Renewable Energy In Pakistan

Renewable Energy In Pakistan
(Potential and Prospects)
By
AMJAD ALI AWAN
Chief Executive Officer
Alternative Energy Development Board
Government of Pakistan
June 10th, 2015
Facts about PKISTAN
 190 Million People (6th most populous country)
 Pakistan is 26th Largest Economy in the world with GDP (PPP)
($ 928.43 billion) in 2015. GDP per capita is around $ 4886.27.
 Pakistan has currently Foreign Reserves of $ 17.7 billion
 With Considerably high trend of attracting FD1 ($ 52 billion in 2015)
 In Conventional technology based private power sector, Pakistan has
successfully developed 9071 MW of power (More than 40% of its power
supply mix)
 Karachi Stock Exchange (KSE) has been world’s 2nd best performing
stock market in year 2013
Facts about PKISTAN
 Pakistan is one of the World’s Largest Youth Bulge country with 48
percent population aged 15-49 and 56 percent (age 15-64) is in productive
age group.
 Literacy Rate staggers between 65-70 percent, whereas size of the
Development Program is PKR 758 billion (2015)
 We have 30 Million Internet users that will grow to 65 Million in the
next 5 years – larger than UK, Australia, South Africa and Saudi Arabia.
 Pakistan Acknowledged by the Goldman Sachs Global Economics Group
as one of the "Next Eleven (N-11)" in 2005 – a group of countries with
economies that “might have the kind of potential for global impact that
the BRICs projections highlighted, essentially an ability to match the G7
in size
RENEWABLE ENERGY POTENTIAL
 Wind:
340,000 MW (Theoretical)*
1760 MW in pipeline and abundant
potential for development
 Solar:
2,900,000 MW (Theoretical)*
 Hydro (small/mini)
3,000 MW (Approx.)
 Bagasse Cogen:
2,000 MW (Approx.)
 Waste to Energy:
1,000 MW (Approx.)
 Geothermal
Studies underway
 Alternative Fuels
Potential being determined
• Initial macro level resource maps for wind and solar developed by NREL
(USA).
• Resource mapping and spatial planning of solar , wind and biomass energy
resources has been initiated with the support of the World Bank Renewable
Energy Resource Mapping Initiative.
* Based on NREL study conducted in 2006.
NATURAL POTENTIAL OF SOLAR ENERGY
o Annual Direct Normal Solar
Radiation (for CSP) is in the range of
5 to 7.5 kWh/m2/day in most parts of
the country
o The Annual Flat Plate Tilted at
Latitude Solar Radiation (for PV) is
in the range of 6 to 7.5 kWh/m2/day in
most of most parts of the country
o Large chunks of barren lands
available which can be utilized for
large scale solar power projects
Why Renewable Technologies ?
 Short gestation period
 Relieves grid resources
Energy
Source
(Yrs)
 Energy security
 Only energy option for many rural areas (offgrid)
 Reduced dependence on Imported fuel
 Low infrastructure needs
 Environment Friendly - Mitigation of carbon
emissions
 Other benefits include:
Utilization of waste land
Employment creation and poverty alleviation
Carbon Credits
Gestation
Period
Hydel
(Large)
7 - 10
Thermal
3-5
Coal
4-5
Small
Hydro
2-3
Wind
2-3
Solar
2
Why Invest in RE Sector of Pakistan
(Snapshot of Investor Facilitation)
Resource Risk is not shifted to Project Sponsor.
Guaranteed Electricity purchase.
Grid provision is the responsibility of the Power Purchaser.
Protection against political risk & change in law.
Attractive Tariffs – Cost Plus and Upfront Tariff Regimes.
Guaranteed Return on investment is between 17% to 18% (IRR).
No Import Duties on Equipment.
Zero Sales Tax.
No Income Tax / withholding tax / turnover tax
Convertibility of PKR into USD.
Conducive Project Execution
Environment
• Renewable Energy Policy is in place, that gives thorough roadmap of
project development, procedures, incentives and defines the role of
stakeholders in a concrete way.
• Standardized security agreements (EPA and IA) for Wind, Solar and
Biomass/Bagasse Co-generation projects made available.
• Detailed resource mapping for wind, solar and biomass resources being
carried out by Energy Sector Management Assistance Program
(ESMAP) of the World Bank.
• Quality standards enforced to restrict the import of sub-standard solar
equipment being introduced.
• Framework regulations for introduction of net-metering using solar,
wind etc. being introduced
Incentives to Investors
No customs duty or sale tax for machinery equipment and spares
meant for the initial installation or for BMR and expansion of RE
Projects;
Exemption from income tax, including turnover rate tax and
withholding tax on imports.
Repatriation of equity along with dividends freely allowed, subject
to rules and regulations prescribed by the State Bank of Pakistan.
Parties may raise local and foreign finance in accordance with
regulations applicable to industry in general. GoP approval may be
required in accordance with such regulations.
Incentives to Investors - 2
Permission for power generation companies to issue corporate
registered bonds
Facilitation provided by AEDB as a one-window entity
Standard bankable project agreements available
Guaranteed Power Purchaser
Permission to issue shares at discounted prices to enable venture
capitalists to be provided higher rates of return proportionate to
the risk.
Permission to issue shares at discounted prices to enable venture
capitalists to be provided higher rates of return proportionate to
the risk.
Incentives to Investors - 3
Permission for foreign banks to underwrite the issue of
shares and bonds by private power companies (IPPs) to the
extent allowed under the laws of Pakistan.
Non-residents allowed to purchase securities issued by
Pakistani companies without the State Bank of Pakistan’s
permission, subject to prescribed rules and regulations.
Independent` rating agencies available in Pakistan to
facilitate investors in making informed decisions about the
risk and profitability of the project company’s bonds/TFCs.
WIND POWER – CURRENT STATUS
 30 Letters of Intent (1760 MW) issued (Project Execution in Progress)
 Energy Purchase Agreement (EPA) and Implementation Agreement (IA) signed
by 12 IPPs (706.4 MW)

05 projects (255.4 MW) are operational
 9 projects (500 MW) have achieved Financial Close and are under construction
 11 Projects (800 MW) have applied for the award of Tariff by National Power
Regulatory Authority (NEPRA)
 On the basis of available wind data, about 3000 MW of capacity will be
developed in the next 5 year period.
FFC Energy, 50 MW project,
Jhampir, District Thatta.
COD: May 2013
Zorlu Enerji, 56.4 MW Wind
Project, Jhampir, District Thatta.
COD: July 2013
Gharo, District Thatta, Sindh.
Expected COD: Dec 2014
Three Gorges Pakistan 50
MW Project,
Jhampir, District Thatta.
COD: Feb 2015
Tower Manufacturing Facility of
M/s CWE, China Three Gorges
Jhampir, District Thatta.
SNAPSHOT OF SOLAR MARKET
IN PAKISTAN
SOLAR POWER
On-grid:
• 31 Solar PV Letters of Intent (709.6 MW) issued by AEDB
• Upfront Tariff has been awarded to 06 IPPs by NEPRA; these projects
are required to achieve financial close by December 31, 2015
• NEPRA announced new Upfront Tariff for solar power projects on
January 22, 2015. Tariff is as follows:
1-20 MW
21-50 MW
51 -100 MW
(Rs. Per kWh)
North Region
15.27
14.89
14.75
South Region
14.4
14.28
14.15
FUTURE PROSPECTS OF SOLAR ENERGY
IN PAKISTAN
On-Grid Large Scale Solar Power Projects:
 Development of solar current on-grid
power projects - approximately 15002000 MW is planned to be added to the
National Grid by 2018

Augmentation / replacement of old
conventional power plants with solar
FUTURE PROSPECTS OF SOLAR ENERGY
IN PAKISTAN
Solar Street Lights
• Pakistan has over 500,000 Street Lights
with a sanctioned load of over 400 MW
• Replacement
with
efficient
solar
lighting system and relive the national
grid
FUTURE PROSPECTS OF SOLAR ENERGY
IN PAKISTAN
Off-Grid Solar Systems
 Approx. 60 million people in Pakistan
are without electricity
 Power Supply by solar technology as
an off-grid application is the only
option and can bring social uplift.
FUTURE PROSPECTS OF SOLAR ENERGY
IN PAKISTAN
Solar Net-Metering
 More than 22 million electricity
consumers facing energy shortage
 At least 1 million consumers being
targeted for solar net metering
systems in 2-3 years (approx. 3000
MW addition with an average system
of 3 kW)
FUTURE PROSPECTS OF SOLAR ENERGY
IN PAKISTAN
Solar Water Pumps
• 260,000 electricity operated agriculture
water pumps (tube-wells) currently
have a sanctioned load of over 2,500
MW
• 850,000 Diesel Water Pumps consume
72,000 TOE of Diesel annually
• Replacement with Solar Powered
efficient pumps can greatly reduce
burden on national grid and
Government’s expenditure on subsidies
FUTURE PROSPECTS OF SOLAR ENERGY
IN PAKISTAN
Solar Water Heating
• Piped natural gas is available to
only 22% of the population
• One third of the gas in domestic
sector is used for space heating
and water heating.
• Huge market for solar water
heating applications in domestic
and industrial sectors
What Next ?
Transforming real potential into fast track projects.
Ensuring best possible support to international investors
and donors.
Helping the achievement f green global goals relating to
mitigation of Co2 and GHG emissions and providing
sustainable base to energy economy. Hence following the
principle of : “Think Globally and Act Locally”.
Creating awareness at governmental, institutional and
consumers levels to adopt the modern energy conservation
measures at these levels
Facilitating the transfer of technology that may aid to
energy efficiency and decorbon the economy.
Thank You
WWW.AEDB.ORG