Power outages are a nuisance in general but they become demonic when they encompass an entire country, extend beyond 15 hours, and occur twice in three months. Then they become a blackout.
That’s exactly what happened on January 23. What was unusual about this blackout was that it came within months of a previous one in October and that it occurred in the winter when demand is less than half that of the summer.
Pakistan’s electric grid has been lurching from crisis to crisis going back decades. On January 3, a cabinet minister, who was interestingly the minister for defence and not for energy, asked businesses to close early, saying that the nation had to conserve fuel, much of which is imported. Shopping malls, restaurants and hotels were told to close by 8:30pm and wedding halls by 10:00pm. The minister claimed that this measure would save the nation Rs62 billion.
An announcement was issued, saying that Pakistan would stop making incandescent light bulbs and inefficient electric fans. It claimed that by ending the production of incandescent light bulbs, the nation would save Rs22bn. Streetlights would be operated for only half the time, saving another Rs92bn. This measure may be imprudent since street lights promote safe driving and deter crime. The government also announced a 30 per cent reduction in electricity use by federal buildings.
Loadshedding, though widely despised, is nothing new in Pakistan or in several developing countries. Businesses install backup generators and so do households that can afford them. But they are expensive and, in most cases, run on imported fuel.
While it may appear to be a cost-saving measure, loadshedding takes a toll on the economy. The World Bank estimates that it may have lowered Pakistan’s GDP by $18bn or 6.5pc in 2015. It says that reforms could save $8.4bn in business losses and increase household incomes by $4.5bn a year.
Loadshedding tends to happen during periods of high demand. So why was there a countrywide outage in January?
What caused the Jan 23 outage?
According to one report, as night set in, the grid operators just shut the power plants to save imported fuel. It backfired. When they tried to wake up the generators the next morning, an imbalance occurred, violating the frequency. This forced an automatic shutdown of some generating units, leading to a collapse of the grid. Why did the grid operators not anticipate this?
According to another report, it was difficult to get some of the power plants started in a timely fashion, especially coal and nuclear plants. After saying that power had been restored throughout the country, the energy minister noted that approximately 6,600MW of coal and 3,500MW of nuclear plants would take an estimated 48-72 hours to restart. He added, “Until these plants start running, there will be limited load management, excluding industrial users.”
This was an unfortunate use of the term load management. It is not the same as power rationing. The energy minister tried to downplay the blackout, saying it was not a major crisis. In fact, it was quite possibly the worst crisis to hit the grid in the nation’s history.
There is a lot that we don’t know about what happened on January 23. The government should conduct a thorough inquiry and publish it so it does not happen again. There is no reference to the previous blackout on the websites of Water and Power Development Authority (Wapda) and National Electric Power Regulatory Authority (Nepra). Wapda’s Annual Report says little about the power shortages broadly speaking. Nepra’s State of Industry Report barely touches on the topic.
The National Electricity Policy, 2021, says Pakistan’s overarching goal is to provide access to affordable, secure and sustainable energy, “attainment of which will crystallise the vision of the government for the power sector”. The Pakistan Economic Survey 2021-22 says that the government intends to completely eliminate loadshedding, decrease the cost of electricity transmission and distribution losses, increase revenue collection and reduce bureaucratic delays.
Pakistan’s energy mix
How will these goals be achieved? No details are provided. The nationwide outage is a symptom of a deeper malaise. Electricity generation is heavily dependent on imported fossil fuels. Imported liquefied natural gas and piped gas provide 25-30pc of the total natural gas consumed nationally. Coal, a really dirty fuel, is used for electricity generation and around 75pc of that is being imported.
About two-thirds of the power comes from fossil fuels, a quarter from hydro, an eighth from nuclear, and a pittance — 3pc — from renewable energy such as wind, solar and biomass. New wind and solar power projects cost far less to build and run than fossil fuel plants. They also reduce dependence on fuel imports. More importantly, they help to minimise the carbon emissions coming from power generation.
In 2019, the federal government took a step in that direction by introducing the Alternative and Renewable Energy Policy to assist and promote the development of renewable resources in the country. The main objective of the policy was to provide a supportive environment for renewable power projects and increase the share of green energy capacity to 20pc by 2025 and 30pc by 2030 by attracting private capital. However, progress in this regard has been abysmally slow.
Renewable forms of energy can all be produced domestically. Pakistan can generate 50,000MW from wind. Currently, only 1,335MW is installed. Pakistan’s installed solar capacity is 600MW, only 1.4pc of the total capacity.
The World Bank noted that there was a silver lining to loadshedding in the country, which is “the immediate implementation of competitive bidding for new solar and wind capacity. For the last few years, the dominant narrative around the electricity sector has been one of ‘surplus capacity’, which has been used to justify postponing the procurement of new solar and wind. Considering the heavy reliance on expensive fossil fuels, Pakistan would be saving money right now if it had been more ambitious in the past, even allowing for capacity payments.” It added that Pakistan could get up to 20pc of its power capacity from variable renewable energy by simply focusing on existing substations.
The seven-point agenda
Based on the factors identified above, here’s a seven-point agenda for the government’s consideration. It is based on my experience working as an energy economist on six continents over the past four decades, and on my reading of a few key documents pertaining to Pakistan’s electricity policy.
First, on the supply side, move generation towards renewable energy resources, all of which are locally sourced, don’t drain the balance of payments, and are clean. These include wind, solar and biomass.
Second, on the consumption side, institute strict energy efficiency standards for appliances and construction practices for buildings. Provide rebates and low-interest financing to encourage the purchase of efficient appliances. Why are incandescent light bulbs and inefficient fans even being sold? There is vast literature on the subject and many successful examples to emulate from throughout the globe.
Third, stop subsidising the consumption of energy. That promotes wasteful use. If affordability is an issue, provide financial assistance to the affected population segments.
Fourth, modernise tariffs, so power is cheaper when it is plentiful, and more expensive when the system is under stress. There are plenty of examples from around the globe, e.g., here and here.
Fifth, incentivise customers to install solar panels, as was mentioned by the World Bank. According to the Economic Survey, as 2022 began, there were only 18,000 solar installations, representing 306MW. There are nearly 40 million households in Pakistan.
Compare this to tiny Hawaii, at about the same latitude with similar solar potential as Karachi, and with a population of under two million, which has twice this amount of solar capacity on customer premises.
The World Bank has stated that distributed solar — and in particular rooftop solar — can play a significant role in meeting growing electricity demand: “As highlighted by the recent installation of 20MW of rooftop solar on over 30 hospitals in Sindh under a World Bank-financed project, rooftop solar can be delivered quickly (in 6-12 months) and at relatively low cost (as low as $530 per installed kilowatt of capacity, although costs have risen more recently), while avoiding the need for additional transmission and distribution infrastructure.” When coupled with batteries, rooftop solar can provide continuous power for emergency facilities like hospitals when grid outages occur.
Sixth, promote resilience during blackouts by pairing solar panels with batteries. This is being done widely around the globe, and not just in developed countries like the US. It is also being done in developing countries such as South Africa. Installing backup generators that consume fossil fuels is not a sustainable solution.
Seventh, shelve the plans to electrify transportation. Electric vehicles (EVs) lose their glamour if they are powered by electricity generated from dirty, imported fuels.
To conclude, Pakistan’s electricity grid has failed repeatedly to meet the needs of its growing economy. Loadshedding, outages and blackouts inconvenience the citizens, harm its businesses, and deter foreign investment.
Pakistan has arrived at a fork in the road. It can either continue with its current electricity policies, which are costly, disruptive and unsustainable. Or it can modernise its policies, invest in new-generation technologies, and upgrade its transmission and distribution infrastructure. The citizens deserve a grid that caters to the needs of the 21st century. Let’s give it to them.
Header photo: Workers shape glass pieces on a machine in a workshop, a day after a countrywide power breakdown, in Karachi. — Reuters/File
#Pakistans #recurring #electricity #crises #sevenpoint #action #plan #Business