Thursday, June 16, 2016

Pakistan Regulator Publishes New Feed-in Tariff (FiT) Rates

Pakistan’s National Electric Power Regulatory Authority (NEPRA) has published for public comments its revised feed-in tariffs (FiTs) for solar energy projects of up to 100 MW, according to a report in PV-Tech journal.
Source: PV-Tech
The proposed FiTs are slightly lower in Balochistan, Sindh and Southern Punjab region than in Khyber Pakhtun Khwa (KPK) and the rest of Punjab. The proposal for years 1 through 13 includes Rs. 11.128 (US$0.105) per unit for southern region and Rs. 11.783 (US$0.111) per unit for northern region. The rates drop to Rs. 5.588 (US$0.053) and Rs. 5.917 (US$0.056) per unit for northern and southern regions respectively for years 14-25.  The average for the next 25 years works out to Rs. 9.924 (US$0.094) and Rs. 10.507 (US$0.099) per unit for the two regions.

Pakistan Solar Map  Multi-year mean (2000-2012) of daily Global Horizontal Irradiance (GHI) for Pakistan in kWh/m2 [Note: preliminary, unvalidated results] Source: World Bank


Last year, NEPRA, the nation's power regulator,  approved a regulatory framework for solar and wind energy for both commercial and residential installations. The framework includes feed-in tariffs for commercial power producers and net metering for residential applications of up to 1 MW.



Under the new Net Metering Law, NEPRA, the Pakistani power regulator, will grant power generation licenses to solar and wind system owners. The owners will need to register the critical equipment used, particularly the make and model of inverter and generator used. Among other technical considerations, the generator must also install a manual disconnect device to take the system off the network if necessary, according to details published by PV Tech publication.

Net metering is a billing mechanism that pays solar energy system owners for the electricity they add to the grid. It allows a residential customers with rooftop solar panels to generate more electricity than the home uses during daylight hours and sell it to the power supply company. It will require a bi-directional meter (or two separate meters) for implementation.

Pakistan has already introduced feed-in tariffs (FiTs) for larger renewable power systems to supply electricity to the national grid on a commercial scale.  It paved the way for a 1000 MW Quaid-e-Azam solar park being built in Bahawalpur.

Cost of solar power is rapidly declining.  However, Pakistan's NEPRA's attempt to cut tariff down from 14.15 cents to 9.25 cents per unit is being resisted strongly by Zonergy Company Limited, a Chinese company working on Quaid-e-Azam solar park power project, according to a story in Express Tribune newspaper.  This is in sharp contrast to the record low solar tariff of Indian Rs 4.63 per unit (Pak Rs. 7.19)  for 500 MW solar project by US-based Sun-Edison, according to Indian media reports.

Pakistan's renewable power policy and regulatory frameworks have drawn praise from international law firm Eversheds which has described the country as “one of the most exciting renewables markets globally, with an abundance of potential”. Alternative Energy Development Board (AEDB) of Pakistan's CEO, Amjad Ali Awan has said that "Pakistan’s renewable market is relatively new but it provides an attractive investment opportunity with compelling structures which make it bankable as well as marketable."

Net metering law is necessary but not sufficient to promote widespread use of renewable energy. It will take serious coordinated efforts of Pakistan power regulator NEPRA, the country's nascent solar industry and various utilities like K-Electric to start implementation. Meanwhile, consumers could install a stand-alone rooftop solar system that can be connected to the grid in future. They just need to make sure to select high-quality equipment, particularly inverter and switch, for this purpose which will most likely be acceptable to utilities.

Related Links:

Haq's Musings

Pakistan Deploys IT Apps to Improve Service in Public Sector

Solar Power For Pakistan Homes, Schools, Factories

Shakti Solar Model For Pakistan

Pakistan's New FIT Policy For Alternative Energy

Media & Telecom Revolution in Pakistan

Pakistan Building 1000 MW Wind Farms

Pakistan Launches Wind Farm Projects

Renewable Energy to Solve Pakistan's Electricity Crisis

Electrification Rates By Country

Wind Turbine Manufacturing in Pakistan

Pakistan Pursues Hydroelectric Power Projects

Solar Energy for Sunny Pakistan

Wind Power Tariffs in Pakistan

Pakistan's Twin Energy Shortages

10 comments:

Yu Yong, ZTE said...

Tariff below 10 cents is not possible and it will not work. How are you to get return on your investment. Zonergy made commitment to Pakistan at 12.50 cents.

Riaz Haq said...

YY: "Tariff below 10 cents is not possible and it will not work."


Apparently Sun Edison has figured out now to make money with solar power at record low solar tariff of Indian Rs 4.63 per unit (Pak Rs. 7.19) in India.


http://articles.economictimes.indiatimes.com/2015-11-05/news/68044032_1_sunedison-tariff-solar-parks

Vishal said...

There have been 3 tricks that have allowed India to get cheap solar power: (1) Reverse auctioning of projects to Indian and foreign companies with 100% FDI allowed (2) Supply of barren government lands through land banks (3) Strict timelines (Letter of intent within 2 weeks, project contracts in 4 weeks of bidding).

Also, as an FYI -- the solar power tariff in India has fallen even further now, with Finland-based energy firm Fortum Finnsurya Energy getting the contract at Rs 4.34 for a 70-mw solar plant under NTPC's Bhadla Solar Park. The previous low was Rs 4.63 by the US-based SunEdison that you quote. Some of the other winners included Rising Sun Energy Pvt Ltd (two blocks for Rs 4.35 a unit), Solairedirect (two blocks for Rs 4.35 a unit) and Yarrow Infrastructure (one block for Rs 4.36).

From what I know the average solar energy tenders in India are going somewhere between Rs 4.2 to Rs 5.4, depending on the land and location. There are many Indian companies too that are accepting tenders in that range. Rattan India Solar, Yarrow Infrastructure Ltd etc. have all been quoting Rs 4.36/kWh. Even TATAs are now quoting around 4.4 to 5.2/Kwh for solar projects.

Majumdar said...

Prof sb,

This is a step in the right direction. By bringing down tariffs they will encourage genuine investors only and disocurage looters- also prevent discoms and consumers from being ripped off.

Regards

Riaz Haq said...

1.1 GW Of New #Solar Power Capacity Being Developed In #Pakistan with $3 billion in new #FDI http://cleantechnica.com/2016/06/01/1-1-gw-solar-capacity-developed-pakistan/ … via @CleanTechnica

Pakistan is expected to see a sharp jump in operational solar PV capacity over the next few years, as several project developers have signed pacts to set up projects.

The Alternative Energy Development Board (AEDB) has reported that as many as 35 solar PV power projects are currently at various stages of development. These projects will have a cumulative installed capacity of 1,111 MW.

The largest of these projects will come up at the Quaid-e-Azam solar power park. The project currently has 100 MW of operational capacity. Apollo Solar Pakistan, Crest Energy Pakistan, and Best Green Energy Pakistan are working on 100 MW of solar capacity each. These projects are expected to be commissioned by the end of this year. The total capacity of the Quaid-e-Azam solar park will thus increase to 400 MW against a planned capacity of 1,000 MW.

Six other developers have been issued letters of support for the development of projects with a cumulative capacity of 47.84 MW. The ADEB has also issued letters of intent for the development of 25 projects with a combined generation capacity of 663 MW. These projects are expected to be operational by 2018.

Additionally, the government of Punjab province has also issued letters of intent for projects with 600 MW of capacity, of which 300 MW of capacity has already secured financing.

Several European and Chinese companies have already invested in Pakistan’s renewable energy market. Foreign investors poured over $3 billion into the renewable energy sector in Pakistan over the last year.

Shams S. said...

This is Punjabi Nawaz Sharif government at its extreme. Punjabi federal government has given higher tariff for Punjab North than Sindh, so more plants ventures will go there.

Riaz Haq said...

Shams: "This is Punjabi Nawaz Sharif government at its extreme. Punjabi federal government has given higher tariff for Punjab North than Sindh, so more plants ventures will go there. "


First, the tariffs are based on level of irradiance measured in terms KWh/sq meter in north vs south. Southern region is Pakistan gets 6 or higher KWh/sq meter of gross irradiance while the northern region gets less than 5.

Please check this source: http://www.worldbank.org/en/news/feature/2014/11/12/global-wbg-renewable-energy-mapping-program-gets-underway-in-pakistan-with-first-solar-measurement-station

Second, the rates Pakistan is offering are much higher than India's. Sun Edison has accepted solar power solar tariff of Indian Rs 4.63 per unit (Pak Rs. 7.19) in India.

http://articles.economictimes.indiatimes.com/2015-11-05/news/68044032_1_sunedison-tariff-solar-parks

Shahid said...

Punjab has lowest tariff rate then Sindh

Kalya said...

Why does Pakistan have the highest rate in South Asia

Riaz Haq said...

The arrival of clean energy in Pakistan

https://www.dawn.com/news/1342916/the-arrival-of-clean-energy-in-pakistan

Clean energy is ramping up in Pakistan. Solar PV and LED lighting solutions are fast becoming pervasive in both rural and urban areas with thousands of small businesses signing up for clean energy.

For consumers, it is only logical to move beyond intermittent grid electricity which has proven to be both expensive and unreliable.

As per the latest International Energy Agency Report for 2016, clean energy accounted for 70pc of total electricity generation investment, sidelining investments in fossil-fuel based generation by a wide margin.

Clean energy investments are led by wind power (37pc), solar PV (34pc) and hydropower (20pc).

Amongst countries, China leads the global investment in clean energy generation and continues to invest roughly more than double its investment in clean energy as compared to fossil fuel generation, followed by the European Union, the United States and Japan.

Pakistan has taken a different approach towards energy security. The CPEC has shifted the bulk of the new additions to coal and nuclear. Despite this, solar, wind and micro hydro have all taken off.

What is really encouraging is the use of solar PV by small and medium businesses amid unreliable and expensive grid electricity.

The electricity regular, Nepra, must be given full credit for setting the right sectoral tone by introducing Wheeling, Net Metering and Distributive Generation regulations, all in a short span of time.

Consumers have realised that it is grid energy which is intermittent and expensive and not clean energy.

At the grid level, consumers are unnecessarily penalised with surcharges and taxes which include tariff rationalisation surcharge, debt servicing surcharge, Neelum Jhelum surcharge, FED, sales tax and other fees.

Through all this, the cost of grid electricity is being pushed much higher despite low crude oil prices.

Circular debt, as per media reports, is once again hovering in the range of Rs450 billion and the only plausible way to pay it off is via levy of another surcharge. It has become a norm in the sector that those who pay are only asked to pay more for those who don’t pay at all.

Pakistan needs to understand the business case for clean energy — primarily the impact on jobs and increase in business productivity.

As a country, we too will be adding roughly 1,000MW of clean energy (wind, solar and bagasse) in the next two years but will be adding substantially more from coal and nuclear power.

The government needs to realise that the tide has shifted. The old notions that clean energy is expensive and intermittent no longer holds true.

With changing times, incentives must be provided to help scale clean energy, provide it with the right eco-system, along with regulations to help consumers shift to improved technologies.

Now is the time for Pakistan to truly embrace its clean energy potential, make an early transition and reap the benefits of higher business productivity and increased job creation.