Out of the dark, into the future
After years of energy crises, Pakistan is finally coming into the light. Turning its focus to renewable energy, a government-led venture into solar and hydropower will bring electricity to 1.5 million people for the first time. ÅF and the Asian Development Bank are supporting Pakistan’s shift to a more sustainable and prosperous society.
For the last decade, Pakistan has been in the grip of a severe energy crisis. According to the World Bank, approximately 57 million people – 30 percent of the population – lack access to electricity. In reality, the situation is even more critical. Of those connected to the national energy grid, many villages experience power outages of up to 16 hours per day. The demand for electricity in Pakistan far exceeds the generation capacity and the power sector suffers from inefficient generation, transmission and distribution systems.
Access to reliable energy sources is a fundamental prerequisite for reducing poverty and boosting prosperity in any country, as most economic activity is impossible to carry out without electricity. The gap between energy demand and production has been growing in Pakistan over the last few years, with massive negative impact on economic growth as a result. The energy crisis causes an estimated 2 percent loss to the country’s GDP every year and discourages investors and entrepreneurs from establishing themselves in the region.
The situation in Pakistan resonates throughout Asia and the Pacific, where the majority of the world’s energy-poor live. More than 700 million people lack access to electricity in the region, and are instead forced to turn to inefficient and environmentally harmful energy sources like diesel fuel, candles, wood, dung and crop waste to cook, heat and light up their homes.
Sun and hydro – an untapped opportunity
Recent years’ negative development in the energy sector has made the access to affordable and clean energy a key priority of Pakistan’s government. The country holds huge potential for generating renewable energy, but with public and private investments in the energy infrastructure lagging behind for many years, the potential has not been fully exploited.
Moving forward, Pakistan aims to take advantage of its abundant renewable energy sources, in particular solar and hydropower. In line with the national ambition to promote renewable energy sources, the local governments of the provinces of Khyber Pakhtunkhwa (KP) and Punjab have initiated a project to install 3,000 micro-hydro plants in off-grid areas and implement off-grid solar plants to power over 23,000 public schools and 2,600 health units in both provinces. Over the next three years, the Access to Clean Energy Investment Project will enable 1.5 million inhabitants to have access to electricity for the first time, adding a total of 150 MW of new, clean energy generation capacity in Pakistan.
The initiative is being carried out in collaboration with the Asian Development Bank (ADB), a multilateral donor agency operating in Asia and the Pacific since the 1960s. ÅF in Spain and in Switzerland has supported ADB in the development of a sustainable technical, financial, legal and regulatory framework to facilitate the off-grid electrification and attract investments from the private sector.
The project is expected to have a major positive impact on the social and economic development of communities in Khyber Pakhtunkhwa and Punjab.
“This programme faces head-on the issue of electricity supply and demand in rural areas. Through better access to electricity, people in remote communities will be able to take full advantage of modern technology such as smartphones; children will be able to use a computer at school and have access to lighting in the evenings in order to do their homework; and local health units will be able to improve the quality of their services – all of which leads to increased social and economic well-being,” observes Salomé Balderrama, Senior Consultant and Project Manager at ÅF in Spain.
Khyber Pakhtunkhwa is one of the poorest regions in Pakistan, with an electrification rate below 20 percent in some districts. Pakistan’s geographically challenging landscape makes it costly and technically difficult to extend the national power grid to remote rural areas. Declining prices of renewable energy technologies has made investments in such technologies more attractive in recent years. Renewable energy sources are a beneficial option not only from an environmental point of view, but also a financial one.
Strengthening local capacity
The remaining years of the programme will revolve around the construction and installation of the solar- and hydropower plants. Once established, local communities will be responsible for the maintenance of the plants. Aside from improving education and health infrastructure in vulnerable rural and remote areas, the Access to Clean Energy Investment Project aims to strengthen the capacity of provincial governments. This is essential to make the programme robust and sustainable for many years ahead.
“To empower local authorities and establish institutional practices for monitoring of operations, procurement and internal audits is as important as the technologies themselves, in order to ensure an efficient use of energy in Pakistan in the future,” concludes Salomé Balderrama.