Pakistan is heavily dependent on imported energy in the form of oil, LNG and coal. The composition of primary energy power generation capacity shows that hydropower generation from large hydropower projects and renewable energy contribute about 25% and 4% of the total electricity generation, respectively. In terms of consumption, RE is meeting less than 3% of the total electricity consumption. Keeping in view the Sustainable Development Goals (SDG) in the wake of international climate change agenda and Pakistan’s commitment to reduce its carbon footprint, Pakistan will strongly promote the use of RE, hydropower from large projects and efficient use of energy. In this vein, the share of RE is proposed to increase to at least 10 % in 2023 and 20 % in 2030. The share of large hydropower generation will also be increased from 25 % to 35%. To achieve these objectives, following are the key elements of policy.
- There will be no cap on the quantum of intermittent electricity to be absorbed by the NTDC/DISCOs up to 2030.
- NTDC and DISCOs will be required to identify RE Zones near major grid nodes and points of interconnection in consultation with Provinces.
- It will be mandatory for NTDC/DISCOs to provide connectivity within RE Zones and/or within a certain radius of network. All the required improvements needed in the grid system to provide connectivity, including the provision of adequate generation reserves, will be responsibility of NTDC/DISCOs. Grid interconnection will be provided 3 months in advance of commissioning date of projects to enable testing of plants. Arrangement of funds will be the responsibility of NTDC/DISCO, who may arrange it through PSDP, donors, commercial borrowing, self-financing or any other means. IPP may have the option to provide funds for transmission line on terms to be mutually agreed.
- Requests for Proposals (RFPs) for new capacity on the basis of competition will envisage maximization of indigenous manufacturing component.
- Distributed Solar Power projects – both stand-alone type and those based on Off-Grid applications – will be promoted.
- Planning and construction of Large Hydro Power Plants will get priority over the fossil fuel based thermal plants.
- Substitution of subsidized electricity in agriculture and domestic sector with consumption below 300 KWh per month, supplied through grid, with solar based electricity generation schemes on concessional terms.
- Innovative financing schemes for upscaling use of RE in industry (e.g. through wheeling) and agriculture (e.g. solar tube-wells) etc. will be prepared.
- Wind resource assessment will be carried out for new prospective sites and collection of data for bankable projects through appropriate agencies.
- A database will be set up for all the new possible avenues and of the operating renewable energy projects freely accessible to general public, researchers, academia, project developers and financiers to promote evolution of new RE projects.
Roof-top solar projects with or without net metering will be actively promoted in residential, government, commercial and education sectors (e.g. schools). Formation of Energy Service Companies (ESCOs) will be encouraged. For this purpose, various types of training programs will be launched to promote entrepreneurship, methods of formation and functioning of ESCOs, capacity building, preparation of sample drafts of agreements with clients etc. The initiative will be supported by enabling access to easy and subsidized sources of funds. Projects for utilization of free spaces such as parks, water reservoirs, agriculture farms, deserts and many other possible initiatives for generation and utilization of solar energy.
It is proposed to set up a Clean Energy Fund through Clean Energy Levy on the revenue of all oil, gas and coal fuel marketing companies. The purpose of this levy would be to discourage use of fossil fuels emitting GHGs (Green House Gases) and provide funds for schemes/projects for promotion of clean energy, universal access of electricity using renewable energy technologies, indigenization of clean energy technologies, leverage financing of large clean energy projects, concessional funding for projects in far flung areas in the form of mini-grids, roof-top solar projects etc. The resources may also be used to eliminate perpetual subsidy to the customers consuming less than 300KWh/month by enabling them to switch over to roof-top solar energy through one time grant funding of a major share of the cost of installation. The levy may also support R&D for clean energy.
The proceeds of this levy are proposed to be kept in a separate account under a Clean Energy Fund, which will be dedicated to the objectives stated above. It is proposed to be under an independent and transparent administration created through an Act of Parliament. Detailed guidelines for the management and use of the Fund will be prepared immediately after the passage of the budget proposal. The Fund would be so structured and positioned that the domestically raised resources be the seed money for attracting larger funds from various international resources for funding promotion of clean energy and mitigating effects of climate change, grants or concessionary funding from donors and corporate sector.