Country Report Pakistan

Mini-Grids in Pakistan: Bottom-Up Option For Renewable Electrification

By 7 November 2019 No Comments

Pakistan has one of the lowest electrification rates. The country has been in the grip of severe energy shortfalls since 2006.  Owing to the daily blackouts experienced, around 144 million people lack reliable access to the grid.[1] And 51 million people have not even been connected to the grid, the majority of them residing in rural areas.[2] With rising population and increased industrialization and urbanisation, this voracious thirst for energy is projected to further rise in coming decades.

Pakistan is a country with abundant renewable energy sources. Yet the share of renewable energy in the power mix is remarkably low: only 4% of installed capacity and 2% of power generation.  Among several barriers in the take-up of renewable energy, flexibility constraints such as transmission and distribution constraints, isolated grid standing, limited reserve capacity and inflexible operation of conventional plants for integrating VRE remains major roadblock. Against the backdrop, decentralized off-grid solutions directly supplying electricity to the consumers have grown from a niche solution to wide-spread dissemination and are increasingly recognized speedy solutions for renewable energy uptake. 19,000 mini grids are already installed globally in 134 countries ─ mostly in Asia and Africa─ providing electricity to around 47 million people.[3] All this creates a dynamic space for VRE accommodation and investment despite flexibility challenges in developing countries.

Pakistan has a vast hard-to-reach geographic location, i.e. sparsely located rural communities located at long distance from each other with higher costs of laying down transmission lines. It is mostly communities belonging to these regions that are living off the grid. Strikingly, these communities are also geographically positioned in the highest solar insulation zones. Decentralized approaches in terms of off-grid energy infrastructure offer promising solutions for both increasing electrification and increasing renewable energy deployment. Further energy deprivation and blackouts in Pakistan have also stirred a social change where a momentum toward off-grid renewable applications is underway.

Nevertheless, against the universe of opportunities that decentralized generation has unleashed, they have remained frequently overlooked in the country’s national policies resulting in its chronic underinvestment. Though the renewable energy policy of 2006 required the relevant authorities to enact measures for the promotion of off-grid renewable energy including mini-grids, insignificant progress has been made so far. A closer look at the existing regulations reveals legal and financial binding constraints on developments of mini-grids. Private parties are not allowed to set up a distribution system or sell electricity without a prior approval and license from both the national energy regulatory authority and respective distribution company.[4] Absence of financial support packages further handicaps the growth of such systems. Among the limited initiatives, KfW – a German development bank – has successfully assisted Pakistan Poverty Alleviation Fund in setting up multiple modern solar-powered mini power grids in several regions of the country.[5]

The energy access gap left by the grid could be effectively plugged by green mini-grids. These grids could prove major breakthroughs for helping both the unelectrified population as well as those connected to frail and overburdened utilities with unreliable energy access. Today, in many developing countries mini grids .  However, for any large scale investment of mini grids, an enabling policy and regulatory framework remains a necessary pre-condition. Above analysis hence underlines the need for a favorable financial landscape towards decentralized renewable energy, especially in remote unelectrified areas. For governments, this translates into changing the structure of existing centralized regulations on power supply. Comprehensive electrification planning, strong policies and financial schemes could substantially lead to mini-grid integration.

[1] “Pakistan Off Grid Lighting: Consumer Perceptions.” IFC, (2015).

[2] “World Energy Outlook”, IEA (2017).

[3] “Mini Grids Have Potential to Bring Electricity to Half a Billion People, According to New World Bank Study.” World Bank. (2019).

[4] “Why Are There No Microgrids in Pakistan?” IGC, September 20, 2017.

[5] “KfW-PPAF inaugurates hydropower & renewable energy projects in KP”, Pakistan Poverty Alleviation Fund. (2017).

Naila Saleh

About Naila Saleh

Naila has done her post-graduation in Public Policy at the Pakistan Institute of Development Economics (PIDE). Currently, she is Senior Research Officer at Institute of Policy Studies. She is very much passionate about clean and renewable energy, climate justice and energy security.

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