The National Transmission and Despatch Company (NTDC) has released a new version of the Indicative Generation Capacity Expansion Plan (IGCEP). As the name implies, it is a power-generation capacity expansion plan for the next 10 years. It is kind of a rolling plan and is revised and redone yearly.
The broad trends are emphasis on renewable energy (RE), confusion and uncertainties on hydro, and the immediate exclusion of residual fuel oil (RFO) and the gradual exclusion of RLNG – by 2027. This time a scenario-based plan has been prepared; this article will discuss the plan along with other issues.
The 2022-31 IGCEP takes the existing demand of FY2022-23 as 28,425MW as opposed to the installed capacity of 43,259 MW and the generation volume of 156,379GWh. There are 36.6 million consumers out of which only 391,442 are industrial consumers. The industrial sector’s energy consumption is 27 per cent of the total power consumption as opposed to the 49 per cent share of residential consumers.
There are several issues regarding the assumptions and output of the IGCEP. The plan is based on the GDP growth assumption of 3.4 per cent (low) to 5.45 per cent (high). In the post-floods circumstances, it is difficult to have a degree of certainty. However, the difference between proposed generation capacity and actual production is nominal – 13 per cent or 6000MW. There is no certainty of fuel price fluctuations, especially the price of LNG. Oil prices have started to increase once again. The plan also mentions an investment of $50-55 billion.
There will be serious financial issues in the wake of the recent floods. Other possible constraints could be high interest rates, inflation, falling exchange rates and import restrictions due to a shortage of dollars in the next few years. Those responsible for drafting the IGCEP do not have any way of including these factors in their plan; they have a standard model. Pakistan will have to divert substantial financial input towards post-flood reconstruction. There will be severe limitations on the PSDP. Wapda hydro projects will come under severe pressure and consequent reduction in actual terms. Although non-Wapda projects may also face pressure, they will be relatively better as they are financed under commercial finances, FDI and annual energy payments spread over a larger time span.
The plan has made three demand projections for the year 2030-31 and intervening years at the growth rates of 4.12 per cent (low demand), 4.87 per cent (normal) and 5.78 percent (high demand); the respective demand projections are 38,744MW, 41,338MW and 44,668 MW.
The plan also mentions raising the power generation capacity to 69,372MW by 2031. How this will be done is explained with the following details: the existing capacity is 33,082MW; committed projects are going to generate 14,159 MW; the other 17,812MW will be added through candidate projects, and the remaining 4,320MW will come through net-metering. Committed projects are the approved projects and candidate projects are those which are at various planning stages.
The proposed installed capacity under the three demand scenarios of low, base (normal) and high is 65,262MW, 69,372MW and 73,623MW respectively. Readers may be surprised to see the proposed installed capacities and peak demand; the country’s peak demand is 41,338MW as compared to the corresponding base capacity of 69,372MW. There is a large share of RE and hydro in the IGCEP, which typically have low capacity utilization (factor) – solar 20 per cent, wind 35 per cent and hydro 45 per cent. Coal and nuclear have the capacity factor exceeding 85 per cent, leading to an average capacity factor of about 60 per cent in the proposed plant mix. The base installed capacity addition in 10 years is projected to be 30,851MW; the 7,339MW of existing capacity will be retired.
The plan has used a new term, optimized generation capacity (OGC), which one might have difficulty comprehending. In my view, all plans are understood to be ‘optimized’. OGC provides the capacity addition of 17,000-18,000MW as opposed to conventional of around 30,000MW. In OGC, there is no addition to coal power except a KE plant based on the local Thar coal of 990MW by 2027. It further contains a low hydro addition of 3,461MW – and 13,278MW from other renewable sources; solar 8,350MW and wind 4,928 MW.
The IGCEP has developed four scenarios. There are four lobbies in the country; nuclear pushing C-5 nuclear power plant; hydro enthusiasts; solar and wind proponents, and Thar coal enthusiasts. There has been quite some support for hydro power in the country, especially the Bhasha dam which will provide water storage and 4,000MW of electricity. There are provincial issues as well. Bhasha has remained on the agenda of successive governments and has been inaugurated several times. Substantial advance work has been done on it, including the purchase of land costing more than $1 billion.
Bhasha has political problems as well due to which IFIs are not financing it. Its capital cost was estimated to be $14 billion in 2013. High financial requirements and a long lead time of 10 or more years have raised many questions on its viability. There are similar problems in other hydro projects as well. Climate change issues, which cause irregularities in water supply through precipitation and glacier melting, have come to the fore. It is not possible for any political government to drop the Bhasha dam project. Hence, the plan uses the term ‘scenario’ for the dam project. Also, in the report’s assumptions section, a reference has been given to an official meeting that says that work on Bhasha has been delayed. It is almost clear from the IGCEP that it is highly unlikely for the Bhasha project to be completed this year.
High LNG prices and imported coal cost have compelled planners and decision-makers to look for cheaper and fast-track options. They have found solar and wind power to be good alternatives. The earlier IGCEP versions had calculated wind and solar power to be around over 10,000MW. However, this plan was spread over a longer period and was subjected to a late start. The present decision-makers want to have a fast track solar power plan. The new IGCEP version provides for 12,375MW solar energy and 7,512MW wind energy; the combined total of 19,887MW which is almost as much as energy generated through hydro. Perhaps this scenario assumes that 6,000MW of hydro capacity may not be realized, and thus a balancing quantity from other sources has been provided in this scenario. Since solar and wind power is relatively cheap, there is an attempt to neutralize the impact of high-priced fossil fuel.
It is important to have a few words on the solar proposal, which has the following four components: utility solar of 4,005MW; solar feeder 2,000MW; KE solar 1,050MW; and net metering 4,300MW. Solar feeder and net metering may have some overlap in these numbers. There is some criticism of the solar net-metering export tariff. Solar rooftop PV is feasible, irrespective of the net metering tariff being more or less. It has many advantages of autonomy and self-sufficiency. Rooftop solar, even with the reduced net-metering component, is expected to achieve the targeted capacity.
The plans to achieve the power generation capacity of 15,000MW through RE (solar 10,000MW and wind 5,000 MW) by 2025 appear to be highly ambitious, even impractical. High targets have political advantages, but highly attractive low prices can only be obtained if the quantity is large. There is criticism around its feasibility, high financial requirements and inability of the transmission system to deal with a variable and intermittent supply. So, although there are demand-side attractions, there are supply-side constraints. The realistic target could have been 5,000 MW by 2025. It will be more feasible and another 5,000-7,000 MW in the remaining years of the plan period.
CPEC does offer a fast track implementation of a good amount of solar and wind power capacity. It need not be in the public sector, as we have seen that imported coal power plants except for the Sahiwal plant have been built in the private sector under the CPEC framework.
To be continued..
The writer is a former member of the Energy Planning Commission.
