Pakistan – Energy Transition Platform

March 7, 2025 Rachana Desale No Comments

Pakistan’s energy sector is heavily reliant on imported fossil fuels, which heightens its exposure to rising costs and supply chain disruptions, directly affecting financial sustainability. This dependency also amplifies Pakistan’s vulnerability to climate-related risks, as fossil fuels dominate the energy mix with a share of 59.4 percent. Ranked among the most climate-vulnerable nations globally, Pakistan faces urgent pressure to transition toward an indigenous renewable energy source such as solar, wind, biomass, and micro-hydro projects that could enhance energy security and offer Pakistan a more resilient and low-carbon future. Recognizing this, the government has set ambitious goals to transition the country towards clean energy. Pakistan’s ‘Alternative and Renewable Energy Policy 2019’ aims to shift the energy mix to 30% renewable sources by 2030. The policy encourages both local and international investment, setting the stage for innovation and a shift towards greener, more sustainable energy production. Currently renewable sources contribute 6.8 percent of the energy mix, while hydel and nuclear energy adding 25.4 percent and 8.4 percent, respectively.

On-Grid Renewable Potential: Pioneering Projects and Policy Actions

Pakistan is taking several decisive steps to develop its on-grid renewable energy potential. In 2023, the country launched its first round of competitive bidding for the ‘Solar Fast Track’ program, aiming to install 10,000 MW of solar power. Solar energy potential is significant across the country, with Western Pakistan enjoying an average annual Global Horizontal Irradiance (GHI) of 2330 kWh/m², among the highest globally. The government is currently establishing three solar power projects (each 50 MW) in Sukkur. In addition, as of March 2024, net metering based solar installations stand at 117,807 with a cumulative capacity of 1,822 MW. The number of active certified installers has surpassed 400. The government is also working on solarization of public sector buildings. To make sure that Pakistan has enough human resource to install and maintain solar projects, the government is training 500 technicians at various training centers.

In addition to solar, Pakistan’s wind energy potential is notable, with an estimated 346 GW capacity. The government has already established a wind energy corridor along the southern coastal regions of Sindh and Balochistan. The Gharo-Jhimpir wind corridor in Sindh alone could provide 11 GW of energy. The country’s latest Integrated Generation Capacity Expansion Plan (IGCEP) 2022-2031 outlines a target of 4,928 MW of wind capacity by 2031 which would an increase the percentage of wind energy from 4 percent to 10 percent in the total energy mix. Considering rapidly falling equipment costs and improved procurement strategies, wind tariffs have dropped to as low as 3.5 US cents/kWh, encouraging further development in this area. Currently, three projects with a cumulative generation capacity of 108 MW are under process.

Biomass also offers considerable potential, particularly in the agricultural sector. The country’s sugar mills, for example, could generate up to 1,844 MW annually from bagasse. By harnessing bio-waste from both agricultural and municipal sources, Pakistan could further enhance its renewable energy portfolio, reduce waste, and contribute to a circular economy.

Off-Grid Renewable Solutions: Powering the Remote and Rural

While on-grid projects are gaining momentum, the need for off-grid solutions is equally pressing, especially in rural and underserved areas. In many remote regions, grid access remains limited, and reliability issues are common. For such areas, off-grid solutions offer an immediate path to electrification and improved quality of life. The deployment of Solar Home Systems (SHS), mini-grids, Micro Hydel Power Projects (MHPP), and small-scale biogas plants are already providing renewable power to areas beyond the reach of the national grid. However, these are mostly at a nascent stage.

Micro hydropower, in particular, has been effective in reaching remote areas, especially in the northern regions where up to 30 percent of the population lacks grid access. These systems offer a reliable, cost-effective solution, with minimal land requirements and ease of community-based operation and maintenance. Solar mini-grids are also gaining traction as viable off-grid solutions, with an estimated 1,015 potential mini-grid sites across the country. A World Bank study projects that connecting approximately 4 million consumers to mini-grids by 2030 could bring Pakistan closer to universal electrification at a low cost. Similarly, the development sector is promoting the use of small-scale biogas plants in underserved rural communities. However, it is important to quantify the exact potential of off-grid solutions, implement a fair licensing system, build expertise of communities and technicians in installing and maintaining off-grid solutions, and encourage private sector to provide cost-effective and efficient solutions.

The Way Forward: Scaling Renewables for a Sustainable Energy Future

Transitioning to a renewable energy future for Pakistan requires a comprehensive, multi-pronged approach. Prioritizing investment in solar, wind, and biomass infrastructure while expanding off-grid renewable solutions will be essential. The government’s focus on competitive bidding, transparent policies, and international partnerships can support sustainable growth in this sector. Additionally, enhancing information dissemination and public-private cooperation for off-grid projects will attract further investment and expertise. The development sector too can play a vital role in supporting small-scale off-grid solutions in underserved areas. Some progress is already being made support small-scale farmers and rural communities.

Pakistan has great potential for installing renewable power sources. By capitalizing on its solar irradiance, wind corridors, and biomass potential, the country can create an energy system that supports economic growth, social development, and environmental sustainability. Embracing this renewable pathway promises not only to decarbonize the power sector but also to shape a future where energy security, economic resilience, and climate responsibility go hand in hand.

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Pakistan

October 1, 2021 Rachana Desale No Comments

The energy sector is the most critical driver of the global economy engine that supplies power to all sectors. Ensuring access to clean, affordable, and reliable energy for all, is a pre-requisite for progress on many SDGs linked with health, education, environment, and sustainable cities. Based on both economic and environmental trends, a major energy transition phase has been observed in which many countries have tried to opt for most sustainable energy future. While the trend is largely advocated by moving away from fossil fuel and adoption of renewable energy resources, there are still some questions over the scale and timeline of such a transition, especially considering the fact that the world is now facing a major threat due to restriction posed by a global pandemic, i.e., Covid-19.

The energy sector of Pakistan, known for its slow pace of change, is undergoing a dynamic transition. The imperatives of climate change, energy poverty and energy security to underpin development and industrial strategy have made the widespread adoption of renewables and related technologies an essential solution. Policy drivers, technology developments and international co-operation have moved these technologies from niche to mainstream, especially in the past decade.

Major changes in the energy sector took place after the power policy, 2015. The installed power generation capacity of Pakistan until august 2021 has reached 34,296 megawatts (MW), dominated by the RLNG/Gas/Oil based power plants (45%), followed by large hydro power plants(29%). Before 2017, only 31 megawatt coal power plant was operational, since March 2017, new coal power plants have been added with cumulative installed capacity of 4,520 megawatts (13% share of installed generation capacity of national grid). Renewable energy sector is dominated by, wind power followed by solar PV plants. Large scale new additions in wind and solar have not been witnessed since last year, on contrary distributed solar systems have got great traction and over 30 megawatts net metering licenses have been issued since the pandemic. Until date, renewable share stands at 12% of total installed power generation capacity (including nuclear and small hydro less than 25 MW).
Based on the trend and new policies, investments as well as the interest in renewables in Pakistan has slightly increased in the past. In 2018, the total non-hydro renewable share in total generation was only 4 percent, which is slowly expected to increase. As pointed out in IRENA renewable energy readiness for Pakistan, there is a considerable wind potential in the corridors of Baluchistan and Sindh. The potential of solar is even more than that of wind. A 400 MW project of Quaid-e-Azam solar plant is under way with expansions planned. Other than that, an additional 550 MW of solar projects are under completion in the country. As of biomass, bagasse is currently the only source that is being used at a commercial scale in sugar industries, bagasse plants of around 432 MW are operational in the country.

Despite being currently able to generate electricity in a surplus, major inefficiencies, losses, and theft in the distribution system has made the system very fragile. In recent years, Pakistan has observed some of the worst power blackouts due to poor transmission systems, lack of connectivity and poor reliability. Unlike most developed countries, Pakistan has a very limited fiscal space available and the policies are generally driven by economic priorities. The circular debt of Pakistan has now risen above PKR 2.35 trillion and is being contributed by surplus capacity payments. Consequently, between 2007 and 2020, the power crisis has cost Pakistan approximately $82 billion in loss GDP (Gross Domestic Product).

The power sector suffers from institutional and structural disconnections and fragmentation in the priority of issues, ignoring the holistic view and focus only on the power sector. For instance, the development of coal power plants has observed a two-dimensional debate among various stakeholders in Pakistan where some admire its critical role to enhance energy security and economic advantages while others advocate the adverse environmental impacts of these coal power plants. The government’s objective is to reduce the reliance on fossil fuels imports, increase renewable energy share, diversify the fuel resources, and increase fuel supply security. The planned massive capacity additions on coal-fired power generation projects contradict with all these objectives.

Along with these multifaceted energy crises, the country is ranked among the top ten most affected and the most vulnerable countries to climate change from 2000 to 2019, according to the latest ‘Long Term Climate Risk Index’ report. Historically, an overall share of Pakistan in global carbon emissions (CO2) has remained less than one percent. The energy sector is the main contributor to GHG emissions. Pakistan intends to reduce its expected GHG emissions by up to 20 percent of (equivalent to 1603 MtCO2) by 2030, which amounts to US$ 40B at 2016 prices The climate adaptation costs are projected to be US$ 7–14B/annum, while mitigation costs for Pakistan are ranging between US$ 8 – 17B by 2050 (GoP and UNFCC 2011)

Support Policies & Incentives
The Alternate and Renewable Energy (ARE) policy 2019 is the recent policy, formulated to create a conducive environment for renewable energy growth in the power sector. The policy envisages having 20 percent of the total generation capacity from renewable energy technologies by 2025 and 30 percent by 2030. Further, the policy also aims to increasing the share of hydro power in the power generation mix to 30 percent by 2030. So, as per the plans, Pakistan will be able to generate around 60 percent of its total energy from renewables. Moreover, the policy aims to lower the average price basket of tariff by allowing a competitive bidding for new projects whereas all taxes and duties are waived for the import of machinery required for renewable energy projects.

National Electricity Policy 2020, was formulated to eliminate the inconsistencies in the power sector. The policy aims to bring an optimal development of electricity generation, transmission, and distribution while ending expensive power plants running on imported fuels. The six guiding principles of this policy include, bringing efficiency, competition, economic viability, transparency, and most importantly the environmental stability.

Competitive Trading Bilateral Contract Market (CTBCM) Model by NEPRA was approved in 2020. This model aims transition from a one-buyer electricity market to a multi-buyer model. A multi-buyer model will assist the government to transition towards a competitive market for increasing operation efficiency and decreasing the price of electricity to the consumers.

National Electric Power Regulatory Authority (NEPRA) announced distributed generation and net metering regulations on September 1, 2015. As per these regulations, any customer of the national grid (having three-phase connection) can avail net-metering facility for small-scale (1kW to 1MW) Renewable Energy installations. The power distribution companies (DISCOs) in Pakistan are directed to purchase excess units of electricity produced by the consumers, and net them off against the units consumed from the grid. Recently the cabinet has approved that consumers having RE installations would not require generation license from NEPRA for net metering, the distribution companies can directly provide net metering licenses and connections. NEPRA has asked the DISCOs to formulate the SOPs for the new net metering connections under 25KW of RE installations.

Financial incentives have played an important role in adoption of renewable technologies in Pakistan, both grid connected and off grid systems. Green financing scheme is offered by State Bank of Pakistan at 6% to consumers for 1KW up to 10Megawatt renewable energy systems.

Challenges
Data unavailability for wind and solar PV power projects is the biggest challenge faced by the investors or financing institutions. However, limited feasibility studies have been carried out for project implementations. Around 40+ wind masts are installed in Pakistan for data generation. Although the World Bank studies have identified the 18 theoretical as well as technical potential sites for solar and wind, but the ground realities quickly change with the passage of time and externalities. Another reason behind the impeding growth of renewables is the absence of developed power transmission infrastructure to dispatch the generation from renewable power plants resulting in curtailment issues.

Way Forward
The way forward for Pakistan will demand rapid transition towards decarbonization, decentralization and digitalization of energy production, supply and consumption. This must include:

prioritized actions for renewables, such as least-cost generation plan, RE trackers and zoning, developing mini and micro grids
technology transfer programs and skill development through soliciting investments in local RE equipment to reduce the costs
efficient buildings and green infrastructures for responsible investments,
clean cooking solutions
regional cooperation to be able to meet the national and international targets of Pakistan
creating jobs and employment

Lack of planning and policy mismatch between different departments requires a structured stakeholder involvement and the provinces must come up with power planning development studies for evidence-based policymaking and overcoming the barriers of renewable energy growth in the country. An integrated energy plan considering investments in generation, transmission and distribution, and energy efficiency should set up priorities for technology and scale of renewable energy projects. This would help to ensure a more sound and effective competitive bidding for these projects. It would assist policy makers at all levels to evaluate costs of both demand and supply under a given set of economical, technological, and environmental constraints.

Pakistan

July 15, 2021 Rachana Desale No Comments

Mome Saleem and Ayesha Majid

Climate change impacts have no geographical boundaries, and hence the solution to the problem cannot be limited to one country’s policies and actions. South Asia lacks integrative approach to development owing to the geopolitical issues that hinder collaboration on almost all fronts. At the same time the region is plagued with social, economic and environmental issues and have limited financial resources.

On climate crisis front as well, South Asia is one of the most vulnerable regions with two of its countries namely Pakistan and Bangladesh ranked among the top ten most vulnerable countries to the impacts of climate change by The Germanwatch’s Long-Term Climate Risk Index[1] . Countries in the region are not major emitters of greenhouse gases, yet nearly half of the population in the region has been negatively affected by climate-induced natural disasters during the last decade[2] . Pakistan has faced climate induced disasters since 2000. Droughts in Balochistan led to displacement of a large number of people. Similarly, the 2010 floods impacted around 20 million people[3] . Villages in Bangladesh experienced river erosion and many lost their households, while heat waves killed about 6,167 people in India from 2000 to 2018[4] . The situation is expected to get worse amidst continuous rise in average temperatures and shifting weather patterns that will impact the natural resources and topography in the region. This will increase the risk of natural disasters, which in turn, will have a bearing on the large proportion of the population that is dependent on climate-sensitive sources of livelihoods. Socioeconomic security of the region will be threatened as a as well since the most severe impact of climate change cut across national boundaries due to shared topographic features.

As the impacts of climate change and environmental degradation intensify, the countries in the region need to recalibrate their approach towards addressing the issue. Individual adaptation and mitigation strategies, although necessary, are no longer sufficient to tackle the scale of the problem. A broader mechanism is required instead. The framework could include the following pillars;

1- Knowledge Exchange and Assistance: Countries in the region are working on finding and implementing adaptive and mitigation measures. Exchanging knowledge and assisting in finding solutions that work are crucial for bringing the less prepared countries at par. Early warnings systems were to be placed under The Indus Water Treaty, however, due to ongoing tensions in the region, especially India and Pakistan the systems are not functional.. Therefore, there is a need to negotiate terms of efficient shared monitoring and early warning systems to prevent natural disasters such as floods, sharing of status around glacier melt and health and landslides. Collaborative and comparative research for finding solutions and scaling up local wisdom which has worked to adapt to and mitigate climate change impact is also important.

2- Expanding Use and Export of Clean Energy: The South Asian region holds massive potential for energy production through renewable resources such as solar and water. Bolstering the process of clean energy development and regional energy trading will reduce the region’s dependence on fossil-fuel based sources of energy. It will also alleviate the associated issues air pollution.

Following the footsteps of Europe, a regional grid could improve energy issues and reduce emissions from energy production in the long run. These benefits will also be transferred to the transport sector which at the moment significantly contributes to the emissions.

3 – Collective Approach for Mobilizing Green Financing: Countries in the region are individually making efforts for ecosystem restoration. As many of shared topographic features such as glaciers, rivers and mountains could be jointly preserved, regional actors could leverage it for gaining better access to global green financing. Joint efforts for carbon sequestering could also be undertaken. Such initiatives will improve livelihoods, reduce the overall risks of natural disasters, and contribute towards achieving sustainable development.

4 – Investing in Youth for Eco-innovation an Integrated Skills Development through Education: South Asia has a large number of young people with almost 627 million under the age of 18 years. In order to transition towards greener and sustainable future, it is important to invest in young people and provide them with opportunities and platforms during formative years that could help South Asia transition towards sustainable development. As innovation is a key to finding solutions to climate problems, it is utmost that a lifecycle approach to young people’s development is taken at regional level. Education with green skills followed by transition to job placement or/and green entrepreneurship could revamp the landscape not only in South Asia but could help the region take leadership at global level. Exchange programs at university level, regional green innovation challenges, mainstreaming environment and climate change as a subject at school and college level, exposure visits to impacted places, regional afforestation drives and regional mentorship are some of the low hanging fruits in this regard.

Going forward, partnerships and sustained collaborative efforts will be critical for ensuring transition towards low carbon and climate resilient development. In this regard, apart from Track-I diplomacy it is important to promote and facilitate Track – II dialogue which could lead to collaborations and partnerships across the region. Important actors in this regard are the civil society which includes segments such as journalists, think tanks, NGOs, academia and the private sector. Given the increase in digital platforms, it is crucial to engage the actors in dialogues which, could lead to a) research ideas and comparative analysis of the landscape, b) exchange of knowledge and lessons, c) youth collaboration for innovative solutions, d) seed new ideas by providing youth with co-creation platforms and e) dissemination of information to educate the masses.

[1] https://germanwatch.org/sites/default/files/Global%20Climate%20Risk%20Index%202021_2.pdf

[2] https://foreignpolicy.com/2021/08/12/south-asia-climate-ipcc-report-front-lines/

[3] https://www.csis.org/analysis/south-asia-monitor-pakistan-floods-internally-displaced-people-and-human-impact

[4] https://www.indiaspend.com/india-underreports-heatwave-deaths-heres-why-this-must-change/