Prospects, Policies and Projects

Alternative Energy Development Board

Irfan Yousuf

February 21, 2012

www.aedb.org / irfanyousuf@aedb.org/irfan.yousuf@yahoo.com

Pakistan Power Sector Total Installed & Dependable Capacity

IPPs 6,314 31

KESC 1,756 9

Rental & SPP 426 1

Sub Total 8,496 41

Grand Total 20,231 100

PEPCO Thermal 4,829 24

WAPDA Hydel 6,444 33

NUCLEAR 462 2

Sub Total 11,735 59

Public Sector

Private Sector

MW %

MW %

Dependable capacity summer 17,897 MW

Dependable capacity winter 13,215 MW

Oil(34%)

Hydel(32%)

Nuclear

(2%)

Coal

(1%)Gas

(31%)

Peak Demand Projections 2007–2030 (Countrywide)

1888324474

36217

54359

80566

113695

0

20000

40000

60000

80000

100000

120000

2007 2010 2015 2020 2025 2030

MW

Years

Annual Growth Percentage = 8%

Source of Growth Rate : PEPCO , P&D Div

CASE FOR INDIGENOUS / ALTERNATIVE ENERGY

Abundant Indigenous RE Resources

Wind*: 346,000 MW

Solar*: 2.9 Million MW

Hydro

Small 3,000 MW

Large 59,000 MW

Bagasse Cogeneration: 4,800 MW

Waste to Energy: 1,000 MW

Geothermal 2,550 MW

Off-Grid Application: 10,000 MW

Alternate Fuels Large TBD

Reduced dependence on imported oil

The only option for many rural areas

Relieves Grid Resources; Low infrastructure needs,

Environment Friendly and Cost Effective

Energy

Source

Cost/Unit

Waste-to-

Energy

7 -10 Cents

Small Hydro 6 – 8 Cents

Wind 13 Cents

Solar 22+ Cents

RFO

(Thermal)

Expensive*

*dependant on fuel oil prices

Strategic Vision to Develop Energy Sector

• Supply to be based on an optimum energy mix;

• Maximum utilization of the indigenous resources

• Getting the private sector to invest in the sector and

• Develop human resources and capacity.

• Renewable energy (RE) is a key component of this strategic vision.

Theme in Devising Policies

• Help in setting up strong foundation for development

• Develop and maintain investor’s high confidence level

• Announce incentives lucrative enough to attract investment

• Safeguard interests of government as well as private sector

• Building investment conducive environment

• Device mechanisms that give enough freedom to private sector to

do business and flourish

• Minimal government sector involvement

• Simplified procedures for setting up

development projects

Essential Ingredients of Market Development in Pakistan

AEDB Current InitiativesWIND

31 Private Projects at various stages of

development. 6 MW operational (Zorlu).

Financial close 50 MW Achieved.

Construction of 156.4 MW in process

Financial close for 300 - 400 MW expected

2012.

Target 2013: 1500 MW

SOLAR

On-grid: 6 projects (64 MW) solar PV

initiated in private sector

Electrified over 8000 homes in 80

villages. 200 SWP operational. Programs

initiated for solar water heating and solar

water pumping.

Revised SROs resulted in increased

adoption of solar - Annual Growth in sales

(2008-2010): PV: 300%; SWH 200%

OTHERS

35 MW baggass to power plants operational.

15 Projects (294 MW) in advanced pipeline.

Established Enabling Environment (Standard

Agreements, Grid Code, Counter Guarantee)

RE Policy 2011 finalized (New technologies,

Alternate fuels, Feed in Tariff, Dual Fuel and

Fiscal incentives).

SMALL HYDRO

102 MW operational in KPK

10 projects (110 MW) in public sector under

implementation.

45 projects (397 MW) under development

400 + Micro-hydro (60 MW) projects being

developed / implemented in North of Pakistan

ARE Policy - Goals

Harmonize efforts of various Government bodies in developing ARE

resources

Increase deployment of ARE technologies in Pakistan to help resolve the

energy crisis

Introduce investment friendly incentives and facilitate ARE markets to attract

private sector investment

Optimize impact of ARE deployment in underdeveloped areas by

integrating energy solutions with provision of other social

infrastructure

Promote productive use of energy for income generation activities

Facilitate establishment of a domestic ARE manufacturing base in the

country

Promote research and development of indigenous ARE technologies

and local manufacturing

Private

Sector

Project

Feed-in

Tariff

Regime

Simple Standardized

Project Documentation

• RE Tech

• Site

• Land Availability

• Data Source Availability

• One Window Support from

Govt.

• Power Purchase at the

door step of power plant

• Incentivized tax regime

• Financial and fiscal incentives

• Financing (Local / Foreign)

• Govt. guarantees

• Local Industrial Support

• Local Consultancy Service

• Local EPC Services

Financial Close

Plant Construction

COD

Project

Ends

Yes

No

26

New Midterm Policy - Scope

1. Renewable Energy

Systems

2. Alternative Energy

Solar (Solar Thermal or

Solar PV)

Biogas

Hydro – up to 50 MW Biomass

Wind Biofuels (ethanol and

biodiesel)

Geothermal

Tidal Hydrogen

Wave Waste

3. Hybrid Energy Systems

Systems capable of utilizing both conventional fuel and ARE

resources having a minimum of seventy percent (70%) share of

ARE resource component..

Unique Policy Features

Partial Wind Risk / Hydro Resource Risk

Coverage

Mandatory Grid Connection

Guaranteed Electricity purchase

Grid provision is the responsibility of the

purchaser

Tariff on the basis of a Premium Rate of Return

Adders for early completion

Mandatory use of Biofuels

No Import Duties on Equipment

Zero Sales Tax28

Unique Policy Features

SBP Small ARE Facility (< 20 MW)

AEDF

ADB Loan Guarantee Facility

Credit Market Facility

Accelerated depreciation of 90% proposed foreligible depreciable assets installed for generationof alternative energy

100 % Carbon Credits to IPP

Net Metering

Banking of Electricity

Wheeling Provisions

Grid Spill Over Concept introduced

(A) Local Manufacturing of RE Equipment, Building Capacities & Technology Transfer:

– Location: - Nation Wide– Scope - Resource Mapping, Training, Twining, and Technology transfer

(B) Private Sector & Public Sector Investments in:

Wind– Location: - Gharo-Keti Bunder Corridor Sindh with estimated 50,000 MW potential– Scope - Units of 50 MW ++ Wind Farms

Solar PV and Thermal (On-Grid)– Location - Northern Sindh, Southern Punjab & Balochistran– Scope - Multiples of 2- 50 MW each (PV and CSP)

Small Hydro & Micro Hydro – Location - NWFP, Punjab, AJK & Gilgit-Baltistan– Scope - Multiples of 1-50 MW

Solid Municipal / Agriculture Waste to Energy– Location - 13 Major Cities of Pakistan for Municipal Waste; agriculture belt for other– Scope - 3 to 50 MW plants of various technologies

(C) Accelerated Deployment of RE Technologies:

– Scope - Agricultural Water Pump, Solar Water Heater, Biogas plants, Heat Pumps, Solar Powered / LED Street Lights

Priorities for the RE Sector5% Energy Mix coming from RE by 2020

Investment Opportunities in AREs

• Setting up on-grid power plants as IPP through DFI, JV or any other financing mechanism;

.

• Promoting concept of Net Metering, Wheeling and Banking

• Encouraging industries and SMEs for Grid Spill Over

.

• Tube wells for drinking and irrigation to run on AREs

• Commercial load to be met through ARE

– Street Lights; billboard lighting, search lights, outdoor lighting, peripheral lighting and other

commercial lightings.

– Solar energy applications would be promoted to meet with this energy requirement.

• Rural Electrification as ESCOs

– the GoP is intending to electrify the remote villages of the country through SHS. ESCO Model can

be followed

• Promoting solar water heating systems for heating water thereby saving gas supplies.

Targets for On-Grid RE

ApplicationsSerial Technology (MW) Investment (M.US $)

1 Wind 1750 4,375

2 Small Hydel 310 775

3 Solar Thermal 50 250

4 Solar PV 130 455

5 Waste to Energy 300 900

6 Geothermal - -

Total 2440 6755

Targets for Off Grid-RE Applications - 2015

Technology (QTY) Investment (M.US $)

1 Solar Water Pumps 10000 120

2 Solar Street Lights 20000 20

3 Heat Pumps 10000 20

4 Solar Home Systems for

Rural Electrification

30000 35

5 Solar Water Heaters 100000 35

6 Bio-diesel 2% replacement 270

Total 500

Way forward ….

• Government to continue to accord priority to ARE.

• National Resource Mapping at an accelerated pace.

• Pilot Commercial Demonstrations – to demonstrate technology and viability for accelerated private investment.

• Feed-in-Tariff for all Technologies.

• Timely availability of necessary Infrastructure (Land, Grid, Grid Code Amendments).

• Availability of Standard Documentations for all technologies

• Facilitation Financing Availability (Counter Guarantee, State Bank Facility)

• Strengthening Necessary Linkages – CDM etc.

• Provision of Level Playing Field –

• For Off-Grid: Adopting the Least Cost Supply Option

• Technology Transfer – Encouraging Local Manufacturing

• Developing local EPC Contractors and ESCOs

Bio - Diesel

• Energy plantations for Biodiesel cultivated on 650 acres so far in the

country.

• Biodiesel production on a pilot scale initiated with PSO’s

collaboration.

• SRO 474(I)/2008 issued for tax exemptions on Biodiesel production

equipment / specific items.

• Amendments in OGRA Ordinance for regulation of Biofuels finalized

with Federal Cabinet.

Biodiesel

Jatropha Plant at PSO Nursery

Ripening Jatropha Seed Pods

Final Product

Off-Grid Application

Solar Village Electrification

SHS Installed in Village in Mithi

46

Outside installation

Children can Move at Night

48

PV sales in Pakistan

(2007 - 2011)

0.1478

0.9984

2.5810

5.5312

7.00048

0.0000

1.0000

2.0000

3.0000

4.0000

5.0000

6.0000

7.0000

8.0000

2007 2008 2009 2010 2011

Capacity (MW)

Solar Water Heaters

260

743

2396

6848

0

1000

2000

3000

4000

5000

6000

7000

8000

2007 2008 2009 2010

Solar Water Heater Sales

(Pakistan)Target 2015

100,000

Local Manufacturing Capacity 20,000 units /year

Solar (Agriculture) Water

Pumping

Micro Hydro

Other Off-Grid Options

• Domestic Biogas Plants

– 14000 Being installed in the Central Punjab

– 3000 Being installed by PCRET in other parts

• Solar Street Lights & Neon Sign (Load 500 MW)

– High-upfront cost.

– LED bases Solar Street Lights – payback period 4 years.

– All NEON Signs being converted to Solar PV

• Geothermal Heat Pumps (Heating and Air Conditioning)

– Capital cost less than conventional Air-conditioning (HVAC) systems

– Low Maintenance Cost

– Electricity Saving: 70 % of conventional systems

– Free Hotwater.

– Long Life (50 years)