Article

Energy & Environment

0(0) 1–20
An overview of alternative ! The Author(s) 2017
Reprints and permissions:
and renewable energy sagepub.co.uk/journalsPermissions.nav
DOI: 10.1177/0958305X17743036
governance, barriers, and journals.sagepub.com/home/eae

opportunities in Pakistan

Mabroor Hassan1, Manzoor K Afridi2 and

Muhammad I Khan1

Abstract
High demand of energy for increasing economic growth, inadequate resources, pollution from
power generation, inconsistent oil prices, and fickle supplies have triggered governments to
develop long-term and secure energy sources. Alternative and renewable energy sources are
an anticipation of securing long term, clean, and sustainable future of energy. This paper presents
the current energy scenario of Pakistan, the share of renewables, analysis of alternative and
renewable energy governance, barriers and opportunities for Pakistan in adopting alternative
and renewable energy. It highlights development potential for alternative and renewable energy
and issues related to energy governance to achieve the target of 5% share in the energy mix by
2030. The results indicated substantial gaps in alternative and renewable energy policy which is
likely to freak the benefits of opportunities and government targets. The findings of this article
identified the lack of mechanism to cooperate, poor integration of alternative and renewable
energy technologies, underprivileged domestic manufacturing, no portfolio standards for
bioenergy, and the dearth of research and development. Additionally, the study had furnished
the barriers and opportunities in detail for endowment of alternative and renewable energy
resources to assure sustainable energy security of Pakistan.

Keywords
Alternatives, renewables, energy, governance, opportunities, Pakistan

1
Department of Environmental Science, International Islamic University, Islamabad, Pakistan
2
Department of Politics and International Relations, International Islamic University, Islamabad, Pakistan
Corresponding author:
Mabroor Hassan, Department of Environmental Science, International Islamic University, Sector H-10, Islamabad 44000,
Pakistan.
Email: mabroor18@gmail.com
2 Energy & Environment 0(0)

Introduction
The current century is considered to face substantial energy challenges worldwide.
Economic development and population growth expanded the demand for energy. Energy
security, adaptation, and mitigation of climate change and social objectives of poverty
reduction have complex critical trade-offs and decision in implementing effective
energy policies.1 Finite fossil fuels, energy security, increasing pollution from thermal
power generation, and climate change have stepped up concerns and serious paradox
among economic growth, energy supply, and sustainability of the environment.2–4
The emissions from fossil energy, global warming, and climate change have threatened
environmental security, energy security, and discourse of interaction of energy systems
with environment. The issue of climate change has agitated the global community to develop
clean energy for sustainable development, environmental and energy security.5,6 As, energy
security acquires safe supply through the ability of a country to optimize its energy resources
portfolio and maintaining a desired level of supply to sustain economic development and
poverty reduction. It also contends to cover issues associated with energy, economic growth,
geopolitics, and protection of the environment.7 Additionally, the Goal 7 (Affordable and
clean energy for all) and Goal 13 (Urgent actions to combat climate change) in the
Sustainable Development Goals have also stressed the nations to develop clean energy.8
Furthermore, inadequate resources, fluctuation of oil prices, increasing energy demand,
indeterminate supplies, and economic growth have realized the governments to consider
that fossil fuel cannot secure a safe supply and sustainability in the future.9 Hence, the
endowment of alternative and renewable energy (ARE) is a hope to combat climate
change and ensure energy security through diversification of energy mix.6 The renewable
energy growth is an effective, affordable, diversified, and practical choice due to clean and
renewable nature to secure the future development, energy security, and environmental
sustainability of the world.2,10,11,12 According to statistics, about 16% of the global
energy mix is met from renewable energy resources in 2010.13 Additionally, hydroelectricity
and traditional biomass for heating contribute to around 21 and 60%, respectively, in the
world energy consumption.14 They are reducing energy imports, the environmental impact
of energy generation, and the trade deficit.15 The governments have formulated and
implemented ARE policies and set objectives to utilize renewable sources. Hence, aims to
promote ARE, accelerate market penetration and production quotas. It reduces cost, feed-
in tariff; enhances the share of renewables; optimizes taxes; balances energy supply; ponders
environmental protection; reflects political visions and economic development.16,17
These policies ponder innovation in renewable energy as well as effectiveness to rationalize
the energy demand. The quest of policy measures for renewable is becoming an interesting
context in recent research.18 This study aims to highlight the current energy scenario of
Pakistan and share of renewables, analysis of ARE governance, purpose, barriers, and
opportunities for Pakistan. Many previous studies19–24 had mainly focused identification
of ARE potential, energy scenario since 2010, and barriers in Pakistan. Amer and Diam
(2011) meditated the selection of renewable energy technologies for Pakistan. Hence, ARE
governance is least contemplated in previous studies. This article aims to unfold knowledge
gap in the areas of ARE governance and conceptualizes the ARE governance, policy anal-
ysis, recent energy scenario since 2017, contribution of ARE in energy mix, barriers and
opportunities more precisely. The relevance of this study lies in the domain of ARE plan-
ning, policy, endowment of ARE resources, achievement of clean as well as affordable
Hassan et al. 3

energy, abatement of climate change, energy, and environmental security. The data were
collected from various sources including the economic surveys of Pakistan, government
databases, national agencies, relevant ministries, and departments. Additionally, interna-
tional agencies, nongovernment organizations, and International Energy Agency were con-
sulted to conduct empirical analysis of Pakistan’s initiatives and policies for ARE.
Apparently, this paper attempts to organize random data from many government reports
and literature into a meaningful structure.25

Energy scenario of Pakistan

Pakistan is blessed with diversified and massive ARE resources (Table 1). The endowment of
these resources can hamper economic growth, development, and substantially overcome the
yawning energy gap. The energy requirement of Pakistan (Table 2) is consistently increasing

Table 1. Alternative and renewable energy potential in Pakistan.32

Resources Potential

Small hydropower 45,000 MW

Wind Estimated potential (346,000 MW)
Technically exploitable (60,000–70,000 MW)
Solar: photovoltaic (PV) and thermal Irradiation (more than 5–6 kW h/m2/day) in many areas of country
Biomasses: Wheat straw, bagasse, A huge quantity of biomasses is produced from agriculture and
rice husk, municipal solid waste, livestock sector
and animal dung Municipal solid has estimated potential of 4000 MW
Geothermal 2000 MW
Ocean The country has a long coastal belt (1046 km) with suitable many
sites
The exact calculation of potential is not available
Biofuels Around 34 million hectares of marginal land
The country has an estimated annual potential of 50 million tons of
biofuels

Table 2. Energy requirement of Pakistan.26–37,38

Primary energy Growth

Year supply (MTOE) rate (%)

2015–16 74.8 12
2013–14 66.8 3.6
2012–13 64.727 0.35
2011–12 64.522 0.32
2010–11 64.5 2.1
2009–10 63.1 0.85
2008–9 62.55 0.58
2007–8 62.92 3.78
2006–7 60.62 4.33
2005–6 58.06 4.18
MTOE: million tons of oil equivalent.
4 Energy & Environment 0(0)

Growth rate %
Primary energy supply (MTOE)
2005-06

2006-07

2007-08

2008-09

2009-10
Year

2010-11

2011-12

2012-13

2013-14

2015-16

0 10 20 30 40 50 60 70 80
Primary energy supply (MTOE) and growth rate

Figure 1. Energy growth rate and primary supply during fiscal years (2005–16). MTOE: million tons of oil
equivalent.

every year with a variable growth rate due to change in oil prices and reliance on oil and gas
as a major source (Figure 1). The primary energy supply was 50.9 million tons of oil equiv-
alent (MTOE) during July–March 2015 with a growth rate (4.4%) as collated to this part of
last fiscal year.26,27 There was an increase in energy supply from 58.8 to 66.8 MTOE during
fiscal years 2005–6 to 2013–14, respectively.28–30 The economic surveys of Pakistan have
demonstrated a consistent increase in primary energy supply except 2008–9. A decrease in
energy supply and negative growth rate was observed during 2008–9 due to a lower level of
economic activities and high circular debt in the energy sector.31
The conventional energy sources (gas, oil, coal, and electricity) prevail more than 90% of
primary energy supply,22 whereas the contribution of alternate energy sources (solar, wind,
and bioenergy) is increasing gradually. As illustrated in Figure 2, the contribution of oil in
primary energy supply varies from 28% (2010) to 33% (2017) during 2008–17 due to fluc-
tuation in price in the global market. Natural gas is a leading contributor to meet primary
energy supply. The highest contribution (46%) was marked in 2016 and 2017, while lowest
contribution (40%) was recorded in 2008 during 2008–17 (Figure 2). The contribution to
primary energy supply of coal was 9% (lowest) in 2012 and 14% (highest) during 2008,
whereas electricity contributed 11% (lowest) in 2014 and 16% (highest) in 2011, 2016, as
well as 2017 (Figure 2 and Table 3). However, LPG contributed around 1–1.5% during
2008–17 to meet primary energy supply.26,27,30--37,39,40

Contribution of renewables
Pakistan is ambitious to shift on renewable energy gradually to meet primary energy supply.
However, hydroelectric power is a main renewable energy source in electricity generation
Hassan et al. 5

LPG
Electricity
2017 Coal
Gas
2016 Oil
2015

2014

2013
Year

2012

2011

2010

2009

2008

0 20 40
Percentage Share

Figure 2. Energy consumption by source.

Table 3. Energy consumption by source in Pakistan.26,27,30–37,39,40

Source (% age share)

Year Oil Gas Coal Electricity LPG

2008 30 40 14 14 1.5
2009 30 43 10 15 1.5
2010 28 42 13 15 1.5
2011 30 42 10 16 1.5
2012 31 43 9 15 1
2013 31 42 10 15 1.3
2014 32 44 11 11 1
2015 29 44 10 15 1
2016 32 46 N/A 16 N/A
2017 33 46 N/A 16 N/A

along insignificant contribution from solar energy, biogas, and wind energy (480 MW).39
Unfortunately, the contribution of hydroelectric power has been decreased from 37.5%
(2005–6) to around 29.7% (2013–14) as shown in Figure 5 and Table 5.40 Meanwhile
Büyük€ozkan and Güleryüz41 had reported contribution of renewable energy (about 45.8%)
in Turkey through biogas (1.7%), geothermal (0.8%), hydro (35.4%), wind (6.2%), and
combined share of solar and biogas (1.7%) (Table 4). Globally, the share of renewables is
increasing in many developing countries like Turkey but there is consistent decrease in hydro-
power and insignificant increase in solar, wind, and bioenergy in Pakistan. This consistent
decrease is due to poor maintenance of turbines, lack of replacement of old turbines, insuf-
ficient maturity of new resources, and circular debt in the power sector.26–37,39,40,38
6 Energy & Environment 0(0)

Figure 3. Map of potential of wind energy.18

Pakistan’s initiative for renewable energy

Pakistan has put many efforts for development and generation of renewable energy.
The government of Pakistan (GoP) has undertaken many institutional and regulatory incip-
ient to foster development of ARE22 as well endorsed policy reforms from 1975 to date.44
An overview of Pakistan’s initiatives for ARE is presented in Figure 7 and Table 6.
Furthermore, Pakistan has formulated ARE Policy in 2006 which is currently superseded.
Policy recommendations for use of biodiesel as an alternative were implemented in 2008 to
promote use of bioenergy in the transport sector. The GoP has launched soft loans through
Scheme for Financing Renewable Projects in 2009 which was later amended in 2015 to
promote all types of renewable energy. A medium-term ARE Policy was implemented in
2011 followed by Framework for Power Cogeneration, 2013 (Biomass and Biogas) and
Pakistan net metering policy for solar PV and wind projects of 2015.45 The status of current
ARE regulatory and institutional framework is elucidated in Table 6. Many projects of
ARE under Alternative Energy Development Board (AEDB), Private Power and
Infrastructure Board (PPIB), and Independent Power Producer (IPP) mode are at various
stages.42,43,46 The detail of projects is demonstrated in Table 7.

ARE policies, act, and regulations

Alternative and renewable policy
Ministry of Water and Power (MoWP) has formulated the midterm policy for ARE in 2011,
following the extension of short-term policy for ARE of 2006. The current policy must
Hassan et al. 7

Figure 4. Multiyear mean (2000–2012) of annual Global Horizontal Irradiance (GHI) for Pakistan in
kW h/m2.41,42

adhere a set target of at least 5% ARE share to total commercial energy supply by 2030.
The process of policy making must have rationalized cultural influences, values, beliefs, deeper
historical narratives, relative strengths of pressure groups, and participation into a clear vision
as well as objectives.47 The vision of policy is demonstrated by a clear setting of objectives and
targets. The objectives of ARE policy 201132 are depicted in Figure 8.

Strengths of ARE policy. The GoP has considered ARE as an important source to conciliate the
increasing energy demand. The policy mainly focuses on alternative and renewable energy
technologies (ARETs). It has identified the potential sources of renewables in Pakistan and
comprehend a target of 5% ARE share through endowment of these resources. The targets
look achievable by demonstrating commitment, strengthen institutional framework, and
providing the resources. Being a signatory of Kyoto Protocol, the policy covers the impor-
tance of emission reduction and requirements of Clean Development Mechanism under
Kyoto Protocol through carbon credits. The GoP recognized the finance availability as a
crucial concern for both small- and medium-scale ARE projects. For this purpose, the
government has introduced both general and specific incentives. The general incentives
include guaranteed market to buy all electricity and grid connection. The policy has
contemplated the categorical electricity purchase. The categories include purchase from
8 Energy & Environment 0(0)

38

36
Percentage Share

34

32

30

2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2010-17
Year

Figure 5. Contribution of hydropower in electricity generation.25–36,38,39

Figure 6. Identified potential of hydropower.18

ARE projects that are located within 70 km of power station at outgoing bus bar (220 kV),
132 kV transmission line within 50 km perimeter, 11 kV distribution feeders (within 5 km), or
1 km of 400 kV distribution feeders. ARE projects must supply minimum average power of
1250, 250, 100, and 20 kW/km, respectively, in each case.32 The specific incentives include
Hassan et al. 9

Table 4. The presently used capacity and contribution of renewable energy in

Turkey (2015–16).

Source Contribution to energy mix (%) Usage (%)

Biogas 1.7 (both solar and biogas) 16.8

Geothermal 0.8 22.5
Hydro 35.4 30
Solar 1.7 (both solar and biogas) 4.5
Wind 6.2 62
ozkan and Güleryüz.41
Source: Büyük€

Table 5. Contribution of hydropower in electricity generation.26–37,39,40,38

Year Capacity Share (%)

2005–6 31,953 GW h 37.5

2006–7 28,707 GW h 36.4
2007–8 27,784 GW h 33.5
2008–9 28,093 GW h 33.7
2009–10 31,811 GW h 31.6
2010–11 28,517 GW h 31.7
2011–12 29,857 GW h 31
2012–13 31,173 GW h 31.5
2013–14 6775 MW 29.7
2014–15 7027 MW 31.47
2015–16 7027 MW 34
2010–17 29,800 GW h 30

simplifying the licensing procedure for ARE projects up to 5 MW and assistance of prov-
inces in land acquisition. The government shall introduce an Energy Purchase Agreement
between the ARE-IPP and AEDB as a security package. The policy addresses the defined
tariffs (direct or through bidding) along feed-in tariff on alternative energy projects and
fixed rates with the reference rate of US dollars. The premium on ARE projects is also
included in this policy to ensure the fastest growth. Further, the policy covers all the
required procedures for approval of ARE project. The policy has introduced the concept
of energy services to meet the energy requirements in affordable cost and generate income.
Successful execution of ARE policy 2011 oblige to harness dissemination of accurate infor-
mation, unfold the benefits, and understand the impingement of ARE development. It will
meet the overall energy requirement, women empowerment, income, and poverty reduction.
In this scenario, policy mandated AEDB to undertake comprehensive awareness program
for application of ARETs to clinch success.

Gaps in ARE policy. ARE policy has mainly focused on the alternative technologies through
import and transfer of technology. The policy has an objective to develop the integrated
ARET-based solutions to optimize the impacts of ARE deployment in the underdeveloped
area along with its beneficial use for income generation but optimization is not appropri-
ately addressed. Although, the policy has addressed the ways to facilitate private sector.
10 Energy & Environment 0(0)

Pakistan Council for Appropraite Technology (PCAT)

To promote the alternative and renewable energy
Established in 1975.
technologies (ARETs).

National Institiute of Silicon Technology (NIST)

Established in 1981. To manufacture domestic the ARETs.

Pakistan National Conservation Startegy (PNS)

To introduce renewable energy sources such as
Devised in 1992.
wind power, biogas, and mini hydropower projects.

Private Power and Infrastructure Board (PPIB)

To implement o alternate and renewable energy
Established in 1994.
projects of more than 50 MW.

National Environment Action Plan Support Programme (NEAP-SP)

Implemented in 1997. To support ARETs.

Pakistan Council of Renewable Energy Technologies (PCRET)

Established 2001. To promote and develop ARETs.

Alternative Energy Development Baord (AEDB)

An autonomous body for the implementation of
Established in 2003. alternate energy policies and execution of projects.

National Environment Policy 2005

Implemented in 2005. It has emphasized on renewable energy

Others
National Engineering and Science Commission Thery are working on design and production of
(NESCOM) and Solar Energy Center (SEC) . photovoltaic cells

Figure 7. An overview of Pakistan’s initiatives for ARE.

But the domestic manufacturing of ARET is not addressed properly. The policy has dem-
onstrated the commitment to coordinate, harmonize efforts, and correspond the federal
government, provinces, Azad Jammu and Kashmir (AJK)/Gilgit-Baltistan (GB), and gov-
ernment bodies engaged in ARE projects to meet the declared goals. But the way of har-
monization is not addressed properly. The involvement of private sector is comprehensively
encouraged but the responsibility of the state to develop ARE is not clear. The policy
contains excessive detail of proposal approval and fee structure which is usually part of
Hassan et al. 11

Table 6. Regulatory initiatives of Pakistan for renewable energy (2003–15).45

Title Year Status Purpose

Pakistan net metering policy 2015 In force Solar and wind power generators under
for solar PV and wind 1 MW capacity can sell back produced
projects electricity to national grid
Framework for Power 2013 In force Biomass/biogas-based cogeneration
Cogeneration 2013 projects
(biomass and biogas)
Alternative and Renewable 2011 In force Harness the ARE development in the
Energy Policy country
Alternative Energy 2010 In force The act mandated AEDB as an autono-
Development Board Act mous body for implementation of ARE
policy and execution of projects
Scheme for Financing 2009 (as In force Soft loans for projects less than 50 MW for
Renewable Projects amended 12 years
in 2016)
Policy recommendations for 2008 In force Promote the use of bioenergy in transport
use of biodiesel as an sector
alternative fuel
Alternative and Renewable 2006 Superseded Development of alternative and renewable
Energy Policy (short term) energy
Alternative Energy 2003 In force Formulation and implementation of
Development Board alternative energy policies and
execution of projects
AEDB: Alternative Energy Development Board; ARE: alternative and renewable energy; PV: photovoltaic.

regulations. The involvement of research and development is least focused in this policy to
establish domestic manufacturing and reduce cost. The hydropower is globally known as a
clean and renewable energy source but this policy did not consider it. Biofuels are identified
as potential sources of this policy but the use of biofuels as alternative energy requires
application and portfolio standards. ARE policy did not include any guidelines about appli-
cation and portfolio standards for bioenergy.

Power generation policy, 2015 (hydropower generation)

The MoWP has implemented Power Generation Policy 2015 for exploration of indigenous
resources, significant power generation capacity at least cost, and protection of the envi-
ronment from power generation. Ministry has authorized the PPIB and relevant entities in
provinces, AJK, and GB for implementation of this policy. The policy covers the power
generation from conventional sources, i.e. thermal and hydropower projects. Power
Generation Policy deals with private sector projects which did not have detailed engineering
design and feasibility study (raw site hydropower projects). Public sector or private sector
projects with detailed design and complete feasibility assessment, under Public–Private
Partnership (PPP) projects and projects initiated by provinces/AJK/GB solely or private,
public, or PPP will be dealt under this policy. Furthermore, it covers only river run-off
projects where irrigation control, flood control, and seasonal storage are not entailed,
12 Energy & Environment 0(0)

Table 7. Detail of alternative and renewable energy projects in Pakistan.42,43,46

Capacity
Project Source (MW)

Quaid-e-Azam Solar Park, Bahawalpur Solar 100

Three Gorges First Wind Farm Pakistan (Pvt Ltd), Jhimpir Sindh Wind 50
Foundation Wind Power Ltd, Khuttikun, Gharo, Sindh Wind 100
SSJD Sindh Biomasses 12
Lumen Energia, Shahkot, Punjab Biomasses 12
Biomass Power Generation Limited, Punjab Biomasses 12
Fauji Fertilizer Company (FFC) Energy Limited Farm, Jhimpir Wind 50
FWEL Foundation Power Plant I and II Wind 50
Zorlu Enerji Wind Farm, Jhimpir Wind 56.4
Faisalabad and Green Sure Environmental Solutions, Mardan, KPK Biomass and waste 12
New Bong Hydropower Project AJK Hydropower 4
Karot Hydropower Project Hydropower 720
Gulpur Hydropower Project Hydropower 102
Patrind Hydropower Project Hydropower 147
Sehra Hydropower Project Hydropower 130
Suki Kinari Hydropower Project Hydropower 870
Kohala Hydropower Project Hydropower 1100
Azad Pattan Hydropower Project Hydropower 640
Mahl and Chakothi-Hattian Hydropower Project Hydropower 1090
Neelum–Jhelum Hydropower Project Hydropower 969
Diamer-Bhasha Dam Hydropower 4500

Moblize
finiancing,
incentives and
reduce cost to
encourage
private sector
Deploy ARET
Provide
in off-grid and
additional
general
power supply Reconcile efforts of households
the federal
government and
Provinces/ AJK/GB
for accessible,
systematic,
Establishment sustained Productive use
of domestic deployment and of ARE for
ARETs, growth of ARETs income
technical skills generation,
reduce cost and improve
create livelihood and
employment Institutional, alleviate poverty
technical and
operational
capacity
building

Figure 8. The targets and objectives of ARE policy.32 ARETs: alternative and renewable energy technologies.
Hassan et al. 13

otherwise special permission from government is mandatory to undertake development.

The policy provides detail and requirements for hydropower projects processing. National
Electric Power and Regulatory Authority (NEPRA) is authorized to set upfront tariff
after consultation with relevant provincial regulatory bodies under this policy.
Water use charge for the private sector and hydrological risk consideration have been
included in this policy. The policy has covered the build–own–operate–transfer, intercon-
nection, bidding, and security package requirement. Provinces are responsible for
developing their own policies. The government will relax the 5% customs duty on
import of technology for power projects. This policy will be applicable to all new
power projects after 15 February 2015.27

AEDB Act
The AEDB Act of 2010 has been endorsed by MoWP. It has empowered AEDB as an
autonomous regulatory institution to implement and deliver ARE policy. AEDB Act covers
the establishment, structure, and function of AEDB to promote, develop, and certify the
ARE technologies. AEDB Act emphases on the establishment of Institute of Alternative
and Renewable Energy Technology under AEDB for commercial application of ARE.
Alternative Energy Fund has been established under this act to meet the expenses and
functions of the Alternative Energy Board, institute, and organizations. Further, their
accounts will be separated and audited. The AEDB shall follow the policy directives of
Federal Government. AEDB must submit its annual report to Federal Government under
this Act. Furthermore, this act considers all executive authorities in federation and provinces
as authority to assist Board. The dissolution conditions of AEDB are mentioned in this act.
AEDB Act is exempted from all taxes to promote ARE.44

Pakistan net metering policy for solar PV and wind projects

NEPRA has developed Alternative and Renewable Energy Distributed Generation and Net
Metering Regulations in 2015 for the purchase of ARE from distributed generations.
The regulation includes an application for interconnecting distributed generation facility,
licensing for grant of Distributed Generator License. It also decrees general powers rights,
obligation of the distribution company, as well as rights and obligations of distributed
generator. Besides, terms of the agreement, termination of agreement, and dispute resolu-
tion are included in this agreement. The regulation covers distributed generation facility,
design, and operating requirements such as protection requirement, prevention of interfer-
ence, net metering services (metering requirement and billing for net metering), and voltage
and frequency range. According to this regulation, the distributed generator is responsible
for all cost of interconnection between distribution company and distributing generator. If a
person fails or refuses to comply with, or contravenes any of provision of this regulation
may be punished by authorities up to 100 million rupees.48

Scheme for financing renewable projects (as amended in 2016)

The government renewable energy policies adjure fiscal incentives to foster renewable
energy. These incentives encompass rebates, loans, grants, production, and tax incentives.49
State Bank of Pakistan (SBP) has introduced a scheme for financing renewable energy
projects in 2009, later amended in 2015 to express the financial mechanism for banking to
14 Energy & Environment 0(0)

attract borrowing, financing, and promoting ARE. The scheme is available for power gen-
eration from alternative and renewable sources. It has two categories: Category I covers the
prospective sponsors interested in ARE power projects of more than 1–50 MW capacity.
The project has met the prescribed requirements of all relevant government departments/
authorities and AEDB. The refinance of such project will be 100% at the rate of 2.00%,
bank DFIs spread at 4.00 and 6% end user rate. The maximum finance of six billion is
available for a tenure of up to 12 years. Category II covers the industrial, domestic, and
commercial consumers, willing to set alternative and renewable power projects with capacity
from 0.004 to 1 MW. The maximum finance of six billion is available for a tenure of up to 10
years for Category II. The refinance of Category II project will be 100% at the rate of
2.00%, bank DFIs spread at 4.00 and 6% end user rate.50

Framework for power cogeneration, 2013 (bagasse/biomass)

The bagasse/biomass project having high pressure (minimum 60 bar) shall coordinate with
AEDB and the Power Producer may establish the project as a separate entity or part of the
sugar mill. NEPRA is authorized to determine upfront tariff per unit for bagasse/biogas-
based cogeneration project and option to opt is available for the producer. This framework
facilitates the producer to supply at the respective line with interconnection cost.
Meanwhile, the purchaser is responsible for evacuating all energy and billing will be the
standard bankable document. The Letter of Intent shall be issued by AEDB to standard
proposal. The producer shall have to meet the requirements of Initial Environmental
Examination Report and Grid Interconnection Studies. This framework shall be applicable
to all cogeneration projects. This framework shall be applicable to all bagasse/biomass-
based projects commenced after January 2013.51

Institutional framework for ARE

MoWP and provincial entities
The federal MoWP is the ultimate authority for all concerns associated with policy formu-
lation, planning, regulation, incentives, consumption electricity generation, distribution,
transmission, and pricing across the country.29 Therefore, it has an executive authority to
deal with ARE in collaboration with provincial entities in Pakistan. The national policy
acquires support of provincial governments, AJK and GB governments to AEDB in per-
mitting, land acquisition, and implementation of renewable projects in their geographical
territory.32,44

NEPRA
NEPRA was enacted under a NEPRA Act of Parliament (Regulation of Generation,
Transmission and Distribution of Electric Power Act, 1997) to decree as an authorized
regulator to develop commercially oriented, competitive energy market in Pakistan.29
NEPRA is responsible for ensuring quality, standards, the safety of alternative and renew-
able technologies, adjusting price, and tariff with ARE-Intended Power Producers.
Hassan et al. 15

Private Power Infrastructure Board (PPIB) and AEDB

PPIB and AEDB are responsible to explore energy resources, produce energy, issue licenses,
and regulate producers. PPIB is a one-window facilitator, representative of provinces, AJK,
and GB for endowment of conventional power resources comprising of hydropower projects
and ARE projects of more than 50 MW capacity.29
The encouragement, development, promotion, and growth of ARE is behest of AEDB
from its establishment in 2003. MoWP has sequestered its administrative control in 2006 as
well as asserted AEDB as a sole representative of the federal government to implement
policy. The inter alia mandate of AEDB is to:

• Implement policies and ARE projects proposed by both private sector and relevant gov-
ernment entities.
• Abet and support the development of ARE to attain economic growth.
• Establish indigenous manufacturing base along with assure transfer of ARETs.
• Transform the energy services to renewable resources.
• Commence the commercial-scale ARE projects except hydropower projects more than
50 MW, contemporary less than 50 MW require prior consultation with provinces.44

Furthermore, AEDB has been mandated as a regulatory body for the implementation
of AEDB Act. AEDB is working under remote village electrification program to supply
electricity to 7874 detached villages of Baluchistan and Sindh through alternative and
renewable technologies.42,43

Pakistan Water and Power Development Authority (WAPDA)

WAPDA is working under administrative control of MoWP since its establishment
(WAPDA Act of Parliament) in 1958. It is known as a statutory and autonomous body
which was unbundled in 2007 with change in its function. The power wing was assigned a
function to hydropower generation, operation, and maintenance of powerhouses. It has also
the mandate for development of hydropower and water resources in an efficient manner.52

Barriers in endowment of ARE in Pakistan

Although, the SBP and federal government has introduced the incentives for ARE, cost and
pricing is high in Pakistan. The renewable energy projects particularly small-scale projects
are confronting a lack of fiscal resources as well as proper lending facilities.20 Further, high
investment is a barrier for entrepreneurs.53 The distribution system of Pakistan is alternate
current (AC) based but the alternative energy sources (the wind and solar) generate
direct current and it is an important technical barrier. Many renewable energy technologies
including integrated bioenergy systems, geothermal, ocean energy, wind, and solar power
(third-generation technologies) are currently concentrating on efficiency improvement
at development stages in even developed countries.21 Therefore, there is an issue of low
efficiency and technological immaturity. The organized record of research and development
projects is not available; hinder to commercialize the individual research on revisiting mus-
cular power; and restrict the utilization of ocean tidal potential, fuel cells, solar, and wind
power across the country.21 Transmission lines are not easily accessible in many areas.
According to ARE policies, the interconnection cost will be paid by power producer.
16 Energy & Environment 0(0)

There are the high line and power loss. The interconnection cost overburdens the investors
in many countries.54 There are low subsidies at ARETs along with a lack of awareness,
communication, skill, and technical knowledge. The public participation, awareness, and
general information about new technologies, implementation, maintenance, understanding
of practical problems for procumbent of renewable energy in developing countries.55 The
policies are still focusing on transfer of technology from developed countries. But the
manufacturing of alternative and renewable technologies at the domestic level is least
focused on policies of Pakistan. The market of Pakistan is still unreliable for biomass.
The solar energy could be an effective solution for remote and desert areas of Sindh and
Baluchistan but there is the problem of lack of infrastructures such as roads and inade-
quate building codes. The bioenergy required the portfolio standards to improve the effi-
ciency. Renewable portfolio standards have gained exceptional significance for promotion
and generation of renewable energy from the regulatory perspective and are being imple-
mented in most countries at a global level.56,57 Pakistan has no portfolio standards for
bioenergy.

Opportunities for Pakistan

• Pakistan has significant potential for hydropower generation and successfully generated
the low-cost hydropower in past decades. Therefore, hydropower as renewable energy is
the long-term solution for energy crises in Pakistan. Furthermore, alternative energy can
contribute to overcome energy crises in a short time and considered as clean energy to
reduce reliance on fossil fuel for Pakistan. The renewable energy can hamper the pace of
development, foster to overcome yawning energy crises, and a potential resource to vouch
energy security.23
• The promotion, manufacturing, installation, maintenance, and operation of ARE tech-
nologies will bring the employment opportunities in Pakistan. The renewable energy
sector candid a new panorama in professional skill by creating many attractive employ-
ment opportunities worldwide.58
• The adoption of renewables will promote the transfer of technology. The ARE technol-
ogies are not manufactured at domestic level. The Conference of Parties (COP) meeting
COP21 was held in 2015 at Paris with aims of keeping global temperature increase below
2 C during this century.59 This meeting considered ARE as a preferred choice to cope
with climate change. Pakistan has ratified the agreement. Further, this will provide the
opportunities to utilize environmental diplomacy.
• The GoP has encouraged the involvement of private sector in the alternative and renew-
able sector and aligns the policies and procedures to clinch foreign investment. Therefore,
foreign investors are investing in this sector, e.g. Chinese investment in Quaid-e-Azam
Solar Park.
• The solar energy could be a suitable option for remote areas of Sindh and Baluchistan
which have poor road infrastructure and the high cost of transmission lines due to
scattered population and nomadic pattern. The biogas from animal dung could be a
potential source of energy in rural areas of all provinces. The ARE technologies can
transact a meaningful role in rural development.
• The international organization such as World Bank and United Nations has increased
financial support incentives. They are offering aid to developing nation to adopt efficient,
renewable, low carbon technologies, develop environment-friendly infrastructure, abate
Hassan et al. 17

greenhouse gas emissions, and mitigate climate change. This paradigm shift has reshaped
the interests and priorities of developing nations about renewable energy and environ-
mental protections. These global accedes are offering not only financial opportunity but
also a cornerstone to global environmental protection and sustainability.60

Conclusions
• Pakistan is facing energy crises, which threatened the economic development,
social security, and environmental protection. Pakistan is meeting the major share of
increasing supply from high-cost nonrenewable fuels (gas, oil, and coal). However,
Pakistan has a massive potential of identified ARE from hydro, solar, wind, and
biomasses.
• By viewing the scenario, the government has implemented ARE policies equipped with
different regulations to promote and generate the ARE. AEDB Act and institutional
mechanism are present to strengthen governance. Apart from regulations, the govern-
ment has introduced financial schemes and encourage private investment to achieve the
target of 5% ARE share by 2030. But the substantial gaps in ARE policy including
no clear mechanism for integration of ARE technologies and cooperation; less attention
to domestic manufacturing; no portfolio standards for biofuels; scant contemplation
of hydropower, research, and development intimidated the exploration and deployment
of ARE.
• However, there are many barriers such as AC-based system, high line loss, high capital
cost, lack of research and development, less skill and knowledge, low subsidies, low
payback value, high interconnection cost, wide gaps in policies, no portfolio standards,
and poor infrastructure, which are candidates for substantial attention.
• There are enormous opportunities including a solution to energy crises, employment
opportunities, rural development, cleaner energy, technology transfer, environmental
diplomacy, and mitigation to climate change. Therefore, AREs are expected to contribute
in sufficient share to meet the sustainable future of energy in Pakistan as well as the future
development of the world.
• In sum, there is an urgent necessity of vibrant ARE policy based on multicriteria model
(technical, economic, environmental, social, and political criteria). The United Nations
and International Atomic Energy Agency recommended to ponder technical (efficiency,
reliability, right energy mix and demand), economic (investment cost, subsidies, fuel,
operation, and maintenance cost), environmental (emissions, noise, land use, climate
change, and water security), social (social acceptance, employment, and participation),
and political (will, constraints, human resource capacity, etc.).13 Hence, this study
recommends multi-criteria-based approach for future ARE policy.

Declaration of conflicting interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or
publication of this article.

Funding
The author(s) received no financial support for the research, authorship, and/or publication of this
article.
18 Energy & Environment 0(0)

References
1. Ansar A, Flyvbjerg B, Budzier A, et al. Should we build larger dams? The actual costs of hydro-
power megaproject development. Energy Policy 2014; 69: 43–56.
2. Chen F, Duic N, Alves LM, et al. Renewislands – renewable energy solutions for islands. Renew
Sustain Energy Rev 2007; 11: 1888–1902.
3. Geller H, Harrington P, Rosenfeld AH, et al. Polices for increasing energy efficiency: thirty years
of experience in OECD countries. Energy Policy 2006; 34: 556–573.
4. Chapman AJ, Tezuka T and McLellan B. Renewable energy policy efficacy and sustainability: the
role of equity in improving energy policy outcomes. In: Sustainability through innovation in product
life cycle design. In: Matsumoto M., Masui K., Fukushige S., Kondoh S. (eds) Sustainability
Through Innovation in Product Life Cycle Design.Singapore: Springer, 2017, pp.747–763.
5. Lucas JN, Francés GE and González ES. Energy security and renewable energy deployment in the
EU: liaisons dangereuses or virtuous circle? Renew Sustain Energy Rev 2016; 62: 1032–1046.
6. Elum ZA and Momodu AS. Climate change mitigation and renewable energy for sustainable
development in Nigeria: a discourse approach. Renew Sustain Energy Rev 2017; 76: 72–80.
7. Diwan P and Sarkar NA. Energy security. New Delhi: Pentagon Energy Press, 2009.
8. The United Nations. The sustainable development goals report 2016. New York: The United
Nations, 2016.
9. Aslani A, Naaranoja M and Antila E. The feasibility study of prior renewable energy alternatives
to private sector investment. Int J Adv Renew Energy Res 2012; 1: 9-16.
10. IEA. Energy use in the new millennium-trends in IEA countries. Paris: International Energy Agency/
OECD, 2007.
11. IEA. Worldwide trends in energy use and efficiency – key insights from IEA indicator analysis. Paris:
International Energy Agency/OECD, 2007.
12. IAEA. Energy indicators for sustainable development: guidelines and methodologies. Vienna:
International Atomic Energy Agency, 2005.
13. REN21. Global status report REN21. Renewable energy policy network for the 21st century,
http://www.ren21.net/Portals/97/documents/GSR/GSR2011_Master18.pdf (2011, accessed 30
September 2012).
14. Aslani A, Antila E and Wong KF. Comparative analysis of energy security in the Nordic coun-
tries: the role of renewable energy resources in diversification. J Renew Sustain Energy 2012; 4:
062701.
15. Dixon RK, McGowan E, Onysko G, et al. US energy conservation and efficiency policies: chal-
lenges and opportunities. Energy Policy 2010; 38: 6398–6408.
16. Hancock K and Vivoda V. International political economy: a field born of the OPEC crisis returns
to its energy roots. Energy Res Soc Sci 2014; 1: 206–216.
17. Chang RD, Zuo J, Zhao ZY, et al. Evolving theories of sustainability and firms: history, future
directions and implications for renewable energy research. Renew Sustain Energy Rev 2017; 72:
48–56.
18. Johnstone N, Hascic I and Popp D. Renewable energy policies and technological innovation:
evidence based on patent counts. Environ Resource Econ 2010; 45: 133–155.
19. Asif M. Sustainable energy options for Pakistan. Renew Sustain Energy Rev 2009; 13: 903–990.
20. Mirza UK, Ahmad N, Harijan K, et al. Identifying and addressing barriers to renewable energy
development in Pakistan. Renew Sustain Energy Rev 2009; 13: 927–931.
21. Sahir MH and Qureshi AH. Assessment of new and renewable energy resources potential and
identification of barriers to their significant utilization in Pakistan. Renew Sustain Energy Rev
2008; 12: 290–298.
22. Sheikh M. Energy and renewable energy scenario of Pakistan. Renew Sustain Energy Rev 2010; 14:
354–363.
Hassan et al. 19

23. Mirza IA and Khalil SM. Renewable energy in Pakistan: opportunities and challenges. Sci Vis
2011; 16: 13–20.
24. Iqbal J and Khan ZH. The potential role of renewable energy sources in robot’s power system: a
case study of Pakistan. Renew Sustain Energy Rev 2017; 75: 106–122.
25. Amer Muhammad, Daim Tugrul U, Selection of renewable energy technologies for a developing
county: A case of Pakistan, Energy for Sustainable Development, 2011, 15, 4, 420, 435, 10.1016/j.
esd.2011.09. By monaz.gandevia@sagepub.in - 22/11/2017 4:33 PM"
26. GoP. Economic survey of Pakistan 2014–2015. Islamabad: Govt. of Pakistan, Economic Advisor’s
Wing, Finance Division, 2015.
27. GoP. Power generation policy 2015. Islamabad: Govt. of Pakistan, Ministry of Water and Power,
2015.
28. GoP. Economic survey of Pakistan 2005–2006. Islamabad: Govt. of Pakistan, Economic Advisor’s
Wing, Finance Division, 2006.
29. GoP. Alternative and renewable energy policy 2006. Islamabad: Govt. of Pakistan, Ministry of
Water and Power, 2006.
30. GoP. Economic survey of Pakistan 2013–2014. Islamabad: Govt. of Pakistan, Economic Advisor’s
Wing, Finance Division, 2014.
31. GoP. Economic survey of Pakistan 2007–2008. Islamabad: Govt. of Pakistan, Economic Advisor’s
Wing, Finance Division, 2008.
32. GoP. Economic survey 2008–2009. Islamabad: Govt. of Pakistan, Economic Advisor’s Wing,
Finance Division, 2009.
33. GoP. Economic survey 2009–2010. Islamabad: Govt. of Pakistan, Economic Advisor’s Wing,
Finance Division, 2010.
34. GoP. Economic survey 2010–2011. Islamabad: Govt. of Pakistan, Economic Advisor’s Wing,
Finance Division, 2011.
35. GoP. Alternative and renewable energy policy 2011. Islamabad: Govt. of Pakistan, Ministry of
Water and Power, 2011.
36. GoP. Economic survey 2011–2012. Islamabad: Govt. of Pakistan, Economic Advisor’s Wing,
Finance Division, 2012.
37. GoP. Economic survey of Pakistan 2012–2013. Islamabad: Govt. of Pakistan, Economic Advisor’s
Wing, Finance Division, 2013.
38. GoP. Economic survey of Pakistan 2015–2016. Islamabad: Govt. of Pakistan, Economic Advisor’s
Wing, Finance Division, 2016.
39. GoP. Economic survey of Pakistan 2015–2017. Islamabad: Govt. of Pakistan, Economic Advisor’s
Wing, Finance Division, 2017.
40. Büyük€
ozkan G and Güleryüz S. Evaluation of renewable energy resources in Turkey using an
integrated MCDM approach with linguistic interval fuzzy preference relations. Energy 2017; 123:
149–163.
41. GoP. Economic survey of Pakistan 2006–2007. Islamabad: Govt. of Pakistan, Economic Advisor’s
Wing, Finance Division, 2007.
42. AEDB. Alternative Energy Development Board Act 2010. Islamabad: Alternative Energy
Development Board, Ministry of Water and Power, 2010.
43. IEA. Global renewable energy. International energy agency, http://www.iea.org/policiesandmeas
ures/renewableenergy?country=Pakistan (2015, accessed 11 December 2015).
44. AEDB. Solar resource mapping. Alternative energy development board, http://www.aedb.org/
(2016, accessed 7 August 2016).
45. AEDB. Introduction to Alternative Energy Development Board. Alternative Energy Development
Board, http://www.aedb.org/ (2016, accessed 7 August 2016).
46. PPIB. Achievements of Private Power and Infrastructure Board. Private Power and Infrastructure
Board, http://www.ppib.gov.pk/ (2016, accessed 7 August 2016).
20 Energy & Environment 0(0)

47. Jacobsson S and Lauber V. The politics and policy of energy system transformation explaining the
German diffusion of renewable energy technology. Energy Policy 2006; 34: 256–276.
48. NEPRA. Pakistan net metering policy for solar PV and wind projects. Islamabad: National Electric
Power Regulatory Authority (NEPRA), 2015.
49. Menz F and Vachon S. The effectiveness of different policy regimes for promoting wind power:
experiences from the states. Energy Policy 2006; 34: 1786–1796.
50. SBP. Revised SBP financing scheme for renewable energy. Karachi: The State Bank of Pakistan,
2016.
51. AEDB. Framework for power co-generation 2013 (bagasse/biomass). Islamabad: Alternative
Energy Development Board, Ministry of Water and Power, 2013.
52. WAPDA. Introduction to Pakistan Water and Power Development Authority (WAPDA). www.
wapda.gov.pk (2016, accessed 11 August 2016).
53. Painuly JP. Barriers to renewable energy penetration; a framework for analysis. Renew Energy
2001; 24: 73–89.
54. Beck F and Martinot E. Renewable energy policies and barriers. Encyclop Energy 2004; 5:
365–383.
55. Malen J and Marcus AA. Promoting clean energy technology entrepreneurship: the role of exter-
nal context. Energy Policy 2017; 102: 7–15.
56. REN21. Renewables 2013 global status report. Paris: Renewable Energy Policy Network for the
21st Century, 2013.
57. Yin H and Powers N. Do state renewable portfolio standards promote in-state renewable gener-
ation. Energy Policy 2010; 38: 1140–1149.
58. Dvorák P, Martinát S, Van der Horst D, et al. Renewable energy investment and job creation; a
cross-sectoral assessment for the Czech Republic with reference to EU benchmarks. Renew Sustain
Energy Rev 2017; 69: 360–368.
59. UNFCC-COP21. What’s it all about? United Nations Framework Convention on Climate Change
(UNFCCC), http://www.cop21paris.org/about/cop21 (2016, accessed 11 August 2016).
60. Demirbas A, Kabli M, Alamoudi RH, et al. Renewable energy resource facilities in the Kingdom
of Saudi Arabia: prospects, social and political challenges. Energy Sources Part B Econ Plan Policy
2017; 12: 8–16.
61. IEA. Renewable energy: R &D priorities, insights from the IEA technology programmes. Paris:
International Energy Agency, 2006.

Mabroor Hassan is a doctoral candidate at the Department of Environmental Science,

International Islamic University, Islamabad. His research interests include environmental
management, regional environmental security and policy and development.

Manzoor K Afridi is an assistant professor at the Department of Politics and International

Relations, International Islamic University, Islamabad, Pakistan. His research interests
include public policy, foreign policy, international relation and regional development.

Muhammad I Khan is a professor at the Department of Environmental Science,

International Islamic University, Islamabad. His research interests include environmental
management, policy and development.