Is Pakistan Ready For Clean Energy Revolution?

[Riaz Haq]

Rising worries about climate change have recently made me join the Clean Energy Revolution by installing rooftop solar and leasing an electric car. What is the Clean Energy Revolution? It is the growing use of solar panels, battery storage and electric vehicles to reduce carbon emissions. Is Pakistan ready to join the Clean Energy Revolution?

Tesla Surpasses China's BYD in EV Sales. Courtesy Electrek

Tesla Electric Cars:

Silicon Valley is at the forefront of this clean energy revolution led by Tesla. Tesla is more than an electric car company; the company also supplies solar panels and batteries. Other automakers are also taking their cues from Tesla.  China's BYD Auto has only recently been surpassed by Tesla in production volumes. Auto giants General Motors and BMW are both building electric cars and planning to build "gigafactories" like Tesla's to manufacture battery packs for vehicles and homes. Pakistan is building up renewable power generation capacity. The country has also recently announced its National Electric Vehicle Policy that offers incentives to transition to clean energy.

Bloomberg estimates that Batteries and electric transmission account for about 40% of passenger cars’ costs. European demand is met by mainly Japanese and South Korean battery makers like Panasonic, LG Chem Ltd. and Samsung SDI Co. In the U.S., Tesla has built its own battery cells at its Gigafactory to manage costs and satisfy demand for the cars it produces. Chinese demand for battery packs is met by BYD.

Battery Backed Renewable Energy Costs:

High-capacity battery pack costs have dropped nearly 40% since 2015, according to Wood Mackenzie data as reported by Wall Street Journal. The prices of lithium and vanadium—two of several key raw materials that are used in such batteries—also have declined over the past year or so.

Battery storage costs have fallen nearly 90% in the past decade, according to NextEra Energy.  Cost reductions are expected to continue to only $8 to $14 per MW-hour by 2020, or about a penny per kW-hour. For perspective, the average kW-hour of electricity costs about 13 cents for retail users.

NextEra Energy forecasts that post-2023, wind plus energy storage costs will be $20 to $30 per MW-hour, and solar plus energy storage will be $30 to $40 per MW-hour. Natural gas is expected to match the solar-plus-storage costs.

Pakistan Electric Vehicle Policy:

Pakistan has a low level of motorization with just 9% of the households owning a car. Nearly half of all households own a motorcycle. Motorization rates in the country have tripled over the last decade and a half, resulting in nearly 40% of all emissions coming from vehicles. Concerns about climate change and environmental pollution have forced the government to to take a number of actions ranging from adoption of Euro6 emission standards for new vehicles with internal combustion engines (ICE) since 2015 and announcement of a national electric vehicle (EV) policy this year.

Private vehicle ownership in Pakistan has risen sharply over the last 4 years. More than 9% of households now own cars, up from 6% in 2015. Motorcycle ownership has jumped from 41% of households in 2015 to 53% now, according to data released by Federal Bureau of Statistics (FBS) recently. There are 32.2 million households in Pakistan, according to 2017 Census.

Vehicle Ownership in Pakistan. Source: PBS

Pakistan's National EV Policy is a forward looking step needed to deal with climate concerns from growing transport sector emissions with rapidly rising vehicle ownership. It offers tax incentives for buyers and sellers. It also focuses on development of nationwide charging infrastructure to ease adoption of electric vehicles.

Low Carbon Energy Growth:

In recent years,  Pakistan government has introduced a number of supportive policies, including feed-in tariffs and a net metering program to incentivize renewables. These have been fairly successful, and renewables capacity in the country surged substantially over 2018 when 1245 MW was added, of which 826MW was contributed by the solar sector, according to Fitch Solutions.

Non-Hydro Renewables in Pakistan. Source: Fitch Solutions

Pakistan’s Alternative Energy Development Board (AEDB) recently signed deals for projects that will see the country expand its wind power capacity by 560 MW.  Fitch Solutions forecasts Pakistan's solar capacity to grow by an annual average of 9.4% between 2019-2028, taking total capacity over 3.8GW by the end of our forecast period.

Sindh government has recently signed a deal for 400MW solar park at Manjhand, 20MW rooftop solar systems on public sector buildings in Karachi and Hyderabad, and 200,000 solar home systems for remote areas in 10 districts of the province. The project is estimated to cost USD105million, with the World Bank funding USD100 million.

The biggest and most important source of low-carbon energy in Pakistan is its hydroelectric power plants. Pakistan ranked third in the world by adding nearly 2,500 MW of hydropower in 2018, according to Hydropower Status Report 2019.  China added the most capacity with the installation of 8,540 megawatts, followed by Brazil (3,866 MW), Pakistan (2,487 MW), Turkey (1,085 MW), Angola (668 MW), Tajikistan (605 MW), Ecuador (556 MW), India (535 MW), Norway (419 MW) and Canada (401 MW).

New Installed Hydroelectric Power Capacity in 2018. Source: Hydrowo...

Hydropower now makes up about 28% of the total installed capacity of 33,836 MW as of February, 2019.   WAPDA reports contributing 25.63 billion units of hydroelectricity to the national grid during the year, “despite the fact that water flows in 2018 remained historically low.” This contribution “greatly helped the country in meeting electricity needs and lowering the electricity tariff for the consumers.”

Chinese BYD in Pakistan:

Multiple media reports suggest that China's BYD is about to enter Pakistan market following the announcement of Pakistan National EV Policy.   These reports indicate that Toyota, one of the largest automakers in Pakistan, has signed a deal with BYD to manufacture electric vehicles.

Other reports indicate that Pakistan's Rahmat Group is in talks with BYD to set up an electric vehicle plant at Nooriabad in Sindh province.

Minister for Science and Technology Fawad Chaudhry has claimed that in three years Pakistan will become the first country to manufacture electric buses, which will be driven by an electric motor and obtains energy from on-board batteries.

Summary: 

It appears that Pakistan is starting to get serious about joining the Clean Energy Revolution to deal with rising climate change concerns. The country has set targets for renewable energy growth and announced National Electric Vehicle Policy.  In recent years, Pakistan government has introduced a number of supportive policies, including feed-in tariffs and a net metering program to incentivize renewables. These have been fairly successful, and renewables capacity in the country surged substantially over 2018 when 1245 MW was added, of which 826MW was contributed by the solar sector, according to Fitch Solutions.  High-capacity battery pack costs have dropped nearly 40% since 2015, according to Wood Mackenzie data as reported by Wall Street Journal.  Cost reductions are expected to continue to only $8 to $14 per MW-hour by 2020, or about a penny per kW-hour. While production and use of renewable energy are growing, the electric vehicles in Pakistan have yet to find traction. Hopefully, the National EV policy will encourage production and adoption of electric vehicles in the country.

Related Links:

Haq's Musings

South Asia Investor Review

Pakistan Electric Vehicle Policy

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Recurring Cycles of Drought and Floods in Pakistan

Pakistan's Response to Climate Change

Massive Oil and Gas Discovery in Pakistan: Hype vs Reality

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Growing Water Scarcity in Pakistan

China-Pakistan Economic Corridor

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Riaz Haq's YouTube Channel

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[Riaz Haq]

Illuminating Pakistan: Leading solar provider commit to dig deep PV market--China Economic Net



http://en.ce.cn/Insight/202405/31/t20240531_39022443.shtml

LAHORE, May. 31 (Gwadar Pro)– “Today, LONGi’s footprint in Pakistan is around 5GW. I believe we are well positioned to seize such an opportunity to further our efforts towards a green future for Pakistan.”

In recent months, clean energy has experienced a new period of rapid growth, with global renewable energy capacity increasing by 50 percent in 2023 compared to the previous year. Pakistan is committed to becoming an important renewable energy development hub in South Asia and the entire Asian region, and is vigorously promoting green transformation at the national level.

As report goes, the Sindh government lately announced to provide solar systems to 200,000 households across the province, including 50,000 homes in Karachi. “A total of 6,656 solar systems will be distributed in each district of the province,” the Director of Sindh Solar Energy has confirmed. Ali Majid, Pakistan General Manager of leading solar solutions provider LONGi, believes that it is undoubtedly good news for Pakistan’s photovoltaic industry, specifically, for Chinese PV companies that have been deeply involved in the local market.

The systems will include solar panels, charge controllers, and batteries. Currently, Sindh generates 400 megawatts of electricity from solar energy. This project is expected to significantly increase solar power generation in the province.

“Nestled in a region blessed with ample sunlight, Pakistan boasts approximately 2.9 million MW of solar power potential,” Ali told in an interview with Gwadar Pro. “And while the initial cost of solar technology has been a deterrent, the decreasing global cost is making it more economically viable for Pakistan.”

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Pakistan - Renewable Energy

https://www.trade.gov/country-commercial-guides/pakistan-renewable-...

According to National Electric Power Regulatory Authority’s (NEPRA) 2022 yearly report, Pakistan’s total installed power generation capacity is 43,775 MW, of which 59% of energy comes from thermal (fossil fuels), 25% from hydro, 7% from renewable (wind, solar and biomass), and 9% from nuclear.

Wind data, provided by Pakistan's Meteorological Department, measures Pakistan's coastal belt at 60km (Gharo-Keti Bandar) and 180km long, with an exploitable potential of 50,000MW of electricity generation through wind turbines. Currently, 36 private wind projects are operating, producing approximately 1845MW.

Small hydropower projects are mainly located in remote areas of Pakistan particularly the North of the country. Recently, the GoP has identified new generation requirements by capacity, fuel technology, and utilizing indigenous resources for power generation by announcing the Indicative Generation Capacity Expansion Plan (IGCEP). This plan aims to add 13,000 MW of hydropower capacity to the current 9000 MW capacity by 2030.

According to the Private Power & Infrastructure Board (PPIB) of the Ministry of Energy, seven solar projects of 530 MW are operational and supplying electricity to the national grid.

With the rising costs of electricity in Pakistan and an unreliable grid supply, more industries and commercial organizations are turning to captive solar solutions. There has been a strong surge in domestic installation of rooftop photovoltaic panels in larger cities. For projects under 1 MW, net metering regulations came into effect in September 2015. The current state of the energy sector is promising for growth in solar power in the future. given rising fossil fuel prices.

[Riaz Haq]

New players eye Pakistan’s growing hybrid, electric vehicles market

https://www.dawn.com/news/1827302

As the auto market continues to grow in Pakistan, new players are setting their sights on introducing hybrid as well as electric vehicles (EVs) in the country, and one of the largest automakers has announced its entry into Pakistan.

The BYD Group of China has recently announced its entry into the passenger vehicle market in Pakistan in collaboration with Mega Conglomerate Pvt Ltd, the parent company of Hub Power and Haleeb Foods.

During a signing ceremony recently held in China, Aly Khan, executive director of Mega, highlighted plans to promote EV adoption in Pakistan.”

He stated that three BYD showrooms would be established in Karachi, Lahore, and Islamabad in 2024. The move is expected to accelerate the electrification of Pakistan’s automotive industry, which has largely been based on petroleum fuel.

Meanwhile, a senior official of the Ministry of Industries and Production said that BYD and Mega have not applied for the licence to establish an assembly plant in Pakistan. It is more likely that the company and the local partner would import the vehicles into Pakistan, as other EVs, including some European brands, are being sold in the country.

There are several models of EVs and hybrid electric cars in the country, but currently, only the Indus Motor Company is manufacturing a hybrid electric vehicle (HEV) — the Toyota Corolla Cross, while two new entrants are assembling hybrid vehicles.

Ali Asghar Jamali, chief executive officer of Indus Motor Company, said that the auto sector was transforming towards reducing dependency on fossil fuels, which was especially important in countries where petroleum fuel was imported.

However, Mr Jamali added that, considering Pakistan’s current energy landscape, there are challenges in introducing battery electric vehicles (BEVs), as there is heavy reliance on petroleum fuel, which hinders the immediate adoption of BEVs.

“The HEV technology presents a practical and efficient solution in the current scenario, as electricity and electric chargers are not available everywhere,” he added.

Possibly due to these infrastructure hurdles, mostly related to the lack of charging ports and continuous availability of electricity, the National Electric Vehicle policy introduced in November 2019 has failed to attract any single four-wheeler EV assembler in the country.

Responding to the query, Asim Ayaz of Engineering Development Board, an attached department of the Ministry of Industries and Production, said that 34 licences have been obtained by two and three-wheeler manufacturers.

He acknowledged that issues related to the launch of EV vehicles in the country, such as the lack of financing for customers as EVs are more expensive due to the higher cost of batteries, but added that the ministry is proposing to have an EV charging station at every gas station to enhance the availability of charging options.

Two local players, Haval of Sazgar Engineering Works Ltd, and Hyundai Nishat Motors, are already assembling hybrid vehicles, while the third local player is also set to enter the non-conventional vehicle market of Pakistan on a larger scale.

Since they have the grace period up to June 2026 under the Greenfield option, these companies were only assembling vehicles in the country.

Apart from cars, Sazgar is a key player in manufacturing electric auto rickshaws in the country, and in late 2022, Haval introduced Pakistan’s first locally assembled hybrid electric vehicle. Later in October 2023, Hyundai Nishat introduced its hybrid car.

On the other hand, MG Pakistan has decided to enter the market on a larger scale with all three categories of the new energy vehicle (NEV) class.

These include hybrid vehicles that have inbuilt charging, the other category is the plug-in charging where the vehicles operate on fossil fuel and have the option for plug-in charging too in case of fuel shortage, and the third category is the electric vehicle.

[Riaz Haq]

K-Electric to Double Pakistan's Solar Energy Capacity in Next 2 Years

https://propakistani.pk/2024/08/19/k-electric-to-double-pakistans-s...

K-Electric Limited plans to add 640 megawatts of clean energy to its portfolio within the next two years which would double Pakistan’s solar energy capacity, reported Bloomberg.

Chief Strategy Officer Shahab Qader Khan said the bidding process for this begins on August 19 (today) and will close next month. The projects will include 200 megawatts of hybrid solar wind generation.

Solar energy makes up just 1 percent of the national energy mix, and K-Electric wants to alleviate some of the prevalent burden of electricity bills on residential consumers by reducing the country’s dependence on expensive fuel imports.

Looking ahead, K-Electric plans to add 1,200 megawatts of renewable energy over the next five years, while scaling back on costly energy sources like liquefied natural gas and fuel oil.

Pakistan currently faces high electricity costs due to heavy reliance on fossil fuel imports. It is pertinent to mention that monthly power bills have surged by 155 percent since 2021 and now exceed rent expenses for many households across the country.