Recruitment of Distributed Energy Resources based Entrepreneur’s micro-grids as

Competitive Solution to Energy Crisis in Pakistan

Abstract

Amid ample renewable distributed energy resources (DERs) bestowed by the nature,
Pakistan has been facing worst energy crisis since last decade almost; which has badly
devasted the national economy. The leading factors behind these energy crises include
high rate of urbanization and population growth, over-reliance on imported fuels, higher
losses in power network, electricity theft, non-simultaneous up-gradation of all segments
of power sector of Pakistan, circular debt, climate change, changing geopolitical and
geostrategic environment and poor policies. The prompt solution to these energy crises
lies on recruitment of DERs based Entrepreneur’s micro-grids in conventional power
system; which will promote penetration of renewable energy resources and will reduce
over-reliance on foreign fuel. This paper presents DERs based Entrepreneur’s micro-
grids as the potential solution to the prolonged energy crisis. Schematic model of
proposed Entrepreneur’s micro-grid and policy framework to recruit such micro-grids are
also presented in this paper. The viability of proposed system was also checked by
simulating village based solar micro-grid connected with grid, which showed
competitiveness of DERs based Entrepreneur’s micro-grids in Pakistan.

Keywords: DERs, power sector of Pakistan, energy crisis, micro-grid, Entrepreneur

A. Introduction

The sustainable economic growth of a country is largely dependent on uninterrupted and

cheap energy supply. Unfortunately, despite the abundance of distributed energy
resources (DERs), Pakistan has been suffering energy crisis due to multifaceted reasons
like: non-simultaneously up-gradation of electrical power sector, improper energy mix,
high reliance on foreign fuel, high rate of population growth and urbanization, high
power losses, energy theft, postponement in commissioning of new power plants and
many others. Power outages of 4-7 are observed commonly in Pakistan, especially in
summer season. Further, high reliance on thermal resources which has issues of carbon
emissions and climate change threats. In order to conserve the natural climate and reduce
vulnerability to oil prices, renewable energy based microgrids are considered a
competitive solution.

Microgrids are future building blocks of the smart grid technologies. Generically,
microgrid is a power network accommodating small power generations as well as load
connected to it at a time. Microgrids can operate with grid-connected mode and island
mode. There are several classifications of microgrids. The most common classification of
microgrids is based upon the nature of consumers connected to the microgrid; which
includes residential microgrids, community microgrids, commercial microgrids and
industrial microgrids. Distributed Energy Resources (DERs) are small power generation
sources which are small in size, moveable and renewable also.

B. Literature Review on DERs based microgrids

In June 2013, F. Farzan et. al [1] described the problems encountered in analyzing
economics and environmental prospective of microgrids. In December 2013, T. S.
Schmidt et. al [2] presented an overview of Indonesian electrical power sector and an
analysis about village grids being fed from renewable energy. Inclusion of private
sector’s investment to deploy renewable energy microgrids due to scarcity of public
resources was emphasized. The author urged active role of government to ensure positive
returns and manageable risks to attract the private investment. In October 2014, C.
Zalengera et. al [3] presented a detailed overview of Malawi energy situation and stated
high reliance on conventional power generation as route cause of load shedding in
addition with less power generation facilities. The author presented solution to prolonged
load shedding problem in Malawi by suggesting the use of inexhaustible sources. In
November 2014, Wei-Ming Chen et. al [4] criticized the conservative policies of three
countries towards adopting non-depletable energy technologies. The authors termed oil
shocks of 1970s and the Fukushima disaster as two major events which highlighted the
importance of RE in these countries. An analysis framework SWOT (strengths, weakness
opportunities, Threats) was applied to promote RE in these three countries by formulating
separate results for each country. In April 2015, D. Chattopadhyay et. al [5] suggested
transition from solar home systems (SHS) to mini solar microgrids after economically
analyzing the both cases. The author also analyzed Bangladesh solar power model for
benefits of society. Three novel factors were found behind its success namely: (1)
mechanism of supporting payments which is already in place there; (2) quality assurance;
and (3) customer confidence building measures. In March 2016, A. Gholami et. al [6]
termed microgrids as the building blocks of future’s smart grid and presented technical
analysis about role of microgrids to ensure even operation of the power grid. The dire
need of resilience enhancement was proved by presenting some global evidences of
climate change-born brownouts and blackouts which resulted high socioeconomic losses.

In April 2016, B. Frantál et.al [7] presented an empirical evaluation of varying attitudes
of the Czech formers towards adopting renewable energy (RE) technologies and explored
their individual motivations for RE; also concluded by highlighting the rising trend in
agro-energy enterprises in Europe for economic and environmental benefits. In May
2016, A.M. Adil et. al [8] expressed pretext of idea of utilizing distributed sources of
energy and microgrids to face the climate change in coming days. The article emphasized
on community involvement to adopt solar thermal and solar PV energy solutions. In
October 2016, C.A. Gabriel [9] reviewed hinderances in way of deploying microgrids
which will distribute energy among consumers being generated by distributed sources.
Policies to foster such developments were also proposed in this work. In May 2017,
E.M. Gui et. al [10] stated the need of new institutes to facilitate operation of such
microgrids which will handle economic flows in exchange of energy among consumers,
micro-grids, prosumers and overall the major grid. In August 2017, G. Surie et. al [11]
examined entrepreneurship at social level: firm level and institute level and told that how
it would contribute in national innovation culture and economic development. The
proposed framework intended to create new markets in clean energy sector for lower
class people. In January 2018, E. A. M. Ceseña et. al [12] presented a framework on
technical grounds and economic basis to anticipate the finances of different operations of
MGs , using mixed integer linear programming. Microgrid A and microgrid B were used
to address flexibility through generation and battery storage orderly. The study
concluded the effectiveness of microgrids with proposed framework to co-optimize
potentially conflicting services. In January 2018, C. Wang et. al [13] C. Wang presented
comprehensive outlay of distributed energy microgrids and labelled it as future of power
sector. In May 2018, S. Boudoudouh et. al [14] paper stated a strategy to manage energy
in microgrids being fed by distributed locations and consumed in similar way. Two
configurations of microgrids was analyzed in MATLAB Simulink, to find out the
viability of such system for monetary and other gains. In September 2018, K. T. Ponds et.
al [15] presented demand response (DR) aggregators as key players to manage
intermittency of distributed energy resources (DER) and dynamic pricing in transition
scenarios of conventional power system. The authors discussed bright sides of demand
response aggregators along-with dark sides from political, economic, social, and
technological (PEST) points of view. The benefits of DR which these aggregators would
actually provide, its beneficiaries and potential issues were discussed in this paper.
Mechanism for converting consumer into prosumer and a value chain analysis were listed
as future work to recruit aggregators on real basis. In September 2018, H. A. Khan et.al
[16] presented PV-fed microgrids as a solution to electrify remote areas with no
electricity access. After conducting analysis of loads of six villages and system cost
analysis for supply side analysis, decentralized microgrids empowered by local
entrepreneurship were recommended in the article. In October 2018, K. Ulsrud et. al [17]
investigated that what made solar powered villages more successful to ensure clean,
durable and cheap energy supply. The authors conducted socio-technical analysis in
addition with using practice-oriented approach. The long terms experiences in India,
Senegal and Kenya were obtained and synthesized by qualitative interviews and
quantitative surveys. A framework was made to analyze these data sets on basis of social
practice theory to find that how would this system interact with social sectors. In October
2018, L. He [18] conducted a techno-economic analysis of microgrids being powered in
form of inexhaustible energy for power supply to large residential community in Beijing,
China. Different configurations of microgrids were simulated in HOMER software for
optimizing of single variable Net total present cost (NTPC). In August 2017, F. Creutzig
et. al [19] presented solar powered microgrids as potential candidate to mitigate
contributions of electrical power system to climate change. Fossil fuels need to be
eradicated to lower the temperature by two degree centigrade according to the climate
change agreement of Paris and replaced by low-carbon sources of energy, until 2050. In
February 2018, D. Akniyele et.al [20] presented a comprehensive overview of microgrid
technologies globally being used with their applications and applied STEEP (social,
technical, economic, environmental and political) model to assess microgrid failure
factors (MFF). Based on model analysis, sustainable planning framework (SPF) was
introduced to install microgrids at any remote location. The remote communities based in
Nigeria, West Africa were used as case studies to deploy microgrids and renewable
energy potential of Nigeria was tapped out in tabular form along with its energy policy
analysis. Sustainable planning framework (SPF) was proposed to cure all responsible
factor behind MF.

C. Research Methodology: Experimental Set Up

The simulation software named as “HOMER Pro x64” was used to simulate the
distributed energy resources based microgrid for a village with grid-connected mode.
HOMER is the abbreviation of Hybrid Optimization model for electric resources. It is
widely used now a days to simulate renewable energy resources based microgrids across
the globe, to simulate the pros and cons of deploying microgrids. After locating the
place on the globe, the software automatically takes solar-energy potential and wind
energy potential of that place through global solar and wind energy potential mapped by
National Aeronautical and Space Administration (NASA).
D. Proposed Structure of Entrepreneur’s based Microgrids

Figure 1: An overview of proposed Entrepreneur’s owned, DERs based micro-

grid
Figure 2: Policy Framework for Recruiting Entrepreneur’s owned, DERs based Microgrids
Table 1: Comparison of Salient features of proposed system Vs existing system

Characteristics Conventional Power System RES based Entrepreneur’s

microgrid
 Reliance upon High Reliance (48% -52%) Minute reliance (only in peak
Fossil Fuel hours or off-solar hours)

 RE Penetration Very low (Currently 2%) Will boost with passage of

time.
 Energy Storage No central storage system and No need to install UPS-
systems consumers are compelled to buy batteries individually by the
back-up UPS-batteries for consumers due to central
necessary backup. battery storage systems.
 T & D losses High T & D losses (19%) due to Placement of RESs based
concentrated generation and long DGs will reduce the T & D
transmission and distribution lines losses.
 Interruption More (due to high chances of Less (due to provision for
Chances tripping due to congested power operating stand-alone, in case
grid and no provision for stand- of main-grid failure)
alone operation)
 Erection of Irregular and Unplanned (Need- Planned and properly
Power based only which destroys the designed Erection
 Distribution power quality of the system)
Network
 Energy Imports Ever increasing demands of oil and In first phase, increasing
gas imports are putting high burden demands will be met by RES.
on national economy of Pakistan. Then gradually, paradigm
shift from existing reliance
on foreign fuel to RESs, will
ease the current account
deficit of Pakistan.
 Carbon High carbon emissions due to high Gradually declining carbon
Emissions reliance on thermal energy emissions as transition
resources speeds-up from conventional
energy sources to the RESs
 Energy Theft Less organized and focused Comparatively Easy due to
control real time power monitoring
units
 Maintenance of Fault based maintenance Preventive maintenance
Power system
 Power Quality Poor or Rare PQ management High Focus on PQ
Management management (Due to
regulatory guidelines and
also from commercial point
of view)
 Social Impacts Less number of employments Ample opportunities for
And Psychological impacts of Load entrepreneurs to participate
Shedding on health and human in energy market as key
productivity players (hence creating jobs).
Off-grid operation of
microgrids will ensure supply
to essential loads.

E. Simulation and Results: Simulation of solar-powered community microgrid

i. Electrical Load Profile

Monthly bills of 97 consumers were collected from the regional office of electricity
department Bhimber, for purpose of load calculation of the village Khambi being fed by
two transformers rate capacity of 50 KVA each. The average demand of energy per day
was calculated as 471KWh; and maximum demand was 58.26MW with average demand
of 19.63%, yielding 0.34% load factor. Below is the graphical view of month-wise
energy demand of the village over the span of a year.
 Total Units consumed Month-wise (KWh)

Units consumed (KWh)

20000 17172
15000 13043 13088 12731
14653 14534 14924 15374 13781 15574 12917 11923
10000
5000
0
18 r-1
8
r-1
8 18 18 l- 1
8 18 18 t-1
8 18 18 19
e b- a p a y- un- J u ug- e p- c ov- e c- a n-
F M A M J Months A S O N D J

Figure 3: Total units consumed month wise over the year

Figure 4: Daily load Profile Figure 5: Seasonal Load Profile

Figure 6: Yearly Load Profile

ii. Schematic Diagram of Experimental Setup

Two buses (AC bus and DC bus) were drawn in the HOMER software. AC bus was
normally fed through WAPDA grid and a backup diesel generator was also connected
to it for backup supply. PV assemblies of 264KW capacity and two number of Led
Acid (LA) batteries of 1KWh were also connected with DC bus for solar power
generation and energy storage respectively. Lump-sum load of average energy
demand of 471 KWh/day was connected with AC bus. A converter of 30KW was
used for requisite energy transfer between the two buses. Built-in microgrid controller
was used for the simulation and load flow decisions.The schematic of the proposed
system is shown below.
 Figure 7: Schematic Diagram of the proposed system

iii. Electrical Summary

Figure 8: Source-wise power generation per month

Table 2: Electrical Summary of the proposed system

Production
Quantity Value Percentage

Generic flat plate PV 469,113 KWh/year 84.8%

Grid Purchases 83,954 KWh/year 15.2%

Total 553,067 KWh/year 100%

Renewable Fraction - 51.2%

Electricity Consumption and Excess

AC Primary load 171,915 KWh/year 100%

Excess Electricity 376,523 68.1%

iv. Economics of the proposed system

The concrete economics parameters are shown below in the table which enlists present
and annual worth, payback estimation and rate of return.
 Table 3: Economic parameters of the proposed system

Parameter Present Annual Return on IRR Simple Discounted

s worth Worth Investment payback payback
(ROI)
Values $80,339 $6,285 44.9 % 50.3 1.99 years 2.18 years
%
The discount rate of 3%, 6% and 12% were simulated by the system and HOMER
Optimizer selected 12% discount rate for the facilitation of the consumers. Due to this,
simple payback time of total investment raised from normal 1.99 years to 2.18 years.

Figure 9: Cost summary of the proposed system

F. Discussion on Results

Following graphical representation of the comparison of cumulative nominal cash flow,

for base system and proposed system, indicates economic viability of the proposed
system. NPC cost of the both systems is drawn in the graph over the period of 25 years;
which is life time of the proposed system. After that, it would be replaced and again next
payback cycle will start.
 Figure 10: Cost comparison of both systems over the lifetime period of the system

The Tabular comparison of base system versus proposed system is represented below,
which depicts competitiveness of the proposed system in terms of reduced operating cost
of the system, levelized cost of energy, carbon emissions reduction, Sulphur dioxide
reduction and reduction in nitrous oxides also. Especially, difference of worth $7483 in
operating cost of the two systems over the period of year is significant. Net present cost
to electrify the similar load from grid only was $193,393; whereas net present cost for the
proposed system is $113,054. Carbon emissions also reduced from 108,650kg per year to
53,059kg per year; which is closer enough towards clean energy goals.

Table 4: Tabular comparison of different parameters of the proposed system versus existing system

Sr. Properties/Descriptions Base Case Lowest Cost Percentage

No. System System Difference
1. Operating Cost $15,129 $7646 49.46%

2. Cost of Energy (COE) $0.0880 $0.0514 41.59%

3. NPC $193,393.26 $113,054.50 41.54%
4. Annual CO2 gas emissions 108,650kg 53,059 kg 51.16%

5. Annual Sulphur Dioxide 471kg 230 kg 51.16%

6. Annual Nitrogen Oxides 230kg 112 kg 51.30%

The major benefits of proposed system include: increased penetration of renewable

energy in the system, reduced Operating cost, reduced Carbon emissions, reduced power
losses due to localized power generation, practical opportunity for net metering and step
closer to work independently from over-congested national grid and no need to
continuous up-gradation of the distribution systems of remote areas (as only install DERs
in response to increasing demand). This model can be utilized to electrify far-held areas
in off-grid mode, where supply of electricity from the grid is not economical.

Overall, the region of AJK, being hilly, less populous and less-industrial area, has meagre
energy demand as compared to the highly populated and more industrial Pakistan. As
installed grid capacity of AJK is 677 MVA and maximum demand is 400MW, the
distributed energy resources based microgrids should be deployed at residential,
community, commercial and district level, in order to get rid of prevailed menace of load
shedding. Effective policy measures are needed to attract private partnership to deploy
DERs based microgrids on ensured pay-back plans along-with financial, technical and
security support. In this way, the AJK will not suffer load shedding due to under rated
power transmission and distribution system of Pakistan as well as due to multiple tripping
in national grid of Pakistan due to bad weather conditions. Then, in other provinces, this
model may successfully be exercised.

G. Conclusion

In the prevailing environment of securitization of economics of the country, the energy

security is vital for national security and economic progress of the country. The
prolonged energy crisis needs prompt response from all segments of the country as
indicated in STEEPLE analysis. Control on population rise and rapid urbanization,
imprudent use of energy, menace of corruption and energy theft, and technological
advancements in the energy sectors are recommended for quick healing of the sector.
Pakistan should focus on securing its water by negotiating with the neighbors and
renewable energy potential must be tapped at full potential to replace conventional, non-
economic reliance on thermal resources. Distributed energy sources based microgrids are
cost-competitive, eco-friendly and ease-oriented adaptable solution in short term and long
term prospective.
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