Most countries in the South Asian region have been making efforts to secure energy supplies in order to sustain the rapid economic growth and meet the increasing demand. To this end, they have been exploring inexhaustible and sustainable alternative energy sources such as solar, wind, hydro and biomass. Geographically, the South Asian countries experience a range of climatic conditions, which gives them access to a variety of renewable energy sources. Moreover, their geographical locations have made these countries extremely vulnerable to global climate change. Thus, a transition from non-renewable to renewable energy consumption is crucial to ensure sustainable development in this region.
The governments of South Asian countries have initiated renewable energy policies and programmes to encourage industries and individuals to employ renewable energy systems to meet their power requirements. While countries such as India, Pakistan, Bangladesh and Sri Lanka are witnessing the development of utility-scale renewable energy projects, others like Afghanistan, Nepal and Bhutan have found success in setting up decentralised renewable energy generation systems that are not connected to a central electricity grid. From mountain villages in Afghanistan and Bhutan to settlements perched on steep slopes in Nepal, small-scale solar and hydropower projects are bringing electricity to more and more communities. These local renewable energy technologies, called “off-grid” systems, are particularly successful in reaching remote communities. According to the World Bank, Afghanistan, Nepal and Bhutan recorded the highest increase in electricity access from 2006 to 2016. While off-grid renewables have been pivotal in electrifying rural remote areas where grid extension is not feasible, grid-connected renewables have also played a major role in increasing access in these three countries. A look at the key trends in the renewable energy sector across these countries…
Afghanistan has both huge fossil fuel reserves and immense renewable energy potential. The country’s wind power potential alone is estimated to be higher than the projected power demand for several decades ahead. The estimated hydropower and solar photo-voltaic (PV) potential also exceeds the country’s projected power demand in 2032. In spite of that, Afghanistan has one of the lowest access rates and electricity consumption in the world. The situation has improved significantly since 2001. The country’s electrification rate has increased fivefold; agreements have been signed with Central Asian countries and Iran for importing electricity; thousands of small-scale renewable energy projects have been implemented in rural areas; several large-scale energy projects have been developed while existing ones have undergone rehabilitation; the institutional, policy and regulatory landscape has evolved; and transmission lines and distribution networks have expanded.
Years after a civil war that split the country into regional grids, the Afghanistan government established the National Solidarity Program (NSP) in 2002, to provide access to basic services in the villages. Prior to this, the country had non-existent rural electrification plans. The NSP played a major role in providing electricity to remote villages through the abundant renewable energy sources in the country. More than 5,000 micro-hydropower plants, which could produce up to 100 kW of electricity, were installed under the programme, along with 2,450 solar projects including rooftop solar panels, and solar water heaters and pumps. The installed mini-grids are largely community owned and managed in line with the NSP’s mission to encourage local community ownership of development projects.
According to a recent World Bank study, 84 per cent of Afghanistan’s population had access to electricity in 2016, up from just 28 per cent in 2006. While the majority of the population now has electricity, only a third of it uses the national electric grid, with the rest relying on off-grid systems.
Access to finance is a challenge for developing new projects in Afghanistan. The limited availability of risk guarantees, microcredit programmes and low-cost loans makes it difficult for many households and small businesses to finance renewable energy projects. Recently, the International Finance Corporation (IFC), part of the World Bank group, helped the government launch its first pay-as-you-go home solar systems combined with energy storage batteries. The IFC-led programme will first provide these solar systems, manufactured by California-based off-grid home solar specialist d.Light, to homeowners in the eastern and southern provinces of Nangarhar and Kandahar. After the pilot phase, PV systems will be offered across Afghanistan. The initiative is a result of collaboration between IFC’s Lighting Afghanistan programme, the Afghan Wireless Communications Company, the Global System for Mobile Communications and d.Light.
While the focus on off-grid systems continues in the country, the government has also started developing utility-scale projects. The year 2018 was especially good for renewable energy development in Afghanistan. In June 2018, Afghanistan’s Ministry of Energy and Water (MEW) issued a tender for a 5 MW hybrid solar project. The government also awarded 50 MW of solar hybrid projects, to be developed at the Hisar-e-Shahi Industrial Park in Nangarhar and Khost provinces of Afghanistan. In December 2018, the government invited expressions of interest (EoIs) from developers to set up 2 GW of grid-connected solar PV projects in the country. According to MEW, 400 MW grid-connected solar PV projects will be developed in Kabul, Nangarhar, Kandahar, Herat and Balkh provinces. All these initiatives will go a long way in helping the country address its power shortage problem.
Bangladesh aims to generate 10 per cent of the country’s electricity from renewable sources by 2021. Currently, the country’s cumulative installed renewable capacity stands at just 559 MW, which is far below the official target. This includes 325.82 MW of solar capacity, 230 MW of hydropower, 2.9 MW of wind, 0.68 MW of biogas and 0.4 MW of biomass, as of February 2019.
In recent years, the Bangladesh government has approved a large renewable capacity for development. A number of these projects are at an advanced stage of construction. For instance, a 7.4 MW solar plant in Rangamati, Chittagong division, will start operations in April 2019. It will be the country’s second largest PV installation. In September 2018, Bangladesh’s biggest solar plant (20 MW) in Teknaf, Cox’s Bazar, Chittagong, started electricity generation.
Several countries and international agencies have since come forward to provide funds to back the development of these plants, in order to help provide electricity to the power-hungry nation. In early March 2019, the World Bank approved a $185 million credit to fund the development of 310 MW of renewable energy capacity in Bangladesh. Just after that, Riyadh-based infrastructure developer Alfanar signed a $100 million agreement to build a 100 MW solar project in the country. Earlier, in January 2019, the Asian Development Bank agreed to back the development of two floating PV projects, one with a capacity of 50 MW, in Chittagong, Bangladesh.
Bhutan’s electricity access rate increased from 61 per cent in 2006 to 100 per cent in 2016, ahead of the country’s initial 2020 goal. On-grid hydropower is Bhutan’s main energy source and the main driver behind the rapid increase in electricity access. The country has an installed hydropower capacity of over 1.6 GW and another 720 MW of capacity is likely to be commissioned soon.
That said, the country’s mountainous terrain makes grid extension difficult in the remote rural areas that have around 4,000 households. Thus, the government has laid emphasis on off-grid renewable energy projects in the country’s five-year plans, providing around 2,000 solar home systems to rural households and repairing an additional 1,000. Similar donor-assisted grant projects have filled the rest of the electricity gap in the country.
Although Bhutan has achieved a remarkable feat of 100 per cent electricity access, it lacks the resources and manpower to sustain these projects on its own. The country’s mountainous terrain makes remote areas difficult to access for government workers. Communities will need training to install and repair systems themselves, a strategy that would lead to job creation in remote, off-grid areas.
The government’s continued focus on solar and wind capacity addition has led to a remarkable increase in the share of renewables in India’s power mix, from 4.04 per cent in 2016-17 to 8.6 per cent in 2017-18. According to a recent report by global ratings agency Moody’s Investors Service, this is expected to increase further to around 18 per cent by 2022. The report also states that the share of fossil fuel-based generation is expected to fall by 10-15 per cent by 2022. This transition has largely been driven by the government’s efforts to create an enabling renewable energy market, with the right policies and regulations. Meanwhile, the realisation of the government’s plan has been made possible by the quick adaptability and willingness of the industry.
India’s installed renewable energy capacity stood at around 76 GW as of December 2018, which is about 21 per cent of the country’s total installed power capacity of about 350 GW. Competitive bidding in the solar and wind segments, with mega auctions conducted by the central and state agencies, has disrupted the market dynamics. The highly competitive tariffs offered by developers for both wind and solar have made them a feasible option for discoms. In contrast, fossil fuel prices are on the rise and this trend is likely to continue in the future. However, delays in project execution and cancellations of solar and wind project tenders have become a cause for concern to the renewables industry. The first nine months of 2018-19 saw less than 6 GW of renewable power capacity addition, against the target of 15.8 GW for the entire year. This slump is mainly due to the lack of adequate transmission infrastructure, aggressive tariffs quoted by bidders and uncertainties regarding the imposition of safeguard duties.
There have been a few positives too. The Ministry of Power has released the draft amendments to the Electricity Act, 2003, which includes ample provisions for renewable energy development, to keep pace with the changing power mix of the country. Solar-wind hybrids have gained in importance with the release of the solar-wind hybrid policy by the Ministry of New and Renewable Energy (MNRE) in May 2018. Rooftop solar and floatovoltaics are also gaining traction. Renewable energy storage is likely to pick up with the government pushing for storage-based projects. Another upcoming area of opportunity is offshore wind power, with a huge potential in the country. The government has already finalised the policy, and a tender for the first set of offshore projects is being prepared. Meanwhile, both the bioenergy and small-hydro segments have not witnessed much growth, largely due to greater preference being given to the solar and wind segments. As of December 2018, the installed capacity for these segments stood at 9.8 GW and 4.5 GW respectively.
Alhough the country missed its target capacity in 2018-19, the outlook for the coming years seems positive, with some minor bumps along the way. The MNRE has come up with a timeline that will be followed to float utility-scale solar tenders and conduct auctions. Going forward, if this turns out to be a success, the government can roll out similar timetables for wind and hybrid projects. This will help achieve the government’s target of 175 GW of renewable energy by 2022.
Despite having abundant mineral reserves, hydro potential and solar resources, Nepal is one of the weakest agricultural economies in the world. The lack of electricity has long been a barrier to development of local infrastructure, with only 40 per cent of the country’s domestic needs met by the national grid system. The country has around 1 GW of installed power generation capacity, which is almost entirely hydro based. The country relies heavily on imports from India, mainly during winter when river flows decrease. Since the country does not have the financial bandwidth to develop large-scale hydro projects for its internal energy needs, it has been driving rural electrification through off-grid renewables, specifically with small-scale hydropower and solar home systems. With 81 per cent of the population living in rural areas, off-grid solutions have become an important part of the national strategy for increasing electricity access.
A government body called the Alternative Energy Promotion Centre (AEPC) was formed in 1996. It promotes off-grid renewables by offering subsidies, support for agricultural and commercial activities based on renewables, and technical assistance to ensure the quality of renewable systems. Around 2,000 hydropower mini-grids with a combined capacity of around 30 MW have been installed since 1996, providing electricity to 1.5 million people. In 2006, the country adopted a landmark Rural Energy Policy, mandating local governments to use renewable energy technologies in their efforts to expand rural electrification. Thanks to these efforts, Nepal’s electricity access rate increased from 51.2 per cent in 2006 to 90.7 per cent in 2016.
An emerging challenge for Nepal’s off-grid segment is encroachment by the national grid, which delivers electricity generated mainly from biomass, into areas already served by community-owned mini-grids. In order to protect existing solar and hydropower projects, the AEPC and the Nepal Electricity Authority (NEA) need to coordinate and create policies that allow mini-grids to connect to the central grid, without becoming redundant.
Nepal’s energy ministry recently issued a white paper on the current status and future roadmap of the energy sector, stating that Nepal should have a 5-10 per cent alternative renewable energy such as solar in its total energy mix. This prompted the NEA to increase solar power in its total energy mix. In April 2018, Nepal began the construction of its largest solar energy plant of 25 MW in Nuwakot district. In 2019, Nepal’s Department of Electricity Development approved survey licences for 21 locations to prepare for the possible installation of 56 solar plants, which could have a combined solar capacity of 317.14 MW. The largest planned solar energy project is a 120 MW solar PV station in Dhalkebar in Mahottari district.
Pakistan’s energy security is undermined by the large share of imported fossil fuels in its energy mix. By turning to its untapped solar, wind and biomass potential, it could spur social and economic development, while improving energy access. As one of the signatories of the Paris Agreement in 2016, Pakistan has been pursuing low-carbon energy options. Among the renewable energy sources, hydropower has been the most prominent, accounting for almost a third of the country’s electricity generation. However, the share of solar, wind and biomass in its energy mix remains minimal at around 5 per cent.
In terms of solar, a watershed moment was the completion of 400 MW of solar PV projects in 2015-16, driven by the decline in solar PV technology costs. Several large-scale PV projects are currently under development or construction in the country. In June 2018, PowerChina Guizhou Engineering Corporation, a subsidiary of Beijing-based construction group PowerChina, signed an agreement to provide engineering, procurement and construction services for a 100 MW solar project in south-western Pakistan. In November 2018, Germany’s Siemens agreed to supply electrical equipment to Turkey’s Zorlu Enerji for a 100 MW solar project that the latter is building in Bahawalpur, Pakistan’s Punjab province.
In the wind power space, the country has had several successes. Some of the operational wind farms are the 50 MW Jhimpir wind plant in Sindh, one 50 MW plant, each by Foundation Wind Energy II (Private) Limited and Foundation Wind Energy I (Private) Limited in Thatta district, the 30 MW Tapal wind farm in Sindh and the 52.8 MW Sapphire wind power plant in Thatta district. In recent years, several providers have entered the market, offering a range of off-grid renewable energy products such as solar home system products, including solar water pumping systems, solar lighting solutions and solar water heaters.
In 2014, Sri Lanka met its target of generating at least 10 per cent of its electricity using renewable energy. In 2015, the contribution of fossil fuels to the electricity mix decreased while the contribution of both renewable energy and large hydro increased. At the 22nd United Nations Framework Convention on Climate Change Conference of Parties held in Marrakech, Morocco, Sri Lanka pledged to use only renewable energy for electricity generation by 2050. However, there has been no progress towards the next target of 20 per cent renewables contribution by 2020 due to policy and regulatory ambiguities.
The attempt to adopt the tender procedure for the development of wind and solar parks received a lukewarm response. Only a few projects have been initiated in the wind power segment. In a tender launched over two years ago for 60 solar parks of 1 MW each, only a few projects were initiated. A subsequent tender calling for 90 projects of 1 MW each attracted many investors. However, none of them has commenced due to the unviability of the low prices quoted due to changes in the party rate in the time lost by the Ceylon Electricity Board (CEB) in making the award.
In a positive development, the Sri Lanka Government has given the go-ahead to a 100 MW floating solar power project. The project will be implemented by a joint venture of the Sri Lanka Mahewali Authority, CEB, the Sri Lanka Sustainable Energy Authority and the Canadian Solar Institute. Reportedly, the government has invited international competitive proposals to build the solar farm. A joint working committee will be set up to conduct negotiations related to the project. This will help Sri Lanka meet part of its target of installing 200 MW of solar projects by 2020 and 1,000 MW by 2025.