How to cope with inflated gas and electricity bills۔۔۔Arshad H Abbasi
For the second time in two months, the government has raised gas prices by 45% to help gas companies that are struggling financially due to debt from subsidies and to meet requirements set by the IMF to be eligible for the next round of loans. This rise in gas prices will augment the already high inflation. The domestic sector stands at second in terms of gas use in the country, with the power sector standing first. It is noteworthy here that the circular debt has ballooned to about Rs2.3 trillion ($8.9 billion), contributing to inflated electricity bills.
The question that rises here is whether there is a workable technological solution to avoid gas and electricity. Technically speaking, it is possible. Lets examine the fundamentals of energy before presenting the solution. Wood, coal and biomass have always been the primary energy sources for humans. It is called primary energy as it is taken straight from the environment. Natural gas, LPG and oil became the primary sources of energy in the early 1900s.
Nonetheless, the transition away from fossil fuels and towards renewable energy began in the late 1990s. However, it picked up pace following the adoption of the Paris Agreement, an international climate change treaty, in 2015. To cut the emissions of all greenhouse gases, nations chose to implement the global net zero emissions policy. As a result, there is a first stage shift away from gas stoves, which is being fueled by worries about health risks, air pollution and the climate crisis. Thus, over 68% of Americans and 50% of Europeans cook on electric stoves.
Pakistan plans to reduce its estimated emissions by 50% overall by 2030, setting an ambitious cumulative conditional target. How can this goal be accomplished? A roadmap does not exist. In Pakistan, a system known as net-metering, which enables homeowners with solar panel systems to connect to the grid, is a godsend that can aid in achieving this goal. But instead of government pressure, consumers are being forced to install solar panels in record time due to an extraordinary increase in electricity prices. Consider the rapid growth of net-metering: as of June 30, 2023, there were 56,427 net-metering consumers in the CPPA-G system, up from 37,769 on the same date in 2022.
In Pakistan, standard-size photovoltaic panels exceeding 600 watts are widely installed, and recent advancements in photovoltaic technology have resulted in average panel conversion efficiencies exceeding 23%. The percentage of households that use electricity is greater than 45%. What happens if even 30% of consumers switch to solar energy? Not only is it a catastrophe, but Pakistan as a whole and the power sector will completely collapse. But does it matter to the decision-makers? The answer so far is a big no.
Lets now measure the effect of net metering on the electricity industrys financial stability, using the production of electricity in December alone as a benchmark. With a total installed capacity of 35,042 MW, the amount of electricity generated in December 2021 was 8827 million units; however, in December 2023, with an installed capacity of roughly 40000 MW, only 7726 million units were generated. Thanks to NEPRA. This cutback in the quantity of electricity taken from the national grid resulted in a significant capacity payment, which is a crucial component of the circular debt. By sending additional electricity units to the national grid through net metering, domestic consumers are also contributing to the circular debt.
Using November 23 as an example, net-meriting consumers sent 35 million units to the national grid. This indicates that in terms of basic energy conversion, 119420 MMBtu of gas was technically wasted. Theoretically, 3412 Btu is equal to one unit of electricity. The amount of heat needed to raise one pound of waters temperature by one degree Fahrenheit is known as one Btu.
Lets examine the pinnacle of indifference: on November 23, Pakistan LNG Limited (PLL) imported 99026 MMBtu of LNG for $14 per MMBtu, having a total import value of $1.5 billion. By switching from importing large amounts of LNG to using electricity for cooking and heating, Pakistan can save more than $4 billion a year by adopting a net-zero model. Remember that in July 2023, just as Pakistan was about to go into default, the IMF provided it with a $3 billion short-term financial package. If the country had switched from gas to electricity for domestic consumers cooking and heating, they could have saved even more money. The largest benefit of this change, however, would have been an additional $2 billion in savings on the front of circular debt.
This idea came to me a year ago when I created my own net-zero home model. In it, I heat my home with an AC inverter, geysers and an electric stove in the winter. I then sent OGRA a petition to have it replicated nationally. Following a tense discussion, nearly two months ago, OGRA sent my working paper to the ministry for implementation, instructing me to take the case to the ministry on my own. However, Im tired right now. In any case, I only see it as a national service and not as my business venture.
The biggest issue facing Pakistan, in my opinion, is institutional failure, which has caused the countrys economy to collapse and turned it into a global charity. Still, the IMF has to take responsibility for this. One of the IMFs primary responsibilities is to support its members with climate change challenges that directly affect economic growth through macroeconomic and fiscal policies. This simple one-click transition decision can be made when the IMF incorporates climate considerations into its lending as well. If not, the Ministry of Energy may need to take decades to make this decision. Otherwise, the world community cannot afford instability in the fifth most populous nuclear-power nation.
Courtesy The Express Tribune