CPPA refuses power purchase from new renewable energy plants

KARACHI: State-owned power purchasing agency has refused to procure electricity from new renewable energy plants as generation capacity has already turned into surplus, it emerged on Thursday.

“CPPA-G (Central Power Purchasing Agency) cannot provide consent for purchase of power from new renewable energy projects,” the agency said in response to licence applications of certain renewable power producers.

National Electric Power Regulatory Authority (Nepra) said the capacity addition in the system without rationalising the same with the demand projections is currently yielding a capacity surplus of 908 megawatts. The capacity is projected to rise to approximately 13,934MW by 2025, which has significant financial implications for the end consumers, Nepra said in a report.

CPPA-G said Nepra must review the proposal in the context of the demand versus supply situation, “coupled with the quantum of renewable energy to be induced in the national grid according to the recommendations of the grid code review panel duly approved by Nepra from time to time”.

Earlier, the Cabinet Committee on Energy decided that all renewable energy projects would be awarded through competitive bidding and in line with quota allocation by grid code review panel.

“There is no policy for induction of renewable energy and for the proposed additions of capacity in the system, [and] due consideration should be carried out by Nepra prior to issuance of generation licences,” it said.

Recently, Nepra granted generation licences to four renewable energy companies for a cumulative electricity generation of 132MW, involving an investment of approximately $185 million.

The licences have been issued to Grid Edge (Private) Limited for 2MW solar power plant to be setup at Proctor and Gamble, Bin Qasim Town; Sino Well (Private) Limited for 50MW wind power plant in Thatta; Asia Energy (Private) Limited for 30MW solar power plant in district Bahawalnagar; and Shafi Energy (Private) Limited for 50MW wind power plant Thatta.

Nepra said the sustainable and affordable electricity is a key prerequisite for socioeconomic development of any country. “In fact, the economic growth of any country is directly linked with the availability of safe, secure, reliable and cheaper supply of energy/electricity,” Nepra said in a statement.

The authority said all indigenous power generation resources, including renewable energy, must be developed on priority basis for sustainable development.

Analysts said the existing energy mix of the country is heavily skewed towards the costlier thermal power plants, mainly operating on imported fuel. Imports of fuel for electric power generation cause depletion of precious foreign exchange reserves of the country and raise environmental concerns.

“Therefore, in order to achieve sustainable development it is imperative that indigenous renewable energy resources are given priority for power generation and their development should be encouraged,” an analyst added.