ISLAMABAD — In April, American professional services firm Tetra Tech Inc. announced that the U.S. Agency for International Development (USAID) had awarded the company a $57 million contract to help deliver clean energy services and stimulate economic development in Pakistan. The contract was awarded as part of the USAID-funded Clean Energy for Pakistan’s Economy (CEPE) initiative. USAID and Pakistan are working together to build up the clean energy sector in the country and create big opportunities for American companies in Pakistan.
Under the new contract, Tetra Tech will help developers and investors access financing for clean energy projects in Pakistan. The projects are expected to generate up to 3,000 megawatts of capacity over the next four years. Tetra Tech will also provide technical services to boost private financing in the clean energy sector and advocate for policy reforms that will further encourage investment.
The development of the clean energy sector is a vital part of the solution to Pakistan’s long-running energy crisis. In January 2015, Pakistan experienced a massive power outage that left nearly 80 percent of the population — 140 million people — without electricity for eight hours. Persistent energy shortages continue to cause regular blackouts, some lasting for up to 20 hours at a time. The estimated annual loss to the economy as a result of these failures is about $3 billion.
Because of its diverse geography and topography, Pakistan has an abundance of clean energy potential. USAID and the National Renewable Energy Laboratory estimate there is more than 130 gigawatts of wind energy potential alone. General Electric (GE) is seizing the opportunity and working with contractors to build more than 30 wind turbines for the Sapphire wind farm project in Jhimpir, Sindh. As part of the deal, GE will also provide long-term assistance over 10 years in operations and maintenance services.
The U.S. Overseas Private Investment Corporation (OPIC) funds the Sapphire wind farm. According to OPIC, the project anticipates a positive impact on U.S. employment and economy. GE is benefiting short term, but the diversification of the energy sector will have longer term effects that should encourage further investment by American companies in Pakistan.
Pakistan’s clean energy potential is not just limited to wind power. Chinese companies are investing heavily in the solar industry and recently completed the first stage of a multimillion dollar project: the Quaid-e-Azam Solar Power Park (QASP) in the Cholistan Desert. Development of the QASP is still under way; when it is completed later this year, it will be the largest solar farm in the world. The QASP will have the capacity to produce 1,000 MW of electricity and power more than 300,000 households.
In 2016, USAID guaranteed $88 million in loans for clean energy projects throughout Pakistan. The agreement aims to improve access to financing and encourage more private investment in clean energy in the country. American companies like Tetra Tech and GE are already benefiting; as the clean energy sector continues to grow, more and more companies will have the opportunity to enter the market.
According to Pakistan’s Alternative Energy Development Board, foreign investors pumped $3 billion into the renewable energy sector in 2015. The clean energy business in Pakistan is booming and USAID investment is helping American companies in Pakistan capture this golden opportunity.
– Michael Farquharson