The Saudi visit has fuelled optimism all around. Out of the 27 MoUs signed, the one with leading Saudi renewable firm ACWA Power has the potential to create a positive ripple effect for Pakistan’s renewable sector and attract further investment from international renewable firms.
ACWA Power is a major developer, investor and operator of power generation with a specialty in renewable projects and has 51 assets spread across 11 countries. According to the company’s website its total portfolio is valued at over $30 billion and can generate more than 29GW of power as well as produce over 4.8 million m3/day of desalinated water.
Its shareholding pattern is equally impressive and includes eight Saudi conglomerates, Sanabil Direct Investment Company (owned by the Public Investment Fund of Saudi Arabia), the Saudi Public Pensions Agency as well as the International Finance Corporation. So the company has sizeable financial muscle and is well equipped on the technical side too.
ACWA plans to invest $4 billion in the power sector with a focus on renewables so the opportunity is ripe for Pakistan to expand its renewable energy footprint which has a paltry share of less than 5 percent in the overall energy mix (solar and wind).
But capitalizing on this potential opportunity will require a lot of concerted effort from policymaking quarters and the power division. There has been blatant resistance to the induction of more renewable energy by the bureaucracy. The previous government also left the 1000MW Quaid-e-Azam solar power park in sad shape.
The National Transmission and Dispatch Company (NTDC) has been alleged of deliberately delaying power evacuation arrangements to wind power plants which caused considerable delay in the commissioning. The Alternative Energy Development Board (AEDB) has been extremely lethargic in coming up with a competitive bidding framework for renewable energy projects, a fact lamented by the power regulator regularly in its past State of Industry reports. (Read: “Rethinking renewable resistance” published on April 28, 2017)
Therefore, removing these hurdles and creating a streamlined process for investment in renewables is crucial to closing any real deals that actually translate into tangible benefits not only for the investor but for the country as well.
Bear in mind that a Danish company, Vestas Wind Systems which is also the world’s largest wind is investing more than $2 billion to initially set up 250MW of wind farms which is part of the 1000MW Quaid-e-Azam Wind Park in Punjab.
If Vestas and ACWA can execute their projects in a cost competitive manner against traditional fossil fuel based energy, the floodgates can be opened to attract foreign direct investment (FDI) to promote cleaner energy in Pakistan. Given the gung-ho investments in coal power plants, a balance is necessary to keep emission levels in check.