Pakistan, blessed with substantial hydropower potential due to its unique topography and extensive river system, is on the brink of a transformative shift in its energy landscape. Despite an estimated potential of over 60GW, the nation has harnessed only a fraction, approximately 10.6GW, of its hydropower capabilities.
The global precedence of hydrocarbon-rich nations like Norway and Iran prioritizing hydel power development underscores the immense benefits of hydropower. Norway, boasting an installed capacity of over 30GW, and Iran, with 12GW, exemplify the strategic significance of this renewable energy source.
In sync with Pakistan’s demand patterns, hydropower aligns with the nation’s peak energy needs, primarily driven by the summer cooling load. Notably, Pakistan witnessed a demand peak of 25.5GW on August 21 this year, with hydropower contributing over 9GW at its zenith. The indigenous and sustainable nature of hydropower not only caters to domestic demand but also aids in conserving foreign exchange reserves.
However, the ongoing discourse on excess generation capacity has prompted a renewed focus on long-term planning to avert future challenges. The Indicative Generation Capacity Expansion Plan (IGCEP), a pivotal document shaping the nation’s energy future for the next decade, is under review. It employs a least-cost criterion for project inclusion, granting regulatory consent solely to those projects outlined in the document.
Yet, the gestation period for developing private hydro projects spans eight to ten years, contingent upon sequential approval processes. The exclusion of a project from the IGCEP impedes its progress, introducing delays that impact the overall timeline. Recent reports suggest that the 4,500MW Diamir Basha project and the 1,200MW Chashma-5 nuclear power project, initially not scheduled to synchronize, are expected to reach commercial operations in 2029. This misalignment could potentially lead to the exclusion of several hydropower projects in the upcoming IGCEP iteration.
The inclusion of transmission costs in the next IGCEP iteration may further elevate the cost of candidate projects, potentially rendering their selection improbable. With the assumption of reduced demand and the addition of committed projects, the development of private hydel projects may face impediments, paving the way for public sector dominance—a trend observed across various industries in Pakistan.
The recent global dynamics in Intermittent Renewable Energy (IRE), particularly in the solar and wind sectors, add another layer of complexity. The UK’s offshore wind power auction in September, with no bids received despite an offered maximum guaranteed price of 5.6 cents per kilowatt-hour (c/Kwh), signals challenges in the renewable energy sector. If similar trends occur in the upcoming auction of the 600MW Muzaffargarh solar project, justifying the inclusion of such generation becomes challenging given the national average purchase price of 22 Rs/KWh for FY23-FY24.
In this evolving landscape, it is imperative to explore innovative avenues. The generation of green hydrogen through electrolysis, leveraging abundant and inexpensive hydel power resources, emerges as a strategic option. Hydel’s base load power advantage, providing electricity at higher capacity factors than IRE, makes it conducive for hydrogen generation. The generated hydrogen can then be converted to green ammonia and transported globally, mirroring the current LNG shipping model.
Northern regions of Pakistan, particularly Khyber Pakhtunkhwa and Azad Jammu and Kashmir, hold a significant hydropower potential of approximately 30GW and 8GW, respectively. These areas could become hydrogen-exporting hubs, especially when coupled with the development of inland waterways. The extensive Indus River, connecting the north to the Arabian Sea, could serve as a cost-effective transportation route for hydrogen.
While the conventional power transmission from north to south faces prohibitive costs, inland waterways offer a more economical alternative. According to the US Department of Transport, inland waterway transport can be nine times cheaper than truck transportation. The World Bank’s study on the development of Inland Water Way Transport in Pakistan in 2022 supports this, indicating an economic internal rate of return (IRR) of 35.1%.
As Pakistan gears up for the National Electricity Plan 2023-27, emphasizing long-term hydrogen development strategy by December 2025, the integration of hydel power and inland waterways emerges as a visionary path. This strategic shift positions Pakistan as a hydrogen exporting hub, not only for the region but the entire world, establishing a competitive advantage in the development of green fuel for the future.