Daily Times

“I suppose it is tempting, if the only tool you have is a hammer, to treat everything as if it were a nail.” (Abraham Maslow)

Much that one strives to avoid hackneyed phrases, occasionally they become irresistible. Abraham Maslow’s above phrase quickly pops up into mind when one hears the details (as reported in the media) of the public hearing that NEPRA organized on July 15th, to discuss the draft of the NTDC’s Indicative Generation Capacity Expansion Plan for 2020 to 2047 (“IGCEP2047”). The concerns raised by stakeholders mostly revolved around seeking a bigger share for them of the future generation pie; nobody raising any eyebrow that the pie being ordered would be lethal for the nation and also beyond the meager means of its poor people.

Two basic premises appear to have guided the prescribing and developing of the IGCEP2047: first that central-station large-sized generation projects interconnected through high- and extra-high voltage transmission grid and medium- and low-voltage distribution grid was the only way to supply electricity to consumers in the country; and second that the above way is the cheapest way for doing it. We question both of the above premises in the ensuing paragraphs and offer reasons why we think so. The traditional approaches to electricity resource planning, including “least-cost planning”, “integrated resource planning”, “portfolio planning”, and more recently, “value-based planning” are all remnants from an era bygone when electric utilities were considered among the most stable and least risky of industries for investment since economies of scale ruled generation and transmission developments, competition was non-existent, consumers had no choice in suppliers, and a handsome return on investment was guaranteed by regulators.

Traditional planning in its various forms consists of aggregating consumers’ forecast demand within the utility’s control area and meeting it through a least-cost sequence of generation and transmission and distribution (T&D) capacity additions. These approaches have served this industry quite well for over a century, but have now lost their rationale in the wake of disruptive market forces that have put small-scale, distributed, and renewable power generation options face-to-face with their large-sized conventional competitors.

In the traditional business model of the electricity supply industry, since bigger was always better (more efficient) and cheaper too (economy of scale), it was convenient to develop generation projects as large as practicable closer to sources of primary energy supplies and water bodies required for cooling, or away from population centers for high-risk plants like the nuclear. Load centers located hundreds and even thousands of miles away could be served cost-effectively via T&D lines because the extra capital and operating costs of maintaining generation reserves and transmission, and delivery systems were largely off-set by the savings provided by large central station generating facilities.

The changed energy marketplace has razed this century-old paradigm to ground. Small and distributed power generating technologies, both conventional and renewable, are now available with cost and performance features that beat those of their mega-sized competitors. These developments open up unprecedented range of opportunities to cost-effectively and reliably serve the consumers’ demand for electricity right at source or from a nearby location, eliminating the huge costs otherwise required in maintaining generation reserves and T&D facilities.

A continued reliance on the traditional approach, is tantamount to locking the country into capital-intensive, long-lived, import-dependent, and environmentally-hostile power sector infrastructure which would be a recipe for disaster

In the changed, and still changing, power supply and delivery landscape, what our decision-makers needed wasn’t a symptomatic treatment of the power sector ills but a systemic overhaul by pursuing a fundamental transformation in the way we produce and deliver electricity to consumers. Shifting the focus of power sector planning was the first step. Instead, all we see is a continuation of the same old approach which has brought this sector to the verge of financial collapse.

The present draft of IGCEP and NTDC’s efforts to further raise transmission voltages in the country to ultra-high levels (in the range of 1,000 and 1,100 kV AC and DC) make it evident that we are stuck in time and have totally overlooked the developments occurring around us.

A continued reliance on the traditional approach, we are afraid, is tantamount to locking the country into capital-intensive, long-lived, import-dependent, and environmentally-hostile power sector infrastructure which, in simple words, would be a recipe for disaster and, therefore, must be avoided. We must reconsider our approach to planning and managing this important sector of the economy before we get locked into irreversible and costly systems and facilities.

Planning mindset, therefore, must also change from its centralized “top-down” approach to a new “bottom-up” approach, striving to serve the future demand as much as possible right at the source of demand, from a nearby location, or from the centralized grid whichever after proper study and evaluation turns out to be the most feasible option for the consumer, utility, and the nation. As argued by this writer in somewhat more detail in a previous article, “Power sector planning in Pakistan needs turning on its head” (Daily Times: October, 12, 2019), power sector planning should start at the distribution company level and work it upward from there.

Just to take an example from the current draft IGCEP20047, and for the purpose of illustrating the point only, the IGCEP2047 envisages addition of roughly 50,000 MW of new generation capacity to adequately cater to the peak demand of 44,000 MW and 6,500 MW of to-be-retired existing capacity by 2030, raising the total installed capacity in the NTDC system to 76,000 MW by that year. The estimated present worth cost of the new capacity additions reported is roughly 40 billion US$. Assuming that generation capacity cost constitute typically 60 percent of the total cost in the grid (the balance 40 percent going to the T&D system), total cost will easily turn out to be roughly in the 65 to 70 billion US$ range. The above plan by NTDC contemplates maintaining of roughly 70% “reserve margin” (excess capacity required on top of peak demand as a percentage of the peak demand) to cover errors in forecasts, potential forced outages of central-station power plants, and the intermittency and variability of the 30% by 2030 target for renewable (solar and wind capacity) provided to them by the government. Even if we disregard this huge reserve capacity requirements and the existing 20 percent losses in the existing T&D system and instead use industry best practice reserve margin figure of 15 to 20 percent and T&D losses of 10 to 12 percent, just imagine the tremendous future costs that our decision-makers can avoid by planning and developing a decentralized grid based on distributed and renewable generation options.

Are we suggesting that centralized grid has become redundant and, therefore, should be dismantled? Not at all. A solidly-interconnected nation-wide transmission grid is an essential backbone for the country’s power system and will remain so in the foreseeable future as well. Centralized grid will still be required to connect strategically-important nuclear power plants and multi-purpose hydro projects. It will also be essential to provide backup to these decentralized and distributed micro- and mini-grids. All we are suggesting here is only that before committing any future mega-sized central-station generation projects and allied T&D facilities with them, a thorough and rigorous evaluation should be carried out to determine the most feasible option in serving electricity demands of consumers. In place of adding new lengthy and ultra-high voltage transmission lines, our decision-makers should focus on augmenting and strengthening the existing grid through intelligent and smart technologies that will be essential to properly handle the extra stress expected on these systems in the future.

The writer is a concerned citizen of this country