Tag: leadership-first

Does the impact of electric vehicles extend beyond the transport sector?

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According to a European Union report, “The transport sector causes 28% of the total CO2 emissions, wherein the road transport contributes a huge percentage of over 70% of these emissions”. This translates into global warming, disastrous climate change, and destruction on all scales of existence in the long run. The challenge is to keep the roads running while eliminating the CO2 emissions from the scenario. This is exactly where the latest innovation in the go-green culture comes into play, Electric Vehicles (EVs).
The electrification of electric vehicles in a lower Green House Gas scenario (where the carbon costs are also high to support the shift) can result in a 77% reduction of emissions by 2050, in comparison to 2015 levels . Such spectacular outcomes of zero-emission EVs can play a huge part in promoting efficient movability and a sustainable transport model.

In addition to this, Electric Vehicles have a simple framework with a compact engine and are cost-effective in terms of maintenance as compared to traditional combustion vehicles. EVs can be charged at home or even at parking spots with charging stations. They are user-friendly requiring no switching of gears, zero vibration, and no sense of fuel smell.
Considering this ground-breaking innovation, Reon Energy has decided to tap into this segment and play its part to protect the environment against all odds. Reon Energy has joined hands with Redco International in Qatar to create the first, one-of-its-kind, solar bus charging depot in the Middle East. It is a 5.3 MW solar power project based in Lusail, Qatar. The strategic objective of the project is integration with the public transportation sector to clean energy, reduce carbon emissions and improve the climate situation in Qatar. Furthermore, the project would enable the facilitation of 23700 football fans across 241 buses during the FIFA World Cup 2022 and envisions extending beyond it.
Remarkably, this mega-scale project has broken all records and has been established as the largest bus charging station in the Guinness Book of World Records. This milestone is indeed impressive for Reon Energy, and there are many more to come. As we, at Reon, solely believe in going above and beyond across the universe of solar-generated energy to achieve the vision of a carbon-free atmosphere

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Part I: Understanding Pakistan’s Energy Crisis

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By Mujtaba Khan
Chief Executive Officer, Reon Energy Limited

Goal no.7 of UN Sustainable Development Goals(SDG7) is access to affordable, reliable, sustainable and modern energy for all. Access to energy is integral to human development in the 21st century. Of the 1.1 billion people on the planet without access to electricity, a clear majority lives in South Asia. Our own country’s power infrastructure continues to be plagued by a myriad of problems that are discussed and debated time and again.

1) Roughly 60 million people remain beyond the reach of the power grid that means they are relying on more primitive methods such as burning hazardous fuels for cooking and other needs.

Ensuring energy access to this segment will cost roughly 255b PKR (at the country average of 471 kWh per capita consumption*) annually or 2B USD just in terms of generation costs. There will be an added burden to extend the distribution and transmission network to these areas at disproportionately higher costs compared to rest of the country as this segment includes some of the most sparsely populated and difficult to reach terrains.

2) The power system remains structurally nonviable because of high transmission and distribution(T&D) costs and commercial losses are borne by the distribution companies; this is evident in the record levels of circular debt in the system.

3) Heavy reliance on imported fossil fuels creates a huge balance of payments issue for the country and this is the biggest contributor to our trade and fiscal deficits.

4) The grid-connected parts of the country continue to be plagued by power shortages (9GW at its peak in June 2018) that continues to handicap both consumers and industry.

5) Our electricity tariffs are the highest in the region since good customers are bearing the overall costs of all the inefficiencies across generation, transmission, and distribution. Moreover, the recent trend of rising commodity prices such as RFO and coal can cause a further tariff escalation for everyone.

6) Our electricity tariffs don’t reflect the overall cost of externalities from power generation e.g. healthcare and environmental costs of burning fossil fuels. Recent reports from neighboring countries put just the healthcare costs from coal generation between 4.5c – 7.5c per kWh. A study on the health impact of coal-based power generation in the US has found that coal contributes to 4–5 of leading causes of mortality in the US including heart disease, cancer, stroke, and chronic respiratory diseases.

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In summary, we need more power, at better rates, and at fairer pricing to make it available for everyone in the country. Ensuring this by 2030(SDG7) is crucial to creating a more equitable society as per the new government’s manifesto. In Part II of this blog, I will cover a set of policy choices and solutions that are currently available to us to solve these problems.

* Source: 2014 WB IBRD. Actual per capita consumption is much higher considering a large chunk of overall supply is through self-generation and the 471 kWh number only covers 70% of the population.
^ 70.9% losses 26.71 MTOE of fuel used and 7.78MTOE of electricity received by consumers in 2016/17. Compare that to 62% efficiency of combined cycle plants and standard T&D losses of ~6% in the developed world

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Part IIA: Resolving Pakistan’s Energy Crisis – The Economic Argument

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By Mujtaba Khan
Chief Executive Officer, Reon Energy

I’m writing this blog just a few days after publication of the UN IPCC(Intergovernmental Panel on Climate Change) report on the impacts of warming of 1.5 °C and beyond and thus it deserves a mention here. The report extensively covers various mitigating strategies for the wider world to stave off the severest of consequences. While the impact of overshooting 1.5 °C is a severe threat to us, this also presents us with a unique opportunity to participate in the global re-industrialization in a meaningful way. I’ll share detailed findings and implications of the IPCC report in a follow-up blog.

On the domestic front, there’s no doubt that our country is in dire need of an integrated plan to address the energy problems as discussed in Part IUnderstanding Pakistan’s Energy Crisis of my blog. PTI’s energy manifesto had a lot of positives to address these problems including:

 

  • Opening of electricity markets,
  • Promoting indigenous resources, and
  • Distributed solar based generation for off-grid electrification.

However, I believe that this agenda needs to be bolder and more imaginative so we don’t lose this once in a generation opportunity of leapfrogging to the ranks of more technologically advanced nations in energy management.

Looking at the country rankings in energy efficiency it’s apparent that the most efficient countries are also the ones investing most into sustainable energy. It’s led by the usual suspects i.e. Germany and the rest of the EU, followed by the US, China, and India. While there might be a number of reasons why this is the case, I will argue that it’s primarily based on hard economics. According to one estimate, the economic costs of indoor and outdoor pollution for our neighboring China and India were 10% and 7.69% respectively in 2013. When you take this humongous costs into account, their sizable investments in renewable power (126.6B USD and 10.1B USD for China and India respectively) start to make sense. Any solutions we pursue must take into account the economic costs of burning fossil fuels.

Therefore, I believe that our energy problems can largely be addressed by a two-pronged approach:

 

  • Transitioning all our new generation projects to cheaper and 100% renewable power with at least 30% mix from distributed generation
  • Promoting Energy Efficiency across all ends of the value chain from more efficient generation to lower T&D losses and right down to more efficient appliances at the consumer end.

The graph beneath depicts the energy generation round the clock from renewable energy sources primarily Wind, Water, and Solar power (WWS). There’s now widespread acceptance that across the three natural sources of WWS our country has more than enough potential to cover its energy needs e.g. just 1% of Pakistan’s landmass at 7960 sq km can host up to 655 GW of solar capacity and generate 787 TWh of power compared to 85.9 TWh total consumption. So once batteries become cheap everything could be on solar plus batteries including transport. Wind potential in the coastal corridors of Gharo and Jhimpur alone is roughly 50GW.

Clean Electricity 24/7

Source: Inspired by Joule report on 100% Clean and Renewable Wind, Water, and Sunlight All-Sector Energy Road maps for 139 Countries of the World.

Couple that with mostly stable 41 GW of hydel potential to act as storage for peak load, we have more than enough renewable capacity available to serve us for many generations to come.

Commercial case for renewable has never been stronger. Utility-scale tariffs for Wind and Solar have been declining globally`. Latest tariff awards from NEPRA are 4.952c for Wind and 5.2c for Solar projects making them also the cheapest sources available locally. By implementing some of the measures suggested below I believe tariffs closer to the ones in neighboring India(3.74c and 3.3c for Wind and Solar) are achievable.

On a distributed scale, solar power now beats conventional sources by a margin. This has been made possible because of a) Green financing from State Bank that allows businesses and consumers to borrow at sub-commercial rates for up to 10 years b)Increase in price of crude and other imported fuels accentuated by the steep depreciation the USD / PKR exchange rate, and c)Further drop in the price of solar panels due to demand crunch in China and the ongoing trade war with the US.

Distributed Solar vs Conventional Sources

Source: Reon Energy Commercial Team.

So renewable power isn’t just clean and abundant but also the most economical source available both at utility and distributed scale without the health and environmental side effects.

The only argument against Wind and Solar power at utility scale is the intermittency. Firstly, we have more than enough stable power from Hydel and the LNG plants` available to us to balance the grid. Secondly, advanced economies where they’ve had to resolve this issue are at much higher levels of renewable integration (Germany 36.2%, California 30% for 2017) compared to Pakistan at a meager 1%. For Pakistan to reach that level by 2030 will require a minimum of 47 GW* of the renewable installed base as compared to roughly 1 GW in 2017.

The policies and choices of the current govt. will have consequences for generations to come. The first IPP wave in 1994 resulted in expensive Furnace Oil based generation introduced into the system that focused all our investment and resources towards a fuel source with a short shelf life. The fundamental question for the policy makers to answer is “Do we want to repeat mistakes of the past by supporting dead-end technologies OR Do we want to participate meaningfully in the global re-industrialization by developing a renewable industrial base in the country? If the answer is latter then part b focuses on the policies to develop that future.

^Sources: American Council for Energy-Efficient Economy, World Economic Forum Global Energy Architecture Performance Index.

`1.79c Solar tariff achieved by Masdar and EDF for Sakaka Solar Power Project in Saudi Arabia, 1.77c Wind tariff achieved by ENEL in Mexico.

*Source: Pakistan Institute of Development Economics, The demand for electricity in Pakistan is expected to grow 8 fold by 2030 will require 162GW of installed base with the current mix. Actual renewable integration for a 30% contribution could be much higher.

‘Source: World Bank Cost of Air Pollution. http://documents.worldbank.org/curated/en/781521473177013155/pdf/108141-REVISED-Cost-of-PollutionWebCORRECTEDfile.pdf

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Part IIB: Resolving Pakistan’s Energy Crisis – Policy Recommendations

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Now that I’ve laid out the economic and technical argument in favor of renewable power in my last piece, let me highlight some of the key policy measures that if implemented can help the new government to move towards a much more inclusive, efficient and economically viable energy infrastructure.

1. As a first step, we have to start measuring and publishing the proportion of power from renewable sources daily and energy efficiency on a periodic basis like in developed countries. Annual targets could then be set for the integration of more renewable and higher levels of energy efficiency across the board. The govt should also replace generation from less efficient fossil fuel based plants such as those on furnace oil with renewable power as at the current crude price ($85 USD).

2. Priority for the new govt. has to be our 60 million~ off-grid population, it’s mind-boggling that in our 70 odd years of existence, our energy policymakers have largely ignored 30% of the population. The govt should immediately set up a Rural Electrification Board completely separate from the existing power authorities on the lines of REB in neighboring Bangladesh’. This body could setup self-regulating co-operatives in off-grid clusters and implement island mini-grids powered by renewable such as solar, biomass, biogas, etc In more sparsely populated areas, solar and battery hybrid solutions can be made available on easy payment terms to villagers. Aggressive targets leading to a 100% electrification by 2030 is a mandatory goal for a more equitable society.

3. To ensure we’re buying renewable power at the most economical price point, auction mechanism has to be implemented for Solar and Wind Power with immediate effect starting with hybrid opportunities i.e. combination of Wind, Water, and Solar in Thatta and KPK. The number of Megawatts (MWs) to be auctioned must be in-line with the annual targets set by the govt. This could help decrease the tariffs for Wind and Solar Power further by 15-20% (Based on an average of 40 other countries where auctions have been implemented for renewable power). Taking a lead from The Konya Auction in Turkey (1 GW)* and SECI Auction (10 GW)` in India*, only companies with a high degree of indigenization through local manufacturing and services should be pre-qualified to participate.

4. In order to bring the cost of generation down, govt. should accelerate the development of a wholesale power market in the country. At the same time, the practice of awarding 20+ years PPA at a guaranteed capacity payment should be abolished and a maximum term of 10 years should be introduced under a new power policy. We should be encouraging more entrepreneurs with the appetite to sell power in a wholesale market after the Power Purchase Agreement(PPA) term expires.

5. To cover for the environmental and healthcare costs, the government should make it mandatory for a portion of the revenues from fossil fuel plants including RFO, coal, diesel, etc to be re-invested into clean renewable power and health care especially in rural and off-grid areas in Sindh, KPK, and Baluchistan. For fairness, this should start with areas closer to the mining and power generation projects. Island mini-grids 100% powered by renewable is the most cost-effective and sustainable solution for these largely off-grid communities.

6. For more rooftop solar, govt should promote Community Schemes through reverse auctions facilitated by AEDB and local govts. Under such a scheme, homeowners could participate in auctions conducted by AEDB. Similar schemes in large cities like London have significantly improved solar uptake and has helped reduce costs by 15-20%. To encourage this scheme all govt buildings and community shared structures should be allowed to participate in local auctions.

7. A streamlined net-metering process is critical for taking up of distributed solar. DISCOs must set annual net-metering targets and address a certain percentage of their new demand from distributed solar systems. This should include solar heating to reduce the load on gas.

8. State Bank’s Green Financing Scheme is a wonderful incentive and should be extended to 15 years for IPPs, businesses and residential customers. This will further decrease the immediate operating costs for the customer.

 

9. Energy Storage is incredibly important for making the grid more resilient especially for integrating more renewable power. In light of the ever declining battery prices, govt should offer a special peak tariff to customers who install storage for peak demand shaving. These batteries can be charged by excess renewable power during the day and consumed in the night to curtail peak demand.

10. To avoid idle capacity due to transmission bottlenecks, the transmission sector should be opened up to private investment. The National Transmission Company (NTDC) has the impossible job of connecting every single IPP coming on stream and that’s resulting in a huge amount of underutilized generation capacity in the system.

11. Energy efficiency is the cheapest source of energy. More aggressive targets should be set and enforced at transmission, distribution and consumption end. This can only be achieved through digitization of the grid including smart metering of consumers. Our overall T&D losses of 17.5% are too high compared to Bangladesh at 11.4%. Utilities could also be charged with promoting energy efficiency within their geographical boundaries by promoting more efficient appliances.

12. Finally, consumers should be incentivized to invest in energy efficient appliances through credits, green building codes should be enforced within the construction industry and hybrids and Electric Vehicles(EV) should be promoted to enhance fuel efficiency in the transport sector.

I believe if the above-mentioned policy steps are implemented efficiently, they will help make power available to a wider number of people, lower the overall costs for the whole country and will also make our overall system more sustainable. It will also reduce the load on our already overburdened grid allowing it to serve existing customers better. Moreover, integration of indigenous renewable power from Wind, Water and Solar on an aggressive scale will significantly reduce our import bill and will boost our image in the international community as one of the front-line states in the war against climate change and global warming. ‘More on Bangladesh’ Rural Electrification Board, http://en.banglapedia.org/index.php?title=Rural_Electrification_Board *https://www.pv-magazine.com/2017/03/20/turkeys-1-gw-konya-solar-pv-tender-concludes-at-0-0699-per-kwh/ `https://economictimes.indiatimes.com/industry/energy/power/seci-extends-deadline-for-10-gw-solar-tender-to-november-12/articleshow/66168017.cms

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Are Solar Microgrids a Solution to Pakistan’s Energy Crisis?

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The IEA (International Energy Agency) survey suggests that more than 20 million Pakistanis have no access to electricity. Besides, another 75 million Pakistanis with access to grids are forced to live without power for an average of 15 hours a day due to severe load shedding. With the country facing an estimated 4,000-5,000 MW of power shortage, according to the Ministry of Water & Power, it does not come as a surprise that households located in off-grid and bad grid areas tend to rely heavily upon gas and diesel gensets to meet their daily energy needs.

How Can Microgrids Solve the Problem?

For the majority of the off-grid communities, financial restrictions and operational inefficiencies of the system further amplify the challenge of electrification for Distribution Companies (DISCOS). Rural set-ups with lower electricity demand and lower capacity to pay as opposed to their urban counterparts make urban centers the priority for DISCOS. Moreover, for those rural set-ups connected to the grid, insufficient energy access is widened due to inter-province electricity distribution and rural-urban divide. In such instances, microgrids present a viable alternative to the centralized grid infrastructure. Microgrid enhances energy resilience and recovery, reduces energy costs for customers and businesses as energy is now produced near to the consumer that helps reduce line losses and theft.

 

What is a Solar Microgrid?

A solar microgrid comprises an independent power distribution unit with its own energy generation, storage solution, and demand management system. It is a compressed version of the main electrical grid used to power a smaller geographic area except that it uses solar energy to generate power and supply it to the end user. Solar microgrids can run independently of the main grid; however, in situations where a grid and microgrid co-exist, Solar could be used to provide electricity during peak hours and by charging batteries in periods of lower demand. The grid could be used to support the variable Solar supply.

 

Are There Any Successful Microgrid Models?

The Bangladesh Rural Electrification Board (BREB), established in 1977, works with the key objective of extending electricity supply in rural areas. BREB has established 77 Rural Electricity Cooperatives to implement its electrification program and continues to offer financial, technical, management support while monitoring their progress. BREB alongside has also invested in private energy generation projects in selected areas of the country injecting 600MW of electricity in the rural set-up. BREB’s success in enhancing socio-economic development in the country has received immense support from government and donor agencies.

How can it help Pakistan’s Energy Sector?

It is imperative to modernize distribution systems and introduce smarter grids to allow for the decentralization of energy generation and improve efficiency. Alongside, a rural electrification board like the one in Bangladesh must be set-up to help power the 32,000 villages’ in the country without access to the electric grid. There is also a need to develop some level of market liberalization, ownership models, and structural operations that can attract investments in the microgrid set-up. It is equally important to develop a favorable environment for private investors to procure low-cost finance at the right terms and conditions for scaling-up microgrids and to offer incentives in power generation, especially from renewable energy resources.

Certain policy and regulatory changes working with a key objective of last mile connectivity could help create a conducive environment for implementation of microgrids across Pakistan.

Certain policy and regulatory changes working with a key objective of last mile connectivity could help create a conducive environment for implementation of microgrids across Pakistan..

*According to the National Electric Power Regulatory Authority (NEPRA) State of Industry Report 2016

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Why do we need to rethink a post pandemic energy sector?

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The unexpected pandemic with its’ devastating consequences for communities and economies has upended plans and tested assumptions. While we are yet to see how the post Covid world shapes, a holistic response is needed for viewing energy, society, economy and the environment. By making clean energy transition an integral part of the public policy decisions and investment plans, especially the economic recovery packages, the government can achieve a step towards a sustainable development vision and the future.

While we did see a drop in carbon emissions globally due to a drop in economic activity, this is a short-term blip and could be followed by a rebound in emission growth post economic ramp up. Hence, making it far more essential to address energy transition in the economic bail out packages.

Key outcomes of the Clean Energy Transition

The case for renewable energy as against other traditional fuels is stronger than ever before due to the falling costs of solar photovoltaic, wind, battery technologies and Electric Vehicles(EV). The Government can provide contracts or guarantees to encourage private investors to invest into renewable sources as the volatile market conditions and Covid may distract the business leaders in the short-term.

Energy transition investments if executed well will not only create jobs and lead energy’s digital transformation in the 2021-2022 recovery phase but also would make energy affordable for the most vulnerable segments of the region. As innovation, growth and jobs shifts towards these new energy technologies, traditional power from fossil fuel sources will more rapidly become a less favorable source.

Along with costs decline in renewable energy generation and EV, insertion of cheaper renewable electricity and innovation in sectors such as steel and cement can lead to increased production of these important global materials in an efficient manner.

It’s time for energy efficiency

This calls for a coordinated effort by the public and private sectors to work on a unified plan that targets lowering carbon-intensive spending. Needless to say, if a virus could bring our economy to a standstill, we cannot fathom the damage something as severe, pervasive and irreversible as global warming can cause. The Fifth Assessment Report published by the UN Intergovernmental Panel on Climate Change (IPCC) has warned about the alarming impacts of global warming highlighting a carbon budget for future emissions below 2°C

The global pandemic has given us a chance to reset and restart.

It is essential to integrate renewable energy like wind and solar in the economic recovery packages and formulate stimulus policies that will initiate an energy transition towards a sustainable future.

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