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    Electricity generation recovery begins?

    September 21, 2023 - Business Recorder


      It seems the needle is finally moving on electricity generation front. Having stayed in the red for over a year, last two months have witnessed year-on-year increase in grid electricity generation. For August 2023, net power generation went 13.4 percent higher year-on-year to 15.5 billion units. August is Pakistan's electricity system's peak demand month - and without any substantial changes in demand management patterns - the grid was able to generate enough to kickstart a revival of sorts.

      There is of course a clear perspective behind the double-digit growth. As witnessed in a number of high frequency data items from LSM to inflation, and from cement sales to agriculture output - the low base is at play. In August of 2022, the power generation had gone down by 12.5 percent year-on-year, falling to multiyear low for the month. August 2023 numbers are still a little shy of power generation in the same period in 2021.

      The long-term curve is still behind the eight ball, but most things suggest that the bottom may well be behind us, as far as electricity generation (and demand) is concerned. On 12-month moving average, 10.7 billion units is still 5 percent lower year-on-year, but there is a visible trend reversal.

      Mind you, the return to demand of three of four years ago hardly calls for chest thumping. It just indicates the worst may be over. Considering that the system generation capacity all these years has increased considerably, and so has the mix. From that lens, barely being at par with yesteryear generation numbers, partly explains why consumer end tariffs are where they are. It must be noted that August 2023 was the hottest August in a long time, with the national mean temperature increasing by 1.8 degrees. Acres of installed capacity never get to be utilized optimally for most part of the year, and peak demand has remained below the forecast - leading to higher unit cost in most cases.

      In terms of the generation mix itself - hydel led the way with 38 percent, as it always does in August. At 6 billion units generated, this was hydel's highest-ever monthly contribution to grid generation. The biggest difference has been made b Tarbela Extension IV, finally getting online, adding one-fifth to the hydel capacity.

      The added capacity could not have come at better time, as dependence on fossil fuels has played havoc with consumer end tariffs. That said, contribution from hydel will invariably drop from September onwards, and the onus will fall back on to the costlier generation options, even though the demand will also go down.

      Two months is barely a trend, and the test of electricity demand after the recent tariff revisions and surcharges, will get clearer later in the year. Generation is one thing, but how adversely the revised has tariffs affected losses and recoveries, will determine the health of the energy chain going forward.


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