ALTERNATE SOURCES OF ENERGY

BY

SHAHZAD SALIM

ID: 2001-1-27-1859

INTRODUCTION

Pakistan‘s economy has grown strongly over the past 3 years, at an average pace of 7%. Over the last 3
years ,improved business confidence and rising inflows of foreign direct investment (FDI) have buoyed
private investment .Pakistan is currently facing electricity shortfall of around 1000MW. Everyone agree s
that an essential precondition for industrial development is an uninterrupted supply of power. Although
the installed capacity for generation of electricity in the country is 19439 megawatt, the actual production
does not exceed 14000 megawatt as against the peak demand of 15000 megawatt. The demand for power
will increase by 16548 MW by 2007 and 20584MW by 2010, according to PPIB source.

SOURCES OF ENERGY & POWER GENERATION

There are different natural sources for generating energy in a country. Such sources are thermal, Oil, gas,
hydel, coal, solar and wind energy. According to reliable estimates , the total generation capacity of
energy in Pakistan currently stands at 20,184MW, while total demand is calculated at 21,000MW and to
reach 20,081MWby 2010. It seems that demand of energy is rising by 8% per year. Experts had warned
last year that the country may be facing a shortage about 1000MW by 2007, which may rise to 5000MW
by 2010 and 10000 MW by 2020. This phenomenon basically, forces the authority into load shedding on
a large scale in the years to come. The per capita consumption of energy in Pakistan is only MBtu.It is as
high as 165MBtu in UK. 92MBtu in Malaysia, 34MBtu in China, 18MBtu in India etc. Similarly, the
consumption of energy by human being in kilowatts hour are :USA-11,753,Japan-6,165,Singapore
-4,699,Malaysia-1,145,Iran-724, Thailand -635,Chaina -448,India-380 and Pakistan-340.It is an
established fact that the per capita energy consumption reflects the industrial advancement of a country
and the above energy consumption figures clearly indicate the level of development in these countries .
PAKISTAN POWER SUPPLY RESOURCES
33%
Currently about 30% of Pakistan’s power supply is based on natural gas.33% on imported oil.,33% on
hydro and remaining on coal’ nuclear and renewable electricity. With passage of time Oil plants
efficiency is decreasing even through certain deficiencies are restored after annual outages or major
service.

An unbalanced power profile carries serious repercussion. a balanced power profile would require a fair
balance among various sources of power with no excessive reliance on any single source
N a tu r a
INDIGENOUS RESOURCES:

33% Im p o r t
30%
Pakistan is fortunate enough to have two cheap indigenous resources for power generation i.e. water and
coal. But it is sheer bad luck that we have not been able to use both of these resources effectively.

H y d ro
Estimated coal reserves of Pakistan are around 185.175 million tons (PPIB sources ) which is one of the
largest coal reserves of the world whereas their utilization for electricity generation is barely one
percent.Sindh accounts for 99.7% of Pakistan ‘s 185.175 million tons are located in Thar.Coal deposits in
Thar were discovered in 1991, since then it is evident that Pakistan ‘s electricity future lies in indigenous
coal as well.But since then for some unknown resources no progress has been made for the development
of the Thar coal mines.

GAS:

Currently about 30% of Pakistan’s power supply is based on natural gas.33% on imported oil.,33% on
hydro and remaining on coal’ nuclear and renewable electricity. Keeping in view the current power mix,
it is essential to concentrate on indigenous and cost effective sources for power generation.

HYDRO POWER:

Our first choice should be hydro power and then indigenous coal for power production but the biggest
irony of Pakistan is that we have made our best hydro projects .Down the road, we would be facing water
crises as well and time will not allows us to go back to rectify . Thus this leaves coal, which Pakistan has
in abundance, as a safe ,cheap and reliable source to meet the power needs of the country for the
foreseeable future.

COAL:

The discovery of sizable coal deposits in the province of sindh is of significance. Since long an integrated
coal based power plant is approved in the area. Needless to say, abundant supply of coal at home will
greatly reduce pressure on imported oil. This is the time, when we have to decide how we would like to
see the future of Pakistan. The government has embarked on a well planned policy to generate more
power through private investment. it wouldn’t be wrong to say that 2002 power policy along with its
amendments is one of the best power policies whereas it is fundamentally wrong to compare it with 1994
power policy. Various power sector experts believe that under current circumstances this policy provides
best possible incentives to investors. If we had taken a national decision of making indigenous power
resources the prime source of the country’s power generation program, we would have got the
international investor and by now we would have developed the coal mines as well.

It was speculation till 2004-05 but in early 2005-06 becomes obvious that Pakistan would be facing
shortage of natural gas in year ahead which will certainly make it difficult to supply gas smoothly to new
power plants and even would not be available for existing power plants. In this situation, it was decided
be economic coordination committee of government of Pakistan that only dual fuel plants i.e. using
natural gas and furnace oil simultaneously, would be allowed to be installed for power generation.

WIND ENERGY

Wind energy is an ideal renewable energy because it is a pollution –free, infinitely sustainable from of
energy, it dose not require fuel and also is extremely green. It does not create green house gases and not
produce toxic or radioactive waste .Pakistan lies in the region trade winds, which gives it a competitive
edge to utilize the priceless resource to overcome the problem or energy shortage. The area s suitable in
Karachi is Hawke’s bay and National Highway for installing both solar and wind energy plants to
produce electricity. The Sun, the only main source of light in this world is a ball of hot gases. By weight ,
it is 90% hydrogen , 8% helium,1.5%carbon, nitrogen and oxygen and 0.5% all other elements. The sun
temperature is 6000c (10000f) at the surface and 13000,000c(27000,000f)at the centre . The average
distance from the earth to the sun is 93000,000 miles. It takes light eight minutes and eighteen second to
travel from the sun to the earth. The diameter of the sun is 870000 miles (1393000kilometers),100 times
larger than the earth . It volume is big enough to hold 1.4 million earths in side it. The sun is a big atomic
furnace that works by converting hydrogen into helium . The sun contributes about 99.86%of the total
mass of the entire solar system. The sun energy out put is estimated to be 386billion megawatts. In15
minutes, sunlight generates energy as all forms of sources on the earth generate energy in a whole year.
The sun has been producing energy for million of years. Solar energy can be converted directly or
indirectly into solar forms of energy such as heat and electricity .Solar energy is any form of energy
radiated by the sun including light ,radio waves and X-rays, although the term usually refers to the visible
light of the sun. Solar energy is needed by green plants for the process of photosynthesis, which is the
ultimate source of all foods. The energy in fossil fuels(e.g. coal and oil) and other organic fuels (wood) is
derived from solar energy . Difficulties with these fuels have led to the invention of devices that directly
convert solar energy into usable forms of energy such as electricity Solar energy is used heating water for
domestic use , space heating and building ,drying agricultural outputs buildings, dryings agricultural out
puts and generating electrical energy electricity can be produce directly from solar energy photovoltaic
device or directly from steam generation using solar thermal collections to heat different things. Solar
energy is energy that comes from the sun. Every day the sun radiates or sends out enormous amount of
energy .The energy comes from the sun it self .Like other stars, the sun is a big gas ball made up mostly
of hydrogen and helium. The sun generates energy in its core in a process called nuclear fusion. About
15% of the sun energy that hits the energy is reflected back into space. another 30% is used to evaporate
water, which lifted into atmosphere, produces rain fall. Solar energy also absorbed by plants, the lands
and the oceans. The rest could be used to supply our everyday needs . Today people use solar energy to
heat building s and water and to generate electricity and to evaporate the sea water for making salts .In
Pakistan the sun gives bright light from March to October every year, there fore devices may be made to
capture sunlight for making energy in country .

WIND ENERGY PROJECTS

The govt. main focus is to provide cheaper electricity to the people of remote village through wind and
solar generating projects of these areas and 500-600MW power energy capacity installation planss are in
contention. Germany, Holland and China plan to invest in Pakistan in wind energy project.China has
already produced and installed 14 wind turbines of 30&500 watts capacity in coastal area of Sindh and
Baluchistan Pakistan has planned to set up wind energy projects through the private sector to generate
700 megawatts by 2015 and 9700 mega watts by 2030.
USERS OF ENERGY

Agricultural
8%

IMBALANCE POWER PROFILE

Looking at the power portfolio of Pakistan it looks as if we are living in an oil rich country. Presently,
Pakistan has lot of oil fired power G ove
plants rnwith
and m en t
passage of time their efficiency is decreasing even
8%outages or major over hauls. Beside permanent
through certain deficiencies are restored after annual
deficiency, which can restore, along with the continuous hike in furnace oil prices which will make them
unavailable in near future?
Industrial
Such an unbalanced power profile carries serious repercussion. a balanced power profile would require a
34%
fair balance among various sources of power with no excessive reliance on any single source one of the
few matters which must be considered in establishing the power portfolio is that excessive reliance on any
single source especially foreign sources on which we have no control over supply and price can make
things miserable ant time.
GLOBAL OIL ORICES APPREHENSIONS

KEY THREATS/ISSUES (RISK)

Many of the factors behind the recent surge in prices are likely to persist, such as:
Rapidly rising oil demand in the developing countries specially china and India
Under-investment in drilling and refining capacity
Slow discovery of new reserves
Shortage of refining capacity in the U.S
According to the well respected center for the environmental energy engineering (CEEE) study
“the international oil outlook is just as discouraging as the US natural gas situation – production
is peaking when demand is poised to rise rapidly”.

Another major concern is that the current lack of surplus production capacity, which increases
susceptibility to disruption and price volatility.

Natural gas and oil process are expected to remain volatile in coming years. We could see
significant price increases and possibly shortage during periods when demand exceeds
supply. Price spikes could be extremely high by historical standards because much of the
demand is highly inelastic.

However it needs to be acknowledged that the timing and magnitude of these price/supply
problems will be greatly affected by the factors that are difficult to predict including global level
seems to be hovering around oil, implicitly or explicitly.

The OPEC report cited in the detailed report concurs with the threats to price stability while
down-playing any major geo-political threat “uncertainties over future economic growth,
government policies and the rate of development and diffusion of newer technologies raise
questions over the future scale of investment that will be required. These uncertainties, coupled
with long lead times, inevitably complicate the task of maintaining market stability. On top of
this, medium-term prospects suggest there is a need to ensure that the level of spare capacity is
consistent with such stability…it is nevertheless considered a sound conclusion that the oil
reserves are sufficient to satisfy world oil demand growth over the projection period (to 2025)
….it is generally agreed that OPEC will increasingly be relied upon to supply the incremental
barrel.

Primary impact on Pakistan: in a continuous high price scenario the country will have no
option but to accelerate the shift of coal, gas, nuclear and alternative sources thereby
decreasing the market share of oil products over the medium term.

In terms of power generation the share of oil is expected to decline from a current 33
percent to 24 percent by 2010. as far as fuel for transportation is concerned the share of oil
(petrol products and diesel) will continue to decline rapidly in favor of CNG/LPG.

KEY OPPORTUNITIES (UPSIDES)

Although in absolute terms capacity expansions would still be required both at the
production end (refineries and related facilities) as well as distribution/marketing end
(petroleum marketing companies).

EXCESSIVE RELIANCE ON OIL

We are living in a highly volatile region of World and under current US and Iran crises, which seems to

Have no early solution; no one is sure where oil prices will reach. World has witnessed that oil prices
reached new heights in resent UK sailors crises with Iran. Whatever be the US strategy for the middle

East and Central Asia, We should seriously understand our need and must have to decline our reliance on
imported expensive fuel. During the last fiscal year, Pakistan used billion of dollars its prestigious tax
payer’s money for import of furnace oil for these power plant. Oil prices have been seesawing
between US$60 and US& 70 per barrel while it is hard to forecast how international oil market reacts
if US Iran relations get worse. But the point of concern for Pakistan is that how its economy would
absorb at least US $ 100 per barrel.
ENERGY SECTOR OF PAKISTAN

The energy sector of Pakistan comprises of Hyde power, oil, gas petroleum, coal and nuclear . The total
energy supplies measured in terms of ton s of oil equivalent (toe) stood at 50million toe in 2003-04. The
primary energy supplies have been raising steadily over the last several years .It was 45, 2 million toe in
2001-02, increased by 4.4percent in 2002-03 and further grew by 8percent in 2003-04 to stand at 50.8
million toe .The share of commercial energy source during 2003-04was recorded as: natural gas 49.7%.
oil 29.9%,coal 6.5%, hydro electricity 12.7% , nuclear energy 0.8% and LPG 0.4% .The average oil
production was about 60,817barrels per day, while natural gas production was 3,295million cubic feet per
day in 2003-04.According to an official figure , the household sector has been the largest consumer of
energy accounting for 44.2percent of the total energy consumption followed by the industrial sector
34.4percent, the agriculture sector 7.4% ,other the government sector 7.4% , the commercial sector 5.5%
and street light 0.7%.The total in stalled capacity of energy generation in recent year, remaining
20184MW.Wpada , the KESC, the KANUPP, the Chesham Nuclear power plant are the four main public
sector organizations involved in energy power generation, transmission and distribution of the electricity
in the country . The independent power projects are also involved in power generation. The total installed
capacity of WPADA was 11363 MW which accounts for 58% of the total capacity .Of this, hydel
accounts for 56.9% or 6,463 MW and the thermal accounts for 43.1% or 4900MW. The total installed
capacity of IPPs is 5859 MW (30.1%),The KESC 1758MW(9%)and nuclear power is 462WMor 2.4%
.The government is promoting the use of compressed natural gas (CNG) in a big way to reduce the
pollution level being caused by vehicles using motor gasoline and to improve the ambient air quality .
Presently 900CNG station s is operational in the country while 200 are under construction. By March
2006, about 700,000 vehicles were converted to CNG as compared to 450,000 vehicle s during the same
period last year, showing an increase of 56%. With this development s, Pakistan has become the leading
country in Asia and third largest user of CNG in the world after Argentina and Brazil. Exploration and
utilization of alternate sources of energy has also stared in the country. Due to its ideal geographic
location, Pakistan is blessed with un limited natural resources, plenty of sunshine throughout the year and
includes a massive wind energy corridor in South. The velocity of wind in some of the coastal areas is
strong enough to run turbines and generate power .Electricity demand is increasing at national level at the
rate of about 1000 MW per year, and projected a total demand that stands at 21500 by the year 2010 and
36358 MW by 2025. Pakistan is now faced with a most serious energy short fall .The acute shortage of
electricity has resulted in load shedding during the current summer season, coasting the economy million
of rupees .The continuous power shortage is creating hurdles in the current paces of economic growth of
the country . The gap between demand and supply of power and interrupted supply of power to industrial
sector is retarding the country exports. While following the traditional power resources one should look at
the other alternate energy sources. There are other alternative renewable energy sources such as wind and
solar energy. We must exploit these means to over come the energy shortage. Pakistan has abundant
energy resources, which needs to be harnessed through an institutionalized strategy for optimum
utilization .Pakistan aims at its development requirements keeping in view the institutional trends in the
energy sector and availability of resources. The government has set out an action plan to achieve
exploration and maximum utilization of indigenous resources like oil, gas and coal and alternative sources
like solar and wind energy. Pakistan government is putting greater emphasis on renewable energy and has
set a target of 19%renewable energy of 2710MW in the country’s energy by 2015.Pakistan, like other
developing countries of the world is facing a serious challenge of energy deficit. Renewable energy
resources can play an important role in bridging this deficit. More importantly, renewable energy can take
electricity to remote rural areas, where it is needed most. Wind and solar energy are producing electricity
to 100 megawatts with the collaboration of Canada since 2006.The govt. main focus is to provide cheaper
electricity to the people of remote village through wind and solar generating projects of these areas and
500-600MW power energy capacity will be installed by 200.Germany, Holland and China plan to invest
in Pakistan in wind energy project s foe a total capacity of about 1000MW .China has already produced
and installed 14 wind turbines of 30&500 watts capacity in coastal area of Sindh and Baluchistan The of
Pakistan has planned to set up wind energy projects through the private sector to generate 700 megawatts
by 2015 and 9700 mega watts by 2030.

INFRASTRUCTURAL ISSUES

In additionally to the huge financial burden on the economy on the people ,the situation also raises some
new issued of the security of supplies .secondly, expensive fuel is not the only issue ;fuel handling
capacity in Karachi is reaching its maximum and with the constructions and operation of a new seaport at
Gawadar, the problem doesn’t seem to resolve as since long fuel has been transporting from Karachi to
rest of the country but now onward it might also be coming from Gawadar.The transportation system
from this area needs a time test. As of now, there are few reservation on this which can only be resolved
with the passage of time.

ALTERNATE POSSIBILITIES FOR PAKISTAN

The primary impediment in oil extraction has been that of the hard crusted of the nature of terrain and the
resultant capital investment required make much of the country’s oil reserve largely inaccessible
especially given preemptive prices of 30 -$35 per barrel. In relative term the expected return to investor
given low oil prices do not make the returns as attractive
The consumption of the gas has been growing at the rapid rate of nearly 7% over the past decade. there
already exist the country gas provide the country with a considerable buffer and alternative to absorb and
tide over the expected shocks coming from the world oil prices that are likely in the near and medium
term a potential large enough to make the country the envy of most developing countries of the world.

Pakistan is the third largest user of the CNG in the world after Argentina and Brazil; Natural Gas is the
obvious mix in Pakistan energy mix and plays the crucial role in the economy, meeting about the 44% of
the country’s supply mix for commercial energy. Thar coal reserve could face possible technology
impediments in ongoing commercialization, since the coal has high amount of sulphur, ash and moisture
and therefore more detailed investigation and Pilot power plant is required before selecting the
technology and module of commercial unit based on indigenous coal. Pakistan coal reserves are fifth
largest in the world but only 4 % of the electricity is generated by coal. In a nutshell barring major
technology in successful ongoing commercialization. Thar coal reserve has the potential to generate more
then 100,000 MV of electricity for next 30 years.

GOVERNMENT SET TO START 969MW HYDROELECTRIC PROJECT

The government is all set to start physical work for the construction of much awaited $2.14 billion
Neelum Jhelum Hydroelectric Project in the next fiscal year 2007-08.The construction of Neelum Jhelum
Hydroelectric Project would enable Pakistan to get water usage rights over River Neelum. In the event of
any further delay in the construction of the said project, Pakistan would have to forfeit its rights over
River Neelum and allow India to use these waters for power generation, said the official.

The official explained that the cost of the project was estimated at $1.4 billion and the total cost of the
project has been estimated at $2.14 billion. Government of Pakistan has approached Kuwait Fund and
French financers M/S BNP Paribas for arrangement of the foreign exchange component of $785 million.
The project is estimated to have an installed capacity of 969 MW and an annual energy generation
capability of 5150 kWh.