ISLAMABAD: According to the Asian Development Bank (ADB), Pakistan will invest between $62 billion and $155 billion in energy between now and 2030, The News reported on Sunday.

The Central Asia Regional Economic Cooperation (CAREC) Energy Outlook for 2030 report from ADB states that the three scenarios have very different energy investment requirements through 2030.

Given the escalating demand and subpar baseline efficiency, the power generation and energy efficiency sectors require the largest investments. The development of the nation's hydroelectric capacity requires the biggest investments, ranging from $11 billion to $26 billion, in each of the three scenarios.

The country has ambitious plans for utilising its significant renewable energy potential. Investment needs for wind and solar energy are anticipated to reach close to $12 billion in the business as usual scenario, $36 billion in the government commitments scenario, and $57 billion in the green growth scenario.

Additionally, based on the nation's nuclear power generation goals, the business as usual scenario, the government commitments scenario, and the green growth scenario all call for investments in nuclear facility expansion and rehabilitation totaling close to $12 billion, $21 billion, and $31 billion, respectively.

According to estimates, investment categories for generational repair and expansion will need the largest portion of the total — somewhere between 60% and 75%, or $38 billion and $115 billion, depending on the scenario. Energy efficiency initiatives on the consumer side are the second-largest category, costing $12 billion in the "business as usual" scenario, nearly $21 billion in the "government commitment" scenario, and more than $26 billion in the "green growth" scenario.

An estimated $13 billion to $14 billion will be needed for the modernization, expansion, and installation of cutting-edge metering technology.

Several obstacles need to be overcome in order to further open Pakistan's energy industry to private businesses. The ambiguity around resource categorization is one of the major problems.

For instance, the Alternative and Renewable Energy Policy classifies hydropower sources as nonrenewables even though they are typically regarded as renewable energy sources around the globe.

It would be difficult to achieve the 30% renewable energy target in 2030 using only wind and solar PV sources. Reaching the stated goal and establishing more intense competition would be more feasible if hydropower were included in the definition of renewable energy sources.

The absence of a thorough energy plan for the energy industry presents another difficulty. Despite the National Energy Policy's approval, the associated role-sharing among policymakers, who would designate policy areas to all pertinent stakeholders, has not yet been finished.

Sector-specific policies are created by competent agencies under the existing system. For instance, the National Electric Power Regulatory Authority (NEPRA) draughts the power generation policy while the Alternative Energy Development Board (AEDB) develops the alternative energy policy (NEPRA). This results in unnecessary bureaucracy and delays in project implementation, as well as ambiguity about the long-term direction of sector development.

The T&D sectors suffered considerably from underinvestment because to the recent decades' strong emphasis on generation. As a result, Pakistan has some of the greatest transmission losses in the area, with some distribution companies seeing losses of 38%. A centralised transmission plan is necessary to determine a long-term direction for network expansion and to set realistic targets for decreasing T&D losses and attracting investments, even while measures, such the Transmission Line Policy, have been established to attract private investments.

As the number of thermal power plants increased, costs increased as a result of the importation of expensive fuels and the depreciation of the currency. The poor rate of tariff collection and the failure of distribution utilities to reduce T&D losses to regulatory targets also place financial strain on the utilities responsible for providing energy. As a result, distribution companies are unable to pay generators for the electricity they have purchased, which sets off a spiral of arrears that eventually reaches fuel suppliers through power generators.

A tariff differential subsidy is used to cover the difference between NEPRA-approved and uniform tariffs, which places a heavy financial burden on the government. However, by creating a clear and advantageous environment for private investors in the energy industry, the government is taking steps to address these issues and improve the investment climate. A regulatory framework that would create a competitive market structure in the wholesale segment through a bilateral agreement recently received Pakistani approval for its implementation plan.

In addition, the government intends to separate natural gas utilities from transportation and distribution firms and create a competitive natural gas market, which will help in the long run in luring private investments.

To capitalise on its significant potential for renewable resources—more than 3,000 GW—Pakistan has already implemented particular incentives for its renewable energy sector (including hydropower). It intends to stimulate future growth of renewable energy through feed-in tariffs for wind and solar PV technologies and a defined roadmap for renewable energy output.

Investment opportunities are significant given the sizeable development demands in the energy sector and the government's prioritisation of renewable energy.

The government is thinking about partially privatising distribution corporations through management contracts and concession agreements to address power issues and enhance energy distribution capacities. This creates the opportunity to guarantee adequate power supply, reduce losses, and boost competition in the distribution industry.

Pakistan is one of the biggest markets in the CAREC area, with a population that is now expanding by 2% annually and a continuously expanding pool of potential customers. However, more than 25% of the population lacks access to electricity. This would offer a strong foundation for investment in the energy sector, with more opportunities for return on investment and project implementation, with the right government priorities and regulatory frameworks.