gasified liquified natural gas (RLNG), and coal. Coal-fired power plants globally account for 36 percent of electricity production, being the largest single electricity source. In Pakistan, the financial burden associated with coal imports stood at USD 467 million in 2023 all the while when the country is self-sufficient in terms of Thar coal and it’s just a matter of time when the conversion to local coal will reap benefits, significantly restricting the massive import bill. However, the debate remains about whether the imported sub-bituminous coal is better as opposed to the local Thar lignite coal, often talked about for its perceived low quality and higher quantity required for burning. Pakistan has a mere 13 percent coal share with that of local coal being only a meagre 3 percent.
The white paper launched by the US-Pakistan Centre for Advanced Studies in Energy (USPCAS-E), NUST, ‘Transition from imported to local coal to attain energy security in Pakistan: Opportunities & Challenges’, discusses the potential transition from importing coal to utilizing Pakistan’s local coal resources for energy generation. It outlines the opportunities for enhancing energy security and reducing costs, while also addressing challenges such as technological, environmental, and infrastructure-related issues in making the shift sustainable.
According to experts, Thar can be a plot twister for Pakistan’s economy. Substantial benefits will start reaping within five years of the baseload transitioning towards Thar coal. They also revealed that imported coal currently costs over Rs. 20 per unit but switching to local coal is expected to reduce it to Rs. 7 to 8, or even less. By investing USD 100 million per plant and operating at full capacity, the country can save USD 1 billion annually. This will result in the reduction of electricity prices by at least Rs. 2 in the overall basket price and the conversion of refined furnace oil plants will further aid in bringing prices down.
The country is beginning to harness the vast potential of its coal reserves, which are the world’s seventh largest, estimated at 180 billion tonnes, most of which are found in Thar with its largest lignite reserves. It is said that these reserves could potentially fuel 100,000 MW of power for about 200 years, offering a reliable, affordable, and indigenous energy source. Utilising this resource could significantly reduce the country’s fuel import costs while ensuring a stable base load necessary for the country’s energy system.
Despite this promise, Thar coal remains largely untapped. Besides Thar itself, Pakistan has coal reserves in Lakhra, the Eastern Salt Range, and Duki. As far as the energy price component is concerned, the cost of electricity generated from imported coal is significantly higher as compared to electricity produced from indigenous coal. Prioritising the energy mix in the best interest of the country may very well be the short-term goal, leading to long-term benefits for its citizens.
The imported coal-fired power plants operational in Pakistan are the Sahiwal Power Plant, Port Qasim Power Plant, China Hub Power, and Lucky Electric Power. Whereas, local coal-based power plants include Engro Thar, Thar Energy, Thar Coal Block-1, and Thal Nova.
Similarly, the Jamshoro Power Company Limited (JPCL) project, which was initially conceived before 2013, featured two 660 MW units each, designed to use 80 percent imported coal and 20 percent local coal. K-Electric is actively working on the project’s conversion to 100 percent local coal, aiming to provide affordable energy to Karachi and reduce the subsidy burden on the government.
There have been delays concerning the Commercial Operation Date (COD) of Unit 1 which was supposed to be November 2023. If it switched to 100 percent local coal, the estimated savings are calculated to be USD 2.54 billion over the project’s 30-year lifespan. The conversion would require $402 million in investments, entailing a holistic infrastructure comprising power plant modifications, railway expansion, and coal drying equipment installation. The project’s conversion can significantly advance the Government of Pakistan’s strategic goal of fuel indigenisation, as outlined in the National Electricity Plan 2023. Jamshoro Power Company Limited’s (JPCL) Board of Directors had developed and approved an exit strategy, which was submitted to the Power Division on October 25, 2023. This strategy includes plans for disposing of defunct power-generating units and outlines various options for addressing the proposed conversion solutions.
This conversion would set a precedent for other imported coal power plants in the country to follow suit, supporting broader efforts to transition to local coal as this shift could save $800 million annually and reduce electricity prices by up to Rs 3 per unit which is the need of the hour in the wake of the current increasing energy bills and the masses’ decreasing propensity to pay.
The strategic shift towards utilising Thar coal presents a transformative opportunity for Pakistan’s energy landscape. The potential to lower electricity prices and create a more stable energy supply is critical, especially as the nation grapples with rising energy bills. It’s important to highlight that Thar coal energy costs are projected to decline as the expansion of Thar coal blocks gradually leads to economies of scale. Consequently, a substantial reduction in prices is anticipated moving forward.
As demonstrated by the ongoing discussions and initiatives surrounding Jamshoro Power Company Limited and other local coal projects, there is a clear path forward that aligns economic interests with the urgent need for energy independence. Embracing this change will not only benefit the economy but also ensure a more sustainable and resilient energy future for the people of Pakistan.
The writer works in the power sector and has extensive expertise in studying grid technologies.