Pakistan To Tap Indigenous Renewable Energy Resources Amid Financial Crisis
Article / Report originally published at: Arab News
ISLAMABAD: The government is planning to tap indigenous renewable energy resources, including wind, solar, and bagasse, to increase the country’s installed energy generation capacity. This initiative aims to meet soaring domestic and industrial demand while reducing reliance on costly imported fuel amid an ongoing economic crisis, an official confirmed on Saturday.
Pakistan’s dependence on imported fuel has strained its fragile economy, with the energy import bill reaching $23.3 billion in the last fiscal year. Foreign exchange reserves stand at $4.2 billion, barely enough to cover three weeks of imports, raising concerns about a potential balance of payments crisis.
Amid this economic crunch and efforts to revive a stalled $7 billion bailout program, the country aims to increase its installed energy capacity by more than 77 percent through indigenous resources, saving precious foreign exchange used for fuel imports.
Under the Indicative Generation Capacity Expansion Plan (IGCEP) 2022–31, the country plans to use more than 80 percent of indigenous energy resources. “There is an emphasis to develop and utilize local coal, which will increase its contribution to around seven percent by 2031,” Khan added, projecting that dependence on imported fuel will drop from 45 percent to less than 23 percent.
NEPRA estimates an investment of around $53 billion to manage power generation, infrastructure construction, operations, and maintenance of new projects. Peak demand in 2031 is projected at 41,338 megawatts, up from 26,945 MW in 2022, while total energy consumption is expected to reach 228,505 GWh, against 153,866 GWh in 2022.
The current installed capacity of 41,268 MW is expected to reach 68,667 MW by 2031, including committed projects of 14,268 MW, 3,330 MW from net-metering, and 17,969 MW from candidate projects. The IGCEP accounts for 42 committed projects across various technologies, including Hydel (8,192 MW), local coal (2,280 MW), imported coal (660 MW), regasified liquefied natural gas (1,263 MW), and variable renewable energy such as wind (100 MW), solar (430 MW), and bagasse (32 MW).
“Work on all these projects is underway, and we are hopeful to achieve the target,” Khan said. “Once operational, these projects will save billions of dollars in energy import costs while ensuring a smooth and affordable power supply to consumers.”
Energy experts have welcomed the plan, emphasizing its potential to attract local and foreign investment in renewable energy and reduce dependency on imported fuel.
Amjad noted that electricity from solar and wind projects costs around three to four cents per kilowatt-hour, compared to seven to eight cents from imported fuel, excluding operational and maintenance costs. “Consumers currently pay around 14 cents per kilowatt-hour, which could significantly drop with increased generation from renewable energy, while also reducing the fuel import bill,” he said.
Senior researcher at the added that revisiting agreements with Independent Power Producers (IPPs) is critical to reduce capacity payment burdens and phase out costly fossil-fuel electricity. “Electricity generation from renewable resources alone is not a solution unless we invest in transmission capacity to deliver the power efficiently to consumers,” she said.
Malik warned that Pakistan is in a vicious cycle. “Switching to indigenous resources without proper planning and strategy for transmission and energy consumption will not solve our fuel import challenges,” she concluded.