National Energy Efficiency and Conservation Action Plan 2023-2 outlines 29 priority actions across various sectors and projections indicate a cumulative savings of 9 MTOE by 2030 with a mapped investment potential of 8 billion US$. This translates to a cumulative financial savings of 6.4 billion US$ at 2022 prices.
Approximately 17,000 MW of cooling load stems from the widespread use of domestic fans and air conditioners-a load that doesn’t contribute directly to economic productivity. Of this, 69% is attributed to 140 million energy-inefficient fans.
By implementing NEECA’s Labeling Regime and MEPS and subsequently replacing these inefficient models, we can slash peak cooling load demand by 5,000 MW.
JICA estimates that Pakistan’s roughly 1.8 million and 237,306 inefficient refrigerators and air conditioners, respectively have potential to conserve up to 1,074 GWh and 135 GWh of electricity respectively, annually.
Per 2020 report from the Collaborative Labeling and Appliance Standards Program (CLASP), Pakistan’s current estimated 14 million motors is anticipated to surge to 25 million by 2030. Pakistan stands to conserve up to 9,000 GWh of electricity on an annual basis by motors meeting international efficiency standards.
Each year, Pakistan imports inefficient Compact Fluorescent Lamp (CFL) bulbs approximately (86 million) and Fluorescent Tube Lights (96 million) inefficient. By replacing these with energy-efficient LEDs, Pakistan has the potential to conserve up to 8,523 GWh of electricity annually.
By prohibiting manufacturing and operation of Incandescent Bulbs in Pakistan, (annual production of 4 million) and replacing them with LED lights, Pakistan stands to save 385 GWh of electricity annually.
Pakistan’s building sector, encompassing residential, commercial, and public structures, has experienced a compound annual growth rate of 12.3% and is responsible for 54% of the country’s total electricity consumption, primarily due to inefficient design and construction materials leading to substantial cooling and heating loads.
NEECA has introduced the ECBC-2023 and sets forth minimum standards for energy- efficient design and techniques for conserving energy throughout the construction and operation of buildings, including their systems and equipment.
It also encourages energy-efficient building designs, adoption of energy-saving appliances, incorporation of renewable energy sources, retrofitting of existing structures, backing for e-mobility, and establishment of robust monitoring systems.
Its adoption holds the potential for a significant reduction in electricity consumption within the building sector, ranging from 15% to 40%.
The primary objective of Demand Side Management (DSM) is to curtail energy demand by influencing consumer consumption patterns but we have been unable to execute given that in summer, our power demand surges to over 29K MW vs 12K MW in winters and approximately 17K MW is being attributed to cooling load.
Suprisingly, fuel efficiency guidelines for 2/3 and 4 wheelers, reduction in vehicles by improving public transport, mismanaged traffic, losses due unplanned and delay in construction and slow roads infrastructure donot form part of NEECA plans.
Such a measure do hold potential for savings across the board, from reducing fuel imports and subsidies to avoiding the operation of costly power plants during peak demand, lower investment in generation capacity and in turn eventually leading to an overall decrease in electricity costs for end consumers.
Notably, some of these savings will also have a lasting effect through 2050, contributing to the economic transition towards net-zero emissions.
What has Pakistan to show?
We have been in a learning mode since energy conservation started as a USAID project in 1985. Not much has been achieved by National & Provincial Energy and Conservation Authority (Enercon in 2016), under Energy Conservation Policy 2006 or under 2023 National Energy and Conservation Policy.
Although there has been no dearth of generation expansion plans formulated in the past by WAPDA and now NTDC with assistance of foreign/local consultants coupled with in-house efforts:
National Power Plan (NPP 1994-2018) developed by Canadian Consultant; M/s ACRES International Limited, National Power System Expansion Plan (NPSEP 2011-2030) developed by Canadian Consultant; SNC Lavalin, Least Cost Plan (LCP 2016-2035) developed by Japanese Consultant; International Institute of Electric Power, Ltd.
Indicative Generation Capacity Expansion Plan (IGCEP 2018-40), 2020-47, IGCEP 2021-30, IGCEP 2022-31, IGCEP 2024-34 and Transmission System Expansion Plan (TSEP) 2024-34 draft by NTDC is first per MoE Year Book 2022-23.
The conservation impact is negligible and with solarisation needs incorporation in our integrated energy plan including impact of solar duck curve, intermittency of RE, building reliability of T&D networks with experts determining why our projections and execution strategies have failed to then define learning and undertaking corrective measures.
Our Energy Mix has changed significantly over the last 15 years for better but despite Brent hovering in the same range, devaluation has played a significant role in gas and fuel price increases.
The wrong narrative of idle capacity payment can end if capacity additions are based on winter and not summer load demand with acceptance of extensive Load Shedding in summer.
One of the primary drivers for the increase in electricity costs has been the impact of rupee devaluation. At the close of the FY 2021-22, the exchange rate was 1 US$ to 204.85 Pakistani Rupees, whereas by the end of the FY 2022-23, this rate had risen to 1 US$ equaling 287.50 Pakistani Rupees.
Since most of the investment in power sector of Pakistan is correctly denominated in foreign currency, therefore, when the rupee depreciates, it escalates the cost of servicing of these foreign debts, placing strain on the financial stability of power companies and affordability of the consumers.
Moreover, Pakistan heavily relies on imported energy resources such as coal, oil and gas. The devaluation of the rupee leads to higher import costs, directly influencing the pricing of electricity and resulting in increased tariffs for consumers. Moreover, the power sector is heavily dependent on imported equipment and technology. A devalued rupee further amplifies the cost of such imports, making it more expensive to maintain and upgrade power infrastructure.
Without fiscal discipline, the impact will continue and businesses need to take lead in deliverance of reasonable cost of energy by scenario planning at their organizations, implementation of conservation measures and assisting in overcoming our increasing energy imports as GOP expedites deregulation.
Furthermore, NEPRA acknowledges cost of operation of expensive Power Plants could have been minimized, if not entirely avoided, through improved operational practices, efficient planning, and better resource management by utilizing more efficient power projects instead of relying on RFO/ HSD and system constraint’s detrimental impact.
Basis of Power Purchase Price forecast for DISCO(s) during FY 2022-23 did not account for operation of plants using RFO or HSD as per its review, there was ample capacity available using relatively cheaper fuels, system constraints did not exist, shortage of RLNG/Gas was not expected nor refining sector need to produce and sell RFO limiting.
But power plants had to be operated on RFO/HSD at a cost of Rs. 164 bn to end-consumers.
Why the difference in assumptions?
We then talk of taking difficult decisions to reduce cost!
Yet inability to implement decisions despite knowing the consequences is reflective of a bigger disease and is further exemplified by delay in retiring or auctioning fuel-guzzling GENCOs despite knowing deterioration in performance of their power plants over time, is in explainable.
Unfortunately, transition of these GENCOs from a ‘Take or Pay’ to a ‘Take and Pay’ arrangement decided by NEPRA is pending implementation due to cases at different forums.
GENCO-I only utilizes one of its 4 units on RFO and three units drew electricity from Grid without contributing any power. Plant utilization factor was 2.7% for FY 2022-23 with average Energy Purchase Price (EPP) per unit recorded at Rs. 54.62/kWh.
GENCO-II has access to cost-effective dedicated gas but available gas turbines either couldn’t operate, or when they did, they had to do so in open cycle mode with substantial financial losses for electricity consumers nationwide. The utilization factors for its 5-10 units, 11-13 units, and 14-16 units were 41.08%, 0.56%, and 40.63%, respectively.
GENCO-III plant utilization factors for TPS Muzaffargarh and Nandipur were 2.96% and 28.86%, respectively. The average EPP from Muzaffargarh and Nandipur during FY 2022-23 was recorded at Rs. 50.01/kWh and Rs. 28.86/kWh.
NEPRA has emphasized urgency of retiring these older plants (Dependable 4036 MWs vs installed of 5637MWs) to alleviate the financial strain on the power sector and optimize the allocation of precious fuel to the most efficient power plants. IGCEP 2024 projects that happening in 2030
Furthermore, maintaining these outdated and inefficient power plants, with ‘Take or Pay’ condition, despite having sufficient capacity for efficient alternatives, is not advisable as the low efficiencies of GENCO’s older power plants result in inefficient fuel consumption, leading to increased generation costs and burden on the country’s power sector.