Discuss the significance of renewable energy resources for Pakistan.

Introduction

Former UN Secretary-General Ban Ki-moon described sustainable energy as "the golden thread that connects economic growth, increased social equity, and an environment that allows the world to thrive." For Pakistan, which suffered crippling load-shedding in the 2010s and now faces some of the highest electricity tariffs in the region, that thread has been badly frayed. The country imports a large share of its oil, LNG and coal, paying billions of dollars every year, while sunlight, wind and rivers remain underused. Renewable energy offers a way out of the energy crisis that is cheaper, cleaner and more secure.

Overview

Pakistan's electricity comes from a mix of imported fuels (furnace oil, LNG and coal), domestic gas, nuclear and hydropower. Hydropower provides about a quarter to a third of generation, while wind and solar remain a small share of grid capacity, although rooftop solar has grown rapidly since 2022. The country's potential is vast: the World Bank estimated that using just 0.071 percent of Pakistan's land for solar photovoltaics could meet its current electricity demand; the Gharo-Jhimpir wind corridor in Sindh has strong, steady winds; and hydropower potential is estimated at about 60,000 MW. The Alternative and Renewable Energy Policy 2019 set targets of 20 percent of capacity from non-hydro renewables by 2025 and 30 percent by 2030.

Significance of renewable energy for Pakistan

1. Energy security.

Renewables rely on local sun, wind and water rather than imported fuel, protecting Pakistan from global price shocks and supply disruptions such as the LNG shortages of 2022. (Reference: Ministry of Energy (Power Division), Indicative Generation Capacity Expansion Plan (IGCEP) 2022-31; NEPRA, State of Industry Report 2022.)

2. A lower import bill.

Petroleum products and LNG are among Pakistan's largest imports, costing well over $15 billion in some years. Replacing imported fuels with renewables saves foreign exchange and eases balance-of-payments pressure. (Reference: Pakistan Bureau of Statistics, import data by commodity; Finance Division, Pakistan Economic Survey 2022-23, chapter on energy.)

3. Cheaper electricity.

Solar and wind tariffs in competitive bids around the world, and in Pakistan's own recent projects, have fallen below the cost of imported-fuel generation. Cheaper power reduces costs for households and industry. (Reference: International Renewable Energy Agency (IRENA), Renewable Power Generation Costs in 2022; NEPRA tariff determinations for wind and solar projects.)

4. Relief from circular debt.

Expensive fuel-based generation and capacity payments are major causes of circular debt. Low-cost renewables, especially distributed solar, can reduce generation costs and subsidies over time. (Reference: Ministry of Energy (Power Division), circular debt management plan; World Bank, Pakistan Development Update, 2023.)

5. Climate commitments.

Pakistan's updated Nationally Determined Contributions (2021) commit it to 60 percent clean energy by 2030 and a conditional 50 percent reduction in projected emissions. Renewables are central to meeting these targets. (Reference: Government of Pakistan, Updated Nationally Determined Contributions, 2021.)

6. Rural electrification.

Millions of Pakistanis in remote areas of Balochistan, Sindh and the north lack reliable grid power. Off-grid solar systems and mini-hydro plants can electrify villages quickly and cheaply. (Reference: World Bank, Pakistan Off-Grid Solar Market Assessment; Pakhtunkhwa Energy Development Organization, micro-hydel programme.)

7. Jobs and local industry.

Installing, maintaining and eventually manufacturing solar panels, inverters and wind components can create skilled jobs. Rooftop solar installation alone has created a new industry across Pakistan's cities. (Reference: IRENA, Renewable Energy and Jobs: Annual Review 2023; Engineering Development Board, solar manufacturing policy.)

8. Export competitiveness.

Global buyers and the EU's Carbon Border Adjustment Mechanism increasingly require low-carbon production. Clean energy will help Pakistan's textile and other exporters retain access to European markets. (Reference: European Union, Regulation (EU) 2023/956 establishing the Carbon Border Adjustment Mechanism; Pakistan Business Council studies on CBAM.)

Obstacles and measures to harness renewable energy

1. Grid constraints.

The national grid cannot absorb large amounts of variable wind and solar power without upgraded transmission and balancing capacity. (Reference: National Transmission and Despatch Company (NTDC), Transmission System Expansion Plan.)

2. Capacity payments and policy uncertainty.

Long-term contracts with fossil-fuel IPPs oblige the government to pay for capacity even when unused, discouraging new renewable additions, while frequent policy changes deter investors. (Reference: Committee for Power Sector Audit, Circular Debt Resolution and Future Roadmap, report on IPPs, 2020.)

3. Financing.

High interest rates and currency risk raise the cost of renewable projects. Green bonds, concessional loans and blended finance are needed. (Reference: WAPDA, Green Eurobond, May 2021; State Bank of Pakistan, Green Banking Guidelines 2017.)

4. Land, storage and local manufacturing.

Large projects need land and battery storage, and dependence on imported panels exposes Pakistan to exchange-rate swings. (Reference: Engineering Development Board, policy on local manufacturing of solar equipment; IGCEP 2022-31.)

5. Competitive bidding.

Moving from cost-plus tariffs to transparent competitive auctions, as recommended by the World Bank, would lower prices sharply. (Reference: Alternative and Renewable Energy Policy 2019, competitive bidding framework; World Bank, Variable Renewable Energy Integration and Planning Study, 2020.)

6. Transmission investment.

Building new lines from the wind corridor and solar parks to load centres is essential. (Reference: NTDC, Transmission System Expansion Plan.)

7. Net metering and distributed solar.

Net metering, introduced by NEPRA in 2015, has allowed households and businesses to install rooftop solar and sell surplus power, a model that should be protected with fair rules. (Reference: NEPRA (Alternative and Renewable Energy) Distributed Generation and Net Metering Regulations 2015.)

8. Hydropower and storage.

Projects such as Diamer-Bhasha, Mohmand and Dasu would provide clean power and the storage needed to balance wind and solar. (Reference: WAPDA, Hydropower Projects status reports.)

Conclusion

As Thomas Edison is reported to have said in 1931: "I'd put my money on the sun and solar energy. What a source of power!" Nearly a century later, Pakistan has the sun, the wind and the rivers to power its future. Renewable energy can strengthen its energy security, cut its import bill, lower electricity costs, reduce circular debt, meet its climate commitments and bring power to villages. Harnessing these resources requires a stronger grid, competitive bidding, consistent policies and finance, but the reward is an energy system that serves Pakistan's people and economy rather than draining them.