Economic Evaluation of Conventional and Renewable Energy Systems of Pakistan: An Environmental Life Cycle Cost Analysis Study /

Abstract

Developing countries face the challenge of increasing their power generation capacities while conforming to the needs of global environmental concerns. Energy economics play a key role in energy system planning, with inefficient planning leading to financial crises. The power sector of Pakistan faces such a crisis and has been considered as a developing country case study. Four renewable capacity addition scenarios have been formulated for this study, the Business as Usual, and the Green Futures 1, 2, and 3 (16%, 20%, 25%, and 30% respectively). These reflect various government plans for power generation capacity additions till 2040. The environmental life cycle cost analysis, a cradle to the grave method has been deployed on a country-scale as a tool to evaluate the detailed economics of these scenarios. This method incorporates the direct costs and the often overlooked indirect environmental externality costs. Overall savings potentials of USD 55.98, 110.87, and 150.32 billion have been calculated for the respective Green Future scenarios in comparison to the Business as Usual scenario. The largest cost components identified are the operation costs and the environmental externality costs, with the fuel cost being a dominant factor of the operation costs. The Green Future scenarios are put through a monthly demand and supply analysis under three demand conditions of 2040 to evaluate the intermittency effects of increased renewable energy capacity additions. The Green Future 1 scenario of 20% renewables has been identified as the feasible environmentally friendly least-cost pathway.