Daily Times

Our government is planning to scrap the previous “Renewable Energy Policy of 2006” (RE Policy 2006) and introduce a new Alternative & Renewable Energy Policy (ARE Policy 2019) in a couple of weeks in its place.

In this regard, a two-day consultative session was held on August 22 and August 23, 2019, in Islamabad, under the auspices of Alternative Energy Development Board (AEDB). The first day was reserved exclusively for public-sector entities while the second day was devoted to stakeholders from the private sector.

According to published newspaper reports, some serious concerns have been raised by both public sector entities as well as private sector stakeholders during these two sessions on the viability of the new policy. Two major concerns coming to surface are: (i) provinces’ concern that the new policy intends to confiscate the roles and rights granted to them in the previous policy; and (ii) the fate of 140 plus projects (totaling 8,000 MW) that were initiated under the RE Policy 2006, and are currently at various stages of approval or development.

While we leave the settlement of the above two issues between the sponsors of the new policy and the relevant stakeholders, we cannot ignore a third issue, which is of utmost national importance and can have a potentially serious technical and financial implication for the country.

This is setting up of the renewable generating capacity targets for the next decade (20 per cent by 2025 and 30 per cent by 2030) without divulging the reasons or basis as to how these have been fixed.

Comparing the economics of the wind and solar systems at plants’ terminals is unrealistic

Up-scaling of renewable energy technologies (RETs) in the power sector is a highly desirable endeavour and there cannot be two opinions about it. However, we need to tread carefully on this road since, unlike conventional energy supply options, RE systems (mainly solar and wind) possess some unique characteristics, in particular, their intermittency and variability. Both pose new technical and financial challenges for the upstream systems to which they connect. It is, therefore, only prudent that the targets for the uptake of RETs in the country are set with due regard to these technical challenges and financial implications.

A couple of different conventions exist to describe the penetration of generating technology in the power system. One describes the share of this technology in the overall generation capacity portfolio. The other, and more common, convention describes its proportion concerning peak demand in the system. It is not clear which particular convention our government’s stated targets adhere to. Since both notions are futuristic and, therefore, uncertain, it would have been wiser if our government, instead of giving percentage RE targets, had specified these in terms of actual capacity, GW or MW, obligations.

The first major technical issue, with huge financial implications, is the effective capacity that RETs, due to their intermittent and variable nature, contribute to the grid. A variety of techniques are used by system planners to work out the effective capacity contribution of a generating plant to a system. The most popular among these is the concept of “Effective Load Carrying Capability (ELCC)” of a power plant and is worked out using sophisticated modelling techniques. It is never 100 per cent of the nominal capacity of a power plant and even for mature conventional plants with guaranteed fuel supplies, it’s in the 60 to 80 per cent range.

For the wind and solar power plants located in resource-rich sites, ELCCs have been estimated to be in the range of 30 to 40 per cent for wind systems and 10 to 15 per cent for solar PV systems. For some systems where peak demand occurs during the higher solar availability periods (10 am to 4 pm), ELCC for solar plants can be as high as 60 per cent. In our country, however, where peak demand occurs late in the evening (after sunset), ELCC of solar plants cannot be expected to exceed 10-15%. Obviously, the actual values will have to be determined through proper simulation and modelling studies.

The target of 30 per cent by 2030 translates roughly to 13,500 MW from RETs (30 per cent of the 45,000 MW forecast peak demand by NTDC for that year), implying roughly 10,000 MW of conventional capacity will be required as a backup in the system just to cover the intermittency and variability of the RE plants. And, these are only conservative figures. The actual requirements could be even higher. For our power sector, which is already sinking under the burden of continuously growing capacity costs, the consequences of such new costs are not difficult to grasp.

The new draft policy makes it mandatory for NTDC and DISCOs to connect potential RE plants with their systems. Solar and wind resource-rich areas are generally located far away from major load centres. Harnessing these potential sites requires extending the existing transmission and distribution (T&D) networks and/or constructing new ones to connect these plants with the national grid. That means that comparing the economics of the wind and solar systems at plants’ terminals is unrealistic and the costs of these networks must also be figured into the feasibility studies and analyses to reveal the true costs.

These additional capital and O&M costs of the T&D system are just components of the complex cost equation. Another component is building the additional capability within the T&D networks and facilities to continue to maintain the integrity, stability and security of the grid. A third additional component is developing the capacity at the system operator level to embrace the intermittent and variable RE plants in their existing unit commitment, scheduling, and dispatch portfolios as well as proper weather forecasting tools to squeeze the most value from RE sources.

All of this is not going to come without its costs which must be identified and incorporated in the feasibility evaluations of these technologies and fixing tariffs for them. A simple solution would be to just pass all these additional costs on to the consumers, but that will have its perils. We are already seeing a shrinking of electricity consumer-base in the country, if not in numbers, in average consumption per consumer. The consumers may either be tightening their belts under the pressure of continuously rising electricity tariffs or maybe switching to alternative supplies to the grid electricity. In both cases, the national grid is left with a reduced customer base to recover its sunk costs, thus drifting it gradually to ultimate disaster.

We hope that our leaders in the government and those in the Ministry of Energy, AEDB, and NTDC have considered all the potential costs and benefits associated with the development of RETs in the country and especially when fixing specific targets for their large-scale uptake. Else, they may be setting the nation up for a new crisis.

The writer is a freelance consultant, specialising in sustainable energy and power system planning and development