Pakistan’s energy sector requires investments totaling up to $155 billion through 2030.
ISLAMABAD: Pakistan’s energy sector needs investments ranging from US$62 billion to US$155 billion until the 2030, according to a report titled “CAREC Energy Outlook 2030”, recently released by the Asian Development Bank (ADB).
The Pakistan’s Energy Sector investment needs until 2030 vary with estimates ranging from $62 billion to $155 billion. The most significant investments are required in the power generation and energy efficiency sectors because of the rapidly growing demand and low baseline efficiency, the report added.
One of the objectives of this report is to present a detailed overview and analysis of future energy market trends in Pakistan. For this purpose, three areas were developed considering the country’s regulatory framework, technological development and consumer preferences.
The three areas include business-as-usual (projected energy supply and demand, with current energy system and policies), government commitments (projected energy supply and demand, considering individual priorities of the Government of Pakistan) and green growth (projected energy supply and demand, considering enhanced energy transition and environmental policies).
In all three areas and scenarios, the largest investments are needed ln Pakistan’s Energy Sector for the development of the country’s hydropower capacity, ranging from $11 billion to $26 billion, the report added.
Investment needs for wind and solar energy are expected to reach nearly $12 billion in the BAU scenario, $36 billion in Government Commitments scenario, and $57 billion in the Green Growth scenario, which illustrate the country’s ambitious plans for harnessing its large renewable energy potential.
Moreover, in accordance with the country’s targets for nuclear power generation, investments needed for the expansion and rehabilitation of nuclear facilities account for nearly $12 billion in the BAU scenario, $21 billion in the Government Commitments scenario, and $31 billion in the Green Growth scenario. Generation rehabilitation and expansion are the investment categories estimated to require the largest share of the total, ranging from 60 to 75 percent, or $38 billion to $115 billion, varying across scenarios.
The second biggest category is energy efficiency measures on the consumption side, requiring $12 billion in the BAU scenario, almost $21 billion in the Government Commitments scenario, and over $26 billion in the Green Growth scenario. The modernization and expansion of the power and gas grids, and the introduction of advanced metering equipment require investments of approximately $13 billion to $14 billion.
To further unlock Pakistan’s Energy Sector market for private companies, the report also proposed addressing several challenges. It said one of the key challenges is the lack of clarity regarding the categorization of resources. For example, although hydropower is generally considered a renewable energy resource across the world, the Alternative and Renewable Energy Policy has categorized hydropower sources as non-renewables.
Considering the 30 percent renewable energy target in 2030, it would be hardly possible to reach this level only via wind and solar PV sources. If hydropower were to be included in the definition of renewable energy sources, it would make reaching the stated target and introducing stronger competition more realistic. Another challenge is the lack of a detailed energy plan for the energy sector. Although the National Energy Policy has been approved, the corresponding division of roles in policymakers who would assign policy areas to all relevant stakeholders has not been completed yet.
In the current framework, sector-specific policies are developed by relevant authorities. For instance, the alternative energy policy is developed by the AEDB, whereas power generation policy is drafted by NEPRA. This not only creates uncertainty regarding the long-term direction of sector development, but also leads to unnecessary bureaucracy and delays in project implementation. – NNI