ISLAMABAD: In an interesting development, the National Electric Power Regulatory Authority (Nepra) has returned to the National Transmission & Despatch Company (NTDC) the 27-year Indicative Generation Capacity Expansion Plan (IGCEP 2020-47) to get its approval from the government on the basis of preferred fuel mix and provincial shares.

Strangely, the regulator also gave a list of about two dozen renewable plants with a capacity of about 1,600MW having relatively higher tariffs besides a couple of old thermal plants by name for inclusion in the revised plan and yet asked the NTDC to consider capacity addition on the basis of least cost of energy.

As such, Nepra directives appear contradicting the Alternative & Renewable Energy Policy, 2020 approved this month by the Council of Common Interests seeking all power induction through open competitive bidding for lowest tariff for the ultimate benefit of consumers. Also, the regulator is now again seeking the approval of capacity expansion plan even though it is developed under Grid Code – a subordinate legal order as required by the energy policy approved and introduced by the government under the constitution and acts of parliament.

Nepra order also leaves a very little space of just 25 per cent for competitive electricity market by imposing about 70pc capacity to government-to-government projects, China-Pakistan Economic Corridor projects, public sector projects, nuclear, hydropower and its recommended projects and yet taking up next week public hearing for introduction of competitive electricity market.

Seeks to know criteria for least cost option

While returning the IGCEP, the regulator has asked the NTDC to clearly define criteria for least cost option, strategic projects and committed projects including those recommended by Nepra. The IGCEP must also consider the proposed commercial operation dates of the projects for which bidding has already been conducted, letters of support issued by the Private Power & Infrastructure Board, projects under government to government initiatives of the provincial government, hydropower plants with feasibilities recommended by provincial governments and projects having generation licence and tariff from NEPRA before the notification date of the new Renewable Energy policy.

It ordered that efforts should be made to curtail the open cycle generation turbines to cater for intermittency of renewable energy by replacing with hydropower, diesel gensets, existing Gas Turbines completing term of power purchase agreement, hybrid of wind and solar and some allocation for small hydropower be given under the renewable energy project allocation.

It directed that the IGCEP should review those projects which are completing their term of PPA in the near future but are strategically important for the stability of the system such as Habibullah Coastal which is critical for the city of Quetta and adjoining areas.

Also, the regulator desired that a scenario must be developed in the IGCEP without putting any constraint except the existing constraints in the system to determine the demand supply situation and consider latest cost estimates reflecting devaluation and lower power demand under the International Monetary Fund lower economic forecast. It also advised that although the 1pc loss of load probability (LOLP) – about 3 days of annual load shedding — was as per the Grid Code however, it was very idealistic and not achievable due to cost impacts on end consumers. Therefore, 2pc LOLP (about seven days of annual load shedding) be developed and its impacts may be analysed.

The regulator said the review of existing IGCEP revealed that only a system capacity factor of approximately 35pc was being achieved which was very low and resulted in higher consumer end tariff. Therefore, higher capacity factor of 40pc or 45pc or 50pc be adopted.

Nepra also noted that the NTDC had assumed wind power projects in the north and mid-country while wind power potential lies in the south and south-west Pakistan. This assumption needs to be reviewed in terms of the locational study for variable renewable energies prepared by the World Bank.

It asked the NTDC to critically review impact of future power generation on the basket tariff with the assistance of the Central Power Purchasing Agency to run analysis and present the outcome as part of the next version of the IGCEP.

It said the government has to decide the generation based on its future growth trajectory and forecasts. The affordability of cost of generation, regional development, replacement of thermal generation with renewables as base load (with storage), share of provinces, share of nuclear etc. should be considered as the mandate of federal and the provincial governments.

Published in Dawn, August 23rd, 2020