Eureka: energy crisis caused by faulty business model!

The latest revelation from the Ministry of Water and Power, covering the “faulty business model” being the cause of energy crisis really takes the cake! Don’t we all know this for the last five years at least? “Selling” power at less than half the actual costs of production, subsidy totalling in excess of trillion rupees, has been the recipe for disaster!

In the garb of “essential social protection”, we have been trying to supply heavily subsidised power both to industrial and residential sectors, encouraging waste by installing “cheap” inefficient equipment and specially promoting unhealthy air-conditioning. Just the additional burden of these split air-conditioners is in many thousands of MW which is resulting in massive loadshedding. One air-conditioner on is at least 30 home fans off! All we have to show against all this miserable condition is a crop of people in suits and neck-tie in this very hot weather, posing as the saviours when they are actually part of the problem.

What should we be doing to get out of the Energy Crisis? For sure we need to change the basic model but by itself, that will not be enough We have to reduce the power generation costs (by increasing efficiency and removing fuel and energy theft) as well as privatising power distribution to reduce losses and to eliminate theft.

Power generation costs can be reduced immediately by allowing only the efficient power plants to operate and this will remove all of the inefficient power plants (mostly in Government controlled Gencos but also some “resourceful” private power producers). However, due to very high T & D losses (which is made to cover enormous pilferages), even the IPPs should be the second option!

The main option for available natural gas (the only affordable fuel) should be efficient captive power plants, based on essential combined heat and power system as per Government directive given to both SNGPL and SSGC more than five years back. If only these two organisations had met the nation’s expectations by insisting on efficient utilisation of our heavily subsidised gas, the industrial and commercial captive power plants would have been providing thousands of megawatts at an economical tariff! Even now, the change is possible by developing a correct business model in which the private entrepreneurs stand to make profit by selling power at reasonable price while meeting the national obligation of using our scarce, heavily-subsidised gas in most efficient manner.

When are we going to see many hundreds of large commercial buildings (hospitals, hotels, offices, malls, airport terminals, etc) change to efficient combined heat and power system instead of wasting our precious gas in most inefficient central air-conditioning? When will the industrialists in thousands of installations involving gas-fired boilers for steam and hot water convert to efficient combined heat and power systems and help generate thousands of economical MW of power?

In the world’s richest economy, the US government has passed legislations in favour of Combined Heat and Power Systems to encourage additional 80,000 MW of economical power in next 10 years to “remain competitive” while we are just not ready to help ourselves and only wait for IMF to hopefully get us out of the economic melt-down. We need to stand up and be counted and the responsibility of energy professionals must ensure that we convince the stake-holders. If only the industrialists and large commercial building owners in Sindh & Punjab take this as a challenge, the available natural gas supply can be “extended” to meet most of the essential energy requirements of these two provinces (of course minus the wasteful air-conditioning).

Another very important aspect of energy planning is the consideration for emergency standby power which is becoming more visible due to such power generating sets being installed on roofs and upper floors of high-rise buildings. We have just seen the dramatic collapse of a high-rise building in Dhaka’s suburb (Savar), Bangladesh, which is now being blamed on such standby power generators. RCC structures are not meant to absorb heavy vibrations, and these large power generating sets can produce severe destructive forces due to conveyance of vibration. Who is to be responsible for such failures? A typical response from Structural Engineers covers the assumption that no vibration will be conveyed to RCC structure and that all moving machinery should be totally isolated. Who will ensure this requirement and how are the building control authorities permitting installation of heavy equipment on the roof and higher floors, specially with large fuel storages?

We need to plan our energy requirements sensibly and safely and this starts with energy conservation at all stages. Energy conservation ensures right-sizing of energy infrastructure and should really be the basis of all energy planning.