Muhammad Qasim Khokhar  -  The giant of loadshedding has raised its ugly head once again. The situation is extraordinary and so does its response should be. There is huge demand and supply gap ie 6,000-8000MW which has refused to budge despite best possible efforts of supplementing generation by the Government of Pakistan and Punjab. This crisis situation needs an institutional response well conceived and well implemented. Major responsibility lies on Distribution Companies called DISCOs.

An important move is to engage private sector who has urged to help the nation in mitigating or at least easing this crisis but its energy and efforts and financing needs to be channelised effectively. One successful model tried across the world is Energy Service Companies (ESCO) model. This is a model where a private company jumps and replace the energy guzzling appliances like ICL/CFL /Halogens Lights, fans, motors, CRT TVs, UPSs, alternators, poor power factor motors etc with latest state of the art energy efficient technologies/wherewithal. Usually such retrofitting is complemented with alternate sources of energy like solarisation etc. The cost of equipment is recovered by ESCO in installments from the savings into energy bills of the consumers. It results into win-win for all stakeholders eg Consumer benefits by enjoying latest technology, going green while ESCO enjoys business and profits.

In Pakistan, ESCO market is fledgling, while PEECA has done a lot of efforts to develop this market which will be deliberated in a separate article. Having said that, there are only DISCOs which can fill the vacuum of ESCO market. In fact, due to certain cultural constraints of the sub-continent, the European model of ESCO has already faced certain snags in India. So it needs to be tempered with South East Asian wisdom and experience.

DISCOs have an elaborate reading, distribution and recovery mechanism, so they can effectively work as ECSOs by distributing Energy Efficient appliances such as LED TVs to replace CRT TVs, LED lights to replace ICL/CFL, 3-Star Labeled Fans to replace Energy-guzzling Fans, Inverter Air Conditioners and Invertor Refrigerators to replace traditional ACs & Refrigerators, Solar Digital invertors to replace UPSs and Capacitors to improve power factors in precedence of Sui Northern Pipe Lines Ltd, which supplies conical baffles, geysers timer devices and Solar geysers. The cost is proposed to be recovered through monthly bills in installments.

To move cautiously, DISCOs may start this ESCOs business from their own offices, housing colonies and Wapda towns or their best and top-notch consumers in each tariff category. Millions of consumers daily visit DISCOs offices for resolution of their problems like billing, restoration of connections, reading matters and other services. So the offices and colonies of DISCOs retrofitted and solarised on ESCO model will have an eye-catching showcasing effect.

As PEECA is cognizant of the fact that replacement of Energy guzzling equipment needs abundant Capex at cheap rates, so it is actively engaged with State Bank of Pakistan for starting Energy Efficiency loan at fixed cheaper rates (up to 6%) payable in 10-12 years. The same product will be available very soon. One such product for promotion of renewable resources like Solar and Wind is already available. Thus the market is ready, finace is almost available, there is voracious appetite. So what is missing? Only handholding! Which can be effectively done by DISCOs and PEPCO.

      DISCOs can Co-opt Chamber of Commerce and Industries and leading manufacturers and suppliers of Energy Efficient Appliance as partner ESCOs for procuring such appliances on credit. This model addresses another barrier to energy efficiency and renewable energy sector. That is lack of standardisation. Usually the equipment sold in the market is very poor and sub-standard and thus shakes the confidence of the consumers. This is in fact the biggest cause that solar energy has not become popular in Pakistan despite its huge potential. When ESCOs will have to be dependent on running of the equipment for five years or so for recovery of their cost and profits, they would supply the best grade equipment and thus consumer confidence would be restored due to risk sharing.

This model has bright prospects. As purchase in bulk will tremendously reduce cost of such appliances and will create a thriving Energy Efficiency market and de-load the grid, reducing the load shedding considerably.

The writer is a senior policy maker and is Managing Director of Punjab Energy Efficiency & Conservation Agency.