ISLAMABAD: The government has estimated an addition of 32,000 to 36,000 megawatts to power generation capacity by 2031, which will require an investment of about $55 billion to meet the country’s electricity needs in the national grid including Karachi.
As such, the total installed capacity will increase from the existing 41,000MW to above 65,000MW.
This is part of the Indicative Generation Capacity Exemption Plan (IGCEP) for 2022-31, finalised by the state-owned National Transmission & Despatch Company (NTDC) and is based on low, medium and high GDP growth rates of 3.4pc, 4.3pc and 5.4pc.
The base case scenario is developed on a normal scenario of the long-term forecast, existing contractual obligations and retirements of power projects, during the planning horizon of the IGCEP, as per terms of their respective Power Purchase Agreement (PPA), except Kapco.
Nepra holds a public hearing today to amend net metering regulations
About 8,021MW of existing power generation capacity is planned for retirement during the period in all three scenarios.
Five major factors have been taken into account based on the government’s commitments in addition to the base case scenario. These include low demand, high demand, Diamer Bhasha Hydropower Project in 2029, Chashma Nuclear (C-5) for energy security, local coal inclusion in 2027 and 2030 and unconstrained variable renewable energy.
The regulator would hold a public hearing on the subject next month.
Solar net metering tariff
The plan comes at a time the National Electric Power Regulatory Authority (Nepra) is holding a public hearing on Tuesday for proposed changes to the net metering regulations that will cost the solar net metering distributor generators about Rs10.3 per unit. The amendment is being sought by distribution companies to change the words “national average power purchase price” and replace them with “national average energy purchase price”.
Because of the recent rebasing of the power tariff, the per unit cost of the net metering electricity has reached Rs19.32 per unit and the amendment in the regulations will reduce it to Rs9 per unit. This price is paid by the distribution companies to the net metering distributor generator.
The government and the regulator claim that the change would not have any impact on self-consumption, as well as netting off of the units but only in case of excess units sold by net metering consumers.
The NTDC on the other hand claimed that its IGCEP’s plan had also taken care of hourly demand forecast to cater to the intermittency of variable renewable energy resources such as wind and solar PV in view of the government’s aggressive targets for renewable energy.
In the base case, the demand and the installed capacity of the whole country are 41,338MW and 69,372MW, respectively, by the year 2031. In the said installed capacity, the optimised share from variable renewable energy (VRE) resources includes 8,350MW of Solar PV (utility solar & feeder based/DG) and 4,928MW of wind power.
Consequently, salient features of the base case include aggressive inclusion of VREs, minimal reliance on imported fuels ie, coal, RLNG and residual furnace oil (RFO) based-technologies, increased share of hydropower as well as local coal, and all optimised generation is based on indigenous resources.
Inclusion of VREs, hydro and local coal will help in lowering the basket price of the overall system thus providing much-needed relief to the end consumers, though in the long run.
The base case showed a major contribution from renewables at 41pc of hydropower and 20pc of VRE in the overall energy mix by the year 2031. The base case scenario indicates $52.93bn worth of net present value (NPV) investment requirements both in terms of capital and operational expenditures (CAPEX and OPEX) for electric power generation by the year 2031.
The IGCEP also facilitates structural changes in the power sector planning process with enhanced role of distributed generation and reduction in the large projects distant from the load centers. Further, indigenisation of RE technologies through local manufacturing is also suggested to lower the basket price, for the provision of relief to the end consumer as well as saving precious foreign exchange while maximising nature’s endowment bestowed upon Pakistan.
The key principle for the plan is that the tariff given or cost approved by Nepra for an optimised project should either be equal to or less than the cost used in IGCEP. If, in any case, the tariff given by Nepra to any optimized project is more than the one used in IGCEP, then a re-run of the model shall be required to assess the viability and optimization of that very project on new cost.
Hence, the final tariff of any optimised project shall always be either equal to or less than the cost used in IGCEP.
Published in Dawn, September 27th, 2022