There is a saying that the energy conserved is better and cheaper

than the energy produced or purchased.

In the West, the movement for energy conservation, efficiency, self-reliance

and renewable energy started in the backdrop of the 1973 oil crisis. Since then
remarkable changes have taken place in these areas. Energy intensity (energy
elasticity of GDP) used to be more than one, which means that to increase
GDP by 1%, it required 1-1.5% increase in energy supply or consumption.
Today, in most countries, this index is 0.5 and in some economies, it is even
negative – that is the growth rate of energy conservation and efficiency is
faster than the growth rate of economy.
This is not true for developing countries like Pakistan due to a variety of
factors such as poverty, low education and technology. The sensitivity,
however, both among public and government policies, is increasing.

Energy efficiency and conservation have been neglected in Pakistan for decades. All
governments have focused on adding generation capacity rather than reducing the demand for
energy demand, even though demand-side measures cost far less and can give quick wins.

The first national energy efficiency policy was notified in 2006 but was ineffective in delivering
any results. The energy efficiency authority ENERCON was established in 1988. Since then, it
has been transferred from one ministry to another five times. The situation did not improve after
it was renamed the National Energy Efficiency and Conservation Authority (NEECA) after the
promulgation of the NEECA Act in 2016.

In the World Bank’s Regulatory Indicators for Sustainable Energy (RISE) ranking last year,
Pakistan scored 28 out of 100 in energy efficiency. Our policies, regulations and financing
mechanisms lag far behind other countries.

Energy efficiency and conservation can provide highly impactful and cost-effective ways for the
government to quickly respond to the energy crisis. Despite energy conservation
efforts, many areas continue to experience load shedding of up to 14
hours, as the generation shortfall reached 8 gigawatts (GW). Given the high
energy intensity of Pakistan’s economy and the nascent energy efficiency market, there is
tremendous scope for demand-side improvement. NEECA should fast-track implementation of
minimum energy performance standards for appliances such as motors, lighting, air conditioners,
refrigerators, and water and space heaters which could bring substantial cost savings for
households. It should also work with the relevant authorities to amend the bylaws of
development authorities, mandating the inclusion of building energy efficiency in new
construction. A combination of passive (building orientation, green roofs, insulation) and active
measures (energy-efficient heating and cooling systems) can reduce the energy needs of these
buildings.

It will be important to show the value proposition of energy efficiency to scale this up and
mobilise private sector investment. The government can set up a super-ESCO – a publicly owned
but commercially operated energy servicing company (ESCO). The super-ESCO can design,
implement, finance and manage energy efficiency projects especially in the public sector. It can
also play a role in facilitating financing for large commercial and industrial consumers. There are
examples of super-ESCOs from other countries, including EESL in India, Tarshid in Saudi
Arabia, and Etihad in the UAE.

It will be important to target quick wins such as replacing lights, fans and streetlights which can
give projected energy savings of 4,750 GWh, equivalent to 95 billion Pakistani rupees (USD 431
million) in reduced electricity bills and 142 billion Pakistani rupees (USD 647 million) in fuel
cost savings annually, according to our calculations.

The power regulator determined a tariff increase of Rs 7.9/kWh for the 2023 financial
year, which the government decided to implement in three phases: Rs 3.5/kWh in July, Rs
3.5/kWh in August and Rs 0.91/kWh in October. Given that the previous benefit for those who
use little electricity has been removed for non-protected consumers, several households will have
a 150% increase in electricity bills. Non-protected consumers have been defined as those who
used over 200 units of electricity in the last six months.

Most low-income households only have lights and fans at home. These are energy inefficient as
people are still using incandescent bulbs and inefficient fans. Replacing incandescent light bulbs
with LEDs can save 80% energy while a 3-star (Pakistan Energy Label) fan consumes at least
50% less power than an inefficient fan.

The government should roll out a lights and fans replacement programme through the super-
ESCO – either at federal or provincial level. This can be done quickly through public
procurement. For other household appliances such as electric motors and water heaters an on-bill
financing scheme can be used where consumers can pay for these appliances through monthly
instalments in the electricity bill. This on-bill financing mechanism can also be used for
financing solar energy generation at the consumer level.

The government must launch a national energy conservation campaign encouraging everyone to
do their bit in alleviating the energy crisis. The campaign should emphasise no-cost measures
such as setting the air-conditioner temperature at 26 degrees Celsius especially in malls, hotels,
and offices; using natural lighting; unplugging IT equipment when not in use; and wearing
weather-appropriate clothes to reduce the need for cooling or heating. There are examples from
countries such as Spain.
The current energy crisis, because of its impact on macroeconomic stability, is a national
emergency and everyone has a role to play in defusing the situation. The best way in which
millions of consumers can play their role is through energy efficiency.