KARACHI: The National Electric Power Regulatory Authority (Nepra) has finally decided to determine the upfront tariff for solar power projects on the basis of proposed 23.2934 cents per kilowatt hour (kWh) as laid down by the Alternative Energy Development Board (AEDB).
An official document said Nepra has decided to initiate suo motu proceedings for determining upfront tariff for solar power projects on the basis of proposal received from AEDB in pursuance of Upfront Tariff (Approval & Procedure) Regulations 2011.
The Nepra has also decided to hold a hearing in this regard on February 27, 2013.
The upfront tariff will be based on the cost of generation and is net of any duties, taxes, cesses or other levies payable by the generation company in relation to its separate business of generation and sale of electricity.
According to the AEDB model, the useful life of the project is taken as 25 years, which would also be the length of the contract for the electricity produced.
Independent power producers (IPPs) are exempted from all taxes and duties; exemptions are also given from taxation of profit and gains derived from electric power generation under energy purchase agreement.
Moreover, IPPs would be given guaranteed grid access along with immediate land allocation for the project.
According to the model, the minimum and maximum installed capacity of generation is one megawatts and 100mw respectively, provided the authority may allow a deviation up to 10 percent. It may be mentioned here that government has successfully put in place the upfront tariff regime for wind power producers in 2011 that is being taken up by several potential investors.
Pakistan has an enormous potential of solar energy; most parts of the country are blessed with very favourable conditions for development of solar energy for power generation.
National Renewable Energy Laboratory (NREL), Golden Colorado USA in collaboration with USAID, PMD and AEDB carried out detailed analysis to determine solar energy potential in Pakistan.
The NREL study indicates that the theoretical solar energy potential for power generation in Pakistan is approximately 2.9 million megawatts.
In past, the federal government had asked the authority to finalise upfront tariffs for coal, sugar and solar power projects without delay to attract investment and bring into use over 12,000mw of generation capacity on the emergency basis.
Nepra came under criticism at a recent meeting of the Council of Common Interests (CCI) for not encouraging alternative sources of energy in view of the country facing over 40 percent electricity shortage throughout the year, affecting industry and economic activity.
The federal government also circulated minutes of the CCI meeting to put on record their opinions with directives to the cabinet division to pursue the power regulator to immediately finalise upfront tariffs for coal, solar and bagasse-based power projects.