SUSTAINABLE ENERGY INITIATIVE FOR INDUSTRIES IN PAKISTAN Project ID 100045 Policy review and recommendations on the promotion of renewable energy and energy efficiency (1st Draft) Prepared by: Full Advantage Co., Ltd. (Thailand) PITCO Private Limited (Pakistan) October 2016 For any query or clarification, please contact: Masroor Ahmed Khan National Project Manager UNIDO, Pakistan, Serena Business Complex, 7 th floor, Khayaban-e-Suhrawardy Islamabad Office: 92-51-8354820, Cell: 92-3357888128 Page 1 of 120 Contents Acronyms and Abbreviations .......................................................................................................... 4 Units ................................................................................................................................................... 8 Currencies ......................................................................................................................................... 8 1. Introduction .............................................................................................................................. 9 2. Types and Objectives of RE and EE Policies ....................................................................... 10 3. Recent RE and EE Development in Pakistan ....................................................................... 13 3.1 Brief of Pakistan power sector .......................................................................................... 13 3.2 Renewable energy development in Pakistan..................................................................... 14 3.3 Energy efficiency development in Pakistan ...................................................................... 20 3.4 Existing RE and EE institutional framework in Pakistan ................................................. 22 3.4.1 Existing RE institutional framework in Pakistan ............................................................. 22 3.4.2 Existing EE institutional framework in Pakistan ............................................................. 25 4. Review of existing RE & EE Policy and Regulatory Framework in Pakistan .................. 29 4.1 Existing RE Policy & Regulatory Framework in Pakistan ............................................... 29 4.2 Existing EE Policy & Regulatory Framework in Pakistan ............................................... 36 4.3 Gender Mainstreaming in RE and EE Policy in Pakistan ................................................. 39 4.3.1 Gender in the National Policy ................................................................................... 39 4.3.2 Gender in the RE & EE Policy ................................................................................. 40 5. International Best Practices and Experience in RE & EE Policy Deployment ................. 42 5.1 International RE Policy Best Practices and Experience.................................................... 42 5.1.1 China ......................................................................................................................... 42 5.1.2 India .......................................................................................................................... 46 5.1.3 Philippines ................................................................................................................ 53 5.1.4 Thailand .................................................................................................................... 57 5.1.5 Vietnam ..................................................................................................................... 64 5.2 International EE Policy Best Practices and Experience .................................................... 69 5.2.1 China ......................................................................................................................... 69 5.2.2 India .......................................................................................................................... 74 5.2.3 Philippines ................................................................................................................ 80 5.2.4 Thailand .................................................................................................................... 83 5.2.5 Vietnam ..................................................................................................................... 87 5.3 Gender in RE and EE Policies and Programmes in Asian Countries ............................... 91 5.3.1 Gender in national policies in Asia .................................................................................. 91 5.3.2 Gender in Renewable Energy Policies in Asia ......................................................... 92 6. Policy Gap Analysis ................................................................................................................ 94 6.1 Barriers to RE and EE Development in Pakistan .............................................................. 94 6.1.1 Barriers to RE Development in Pakistan .................................................................. 94 6.1.2 Barriers to EE Development in Pakistan .................................................................. 97 6.2 Comparative analysis of RE and EE Policies in Pakistan and five Asian Countries ........ 98 6.3 Policy Gap Analysis ....................................................................................................... 100 7. Preliminary Policy Recommendations for the Promotion of RE&EE in Industries in Pakistan ......................................................................................................................................... 107 7.1 Preliminary policy recommendations for RE promotion ................................................ 107 7.2 Preliminary policy recommendations for EE promotion ................................................ 107 7.3 Recommendations for gender mainstreaming in RE&EE Policy ................................... 107 Annexes .......................................................................................................................................... 108 Annex 1: List of existing RE & EE Policy and Regulatory Framework in Pakistan .................. 109 References ...................................................................................................................................... 110 Page 2 of 120 List of Figures Figure 1: Existing institutional framework for RE sector in Pakistan .............................................. 24 Figure 2: Existing institutional framework for EE sector in Pakistan .............................................. 26 Figure 3: The organogram of ENERCON ........................................................................................ 27 Figure 4: The organogram of PEECA .............................................................................................. 28 Figure 5: Average share of TPEC by sector in the Philippines (2005-2011) ................................... 81 Figure 6: Final Energy Consumption in the Industrial Sector (2015) .............................................. 84 Figure 7: Stipulated vs actual time in HPCogen approval process ................................................... 95 List of Tables Table 1: Types of RE policy instruments ......................................................................................... 11 Table 2: Types of EE policy instruments .......................................................................................... 12 Table 3: Electricity generation in Pakistan (2014-2015) .................................................................. 14 Table 4: Electricity consumption by sector in Pakistan (2014-2015) ............................................... 14 Table 5: Future hydropower projects to be implemented by WAPDA............................................. 15 Table 6: Potential and actual power generation from RE sources in Pakistan ................................. 29 Table 7: Upfront tariffs/FITs for grid-connected RE-based power projects in Pakistan .................. 31 Table 8: Status of adoption of upfront tariffs for RE in Pakistan ..................................................... 31 Table 9: Licensing fee comparison between RE and non-RE power projects in Pakistan ............... 34 Table 10: Energy consumption by sector in Pakistan (2014) ........................................................... 36 Table 11: Industrial energy consumption by type of fuel in Pakistan .............................................. 36 Table 12: Province-wide industrial electricity consumption in Pakistan .......................................... 37 Table 13: Industrial energy consumption and realizable energy saving in Pakistan ........................ 37 Table 14: Potential and actual power generation from RE sources in China ................................... 42 Table 15: FITs for grid-connected RE-based power projects in China ............................................ 43 Table 16: Potential and actual power generation from RE sources in India ..................................... 47 Table 17: RE target by technology in India ...................................................................................... 47 Table 18: FITs for grid-connected RE-based power projects in India .............................................. 49 Table 19: Potential and actual power generation from RE sources in the Philippines ..................... 53 Table 20: RE-based installed capacity targets of the Philippines