Pakistan has tremendous potential to generate solar and wind power. According to the World Bank, utilizing just 0.71% of the country’s area for solar photovoltaic (solar PV) power generation would meet Pakistan’s current electricity demand. The wind is also an abundant resource. Pakistan has several well-known wind corridors of its windiest areas. However, despite a number of successful projects, the installed capacity of solar and wind energy in Pakistan, at just over 1,500 Megawatts, is just 4%t of total capacity, equal to around 2% of total generation.
Nevertheless, the government aims to meet the renewable energy targets by 2030, rising the generation through renewable resources to 60%.
To achieve such targets, a massive and immediate expansion of solar and wind is required through competitive bidding which would decrease prices. Efforts to reduce power generation from uneconomic thermal plants (in particular heavy fuel oil) and continued investment in hydropower must continue as well.
The country is currently facing a significant power surplus due to new generation additions and weaker than projected demand, in part due to the COVID-19 pandemic. However, Pakistan needs to ensure it avoids a repeat of the boom-and-bust cycle of underinvestment in power generation followed by emergency capacity development that has characterized recent decades. VRE represents a “no regret” option that can be developed relatively quickly and can displace fuel from inefficient thermal plants and reduce various cost and supply risks such as import dependency or delays of major hydropower projects. If VRE targets are met, up to $5 billion could be saved in potential fuel and other costs.