Pakistan is a developing nation that has recently attracted a lot of attention from the renewable energy industry due to its lack of energy infrastructure and its dire need to plug the current energy supply gap. The wind industry has so far done the best among all types of renewable energy and there is also an impressive pipeline of wind projects ahead. This leaves many wondering if and when Pakistan's wind power sector will really soar.
Pakistan's cumulative wind power capacity at the end of October 2014 stood at just 105.9 MW. Most notably, the country has added around 100 MW in the last two months with an extra 50 MW of wind capacity expected to be connected to the grid by the end of January.
The latest addition to Pakistan’s wind farms portfolio comes from the Foundation Wind Energy Limited I and II projects, each 50 MW (consisted of Nordex machines). A source close to the projects told Renewable Energy World that "the Foundation Wind Energy Limited II farm was connected to the grid in December, while its twin farm is expected to be electrified by the end of January 2015."
Both projects are located close to each other at Kutti Kun, near the port city of Karachi at Gharo in Sindh province and will sell electricity to the national grid under 20-year take-or-pay offtake contracts. Fauji Foundation, Fauji Fertlizer Bin Qasim Ltd, the Islamic Infrastructure Fund and (only for Foundation Wind Energy II) the Tapal Group are sponsoring the projects, while the Asian Development Bank coordinates them, reassuring the sponsors that the government will continue to support both projects throughout their life cycle.
In November, Chinese state-owned hydropower developer China Three Gorges Corporation (CTG) completed the building of the long-awaited 49.5 MW Three Gorges wind farm at Jhimpir, also in Sindh province. The Three Gorges farm has 33 wind turbines of 1.5 MW each, manufactured by Goldwind, a Chinese turbine producer.
On the contrary, Pakistan’s first wind park was commissioned two years ago, in November 2012, again at the Sindh province in south-east Pakistan and boasts 49.5 MW of capacity consisting of 33 1.5-MW Nordex turbines. The plant was developed by FFC Energy Ltd (FFCEL) and was awarded a $0.161/kWh tariff in August 2010. Pakistan's Alternative Energy Development Board (AEDB), of the Ministry of Water and Energy, said the project has been funded by the International Development Bank (IDB), the Asian Development Bank (ADB) and local banks, however Syed Imran, project manager at FFC Energy, told Renewable Energy World the project has solely been funded by local banks.
In 2013, Pakistan added a further 50.4 MW of wind power capacity. Specifically, this came from 28 Vestas 1.8-MW wind turbines, installed at the Jhimpir wind farm also located at the Sindh province. The project was initially developed in 2009, adding 6 MW of capacity only. However in March 2013, the Turkish company Zorlu Enerji completed the project's second phase reaching a total 56.4 MW of installed capacity. The generated power is sold to the Pakistani national electricity company for $0.121/KWh.
The good news is that more projects are on the way. In March 2013, the U.S. Overseas Private Investment Corporation (OPIC) approved $95 million in financing a 50-MW wind farm at the Ghoro-Keti Bandar wind corridor, southeastern Pakistan. The so-called Sapphire wind farm will use 33 General Electric (GE) turbines and is expected to go into operation by the end of next year.
OPIC has also approved a credit facility of $101.5 million for an additional 49.5-MW wind energy project located at Sindh, for which GE machines are also going to be used. The project will be constructed, owned and operated by the Dewan Energy Group.
Finally, China's state-owned Harbin Electric International and NBT Wind Power Pakistan II (PVT) signed a 249.6-MW EPC contract on October 2013 to develop the largest wind farm in Pakistan using 156 GE 1.6 MW wind turbines made in GE's factory in Shenyang, China. Once completed, the wind farm will also be located in the wind corridor at Sindh Province. However, this project appears to be in doubt. GE and Harbin Electric announced last year they have terminated their joint venture covering two manufacturing plants in Zhenjiang and Shenyang, China. Fundamental differences in business priorities and strategies, said GE and Harbin Electric, led them to buying back their shares in each other's company, split operations and develop wind power as independent entities. GE failed to answer Renewable Energy World's questions how the project's progress has been affected by the partnership termination with Harbin Electric, while the latter has also not reported on the project's progress too.
Good in Theory
Pakistan has a dynamic pipeline of new wind power projects in place and this is set to continue given many foreign companies have recently announced they are also considering plans to invest in the country.
Pakistan as an interesting destination for the world's wind energy business is far from bizarre. Firstly, the country is facing an electricity crisis that has emerged as the villain of Pakistan’s economic development. Secondly, the wind resource in the coastal areas of Sindh and Baluchistan is particularly good, while a recent study funded by the US National Renewable Energy Laboratory and the US Agency for International Development estimates that Pakistan possesses 132000 MW of potential installed wind capacity. Finally, wind turbine manufacturers and project developers need urgently to expand in new markets balancing out the loss of established markets where the best sites are taken reaching a saturation point.
Reasons why Pakistan should look at renewable energy solutions to satisfy its power hunger include the country's need to decarbonise its energy sector and the renewable power plants' ability to be built relatively fast. Regarding the country's energy mix, this presently consists of about 50 percent natural gas, 30 percent oil, 8 percent coal, 11 percent hydro, 0.9 percent nuclear and only a tiny 0.1 percent renewable energy sources. The government has a target of installing 2700 MW of renewable power plants by 2015 — this is about 10 percent of its energy needs — but has utterly failed in reaching anywhere close that goal.
Bad in Practice
Reality for wind power developers is harsh though. For a start, the country lacks a feed-in tariff (FIT) scheme for wind energy. As a result, each plant needs to separately negotiate a tariff with the country's national electric power regulatory authority NEPRA and this process delays wind energy development significantly.
According to Faiz Mohammad Bhutta, chairman of Pakistan's Renewable and Alternate Energy Association (REAP), other major obstacles include technical corruption, continuous increase in inflation, very limited financing from local banks, obsolete government management system and delayed decision-making, lack of renewable energy education and a weak electricity grid that needs urgently to be upgraded.
The situation is only slightly better for solar PV, for which the government introduced a FIT program in January 2014. As a result, the first 100 MW phase of a 1 GW solar photovoltaic farm in the Bahawalpur District, Punjab is now under construction and is going to be completed in early 2015. Specifically, Chinese solar module manufacturer JA Solar has revealed that it has shipped 100 MW of PV modules to this project in Pakistan. "By completing 100 MW of shipments to Pakistan, JA Solar has achieved a new milestone in its efforts to expand globally into new markets," said JA Solar’s president, Jian Xie. The project will form part of the China-Pakistan Economic Corridor, which is being co-developed by the two nations to create a new gateway for trade across Pakistan.
A number of international companies have also signed memorandums of understanding with the government concerning solar PV projects, however the Quaid-e-Azam project is the only project been confirmed so far.
Punjab region offers Pakistan's best irradiation for developing photovoltaic projects, wind opportunities exist mainly in the Sindh and Baluchistan provinces, hydro opportunities exist in north of Pakistan and bio-energy exists in all provinces, however all forms of renewable energy face similar issues in having their projects being approved and developed in a timely manner. The wind sector has been the most successful so far in implementing some key projects and the solar PV sector appears to follow suit. But Pakistan's renewable energy development will be mainly won or lost dependant on the country's institutions ability and willingness to implement a transparent and efficient management and policy style that is contrary to what they have been doing until now. Despite the recent good news, this may be an enormously difficult task.
Lead image: Pakistan flag via Shutterstock