Renewable projects in focus to enhance power generation capacity

KARACHI: Government on Thursday unveiled a new alternate and renewable energy (ARE) policy to incent green power generation and increase its share to 30 percent within a decade.

The measures introduced in the ARE policy 2020 are expected to set the requisite processes in place so that ARE is fully mainstreamed and integrated within the country’s energy planning and the country’s economic and social development for the eventual benefit of the people of Pakistan.

“Government is determined to pursue the stated policy objectives and strategies with the participation and collaboration of the private sector,” an official document said. “The goal is to continue the envisaged sustained transition towards greater use of indigenous, clean and abundant ARE resources, which must be tapped in a meaningful and timely fashion and utilized towards the social and economic advancement to assist the country’s overall development strategy.”

Government set the target of at least 20 percent on-grid RE generation by capacity by the year 2025 and at least 30 percent by 2030. For the purposes of the aforesaid target, the expression on-grid includes mini/micro grids.

“In order to achieve these targets, a larger percentage of new capacity additions and retiring plant replacements will be AREPs, keeping in view the constraints of base load, reactive power support, spinning reserve requirements and transmission system constraints, while keeping also in view the technological solutions to address these constraints such as RE forecasting capabilities, hybrid AREP solutions and distributed generation,” said the document.

The old policy focused induction of RE projects on a reactive basis.

ARE policy 2020 aims to protect the environment by increasing the share of green energy in the overall energy mix, fast track and transparent procurement of ARE projects through auctions, develop and open up the power market and ease pressure on the public purse for investments in power system expansion.

The policy will also facilitate development of ARE technology local manufacturing, skilled human resource and technology transfer. The policy provides procurement of new RE capacity, displacement energy capacity, and replacement capacity for retiring plants will be done through auctions.

In addition to generation capacity expansion, ARE projects will also be solicited for displacement of expensive electricity generated using fossil fuels.

“This is a major directional change from the past, stemming from the twin advantages of AREPs, namely, a significant drop in the AREP deployment prices over the past few years and that the AREP tariffs do not include capacity payments,” the policy document said.

Under the policy, tariffs will be denominated in Pakistan rupees. Consistent with the current practice, the tariff for AREPs will comprise energy purchase price only and no capacity payments, coupled with a ‘mandatory-purchase obligation’ for a specified duration.

For mature technologies, public utility procurement of AREPs will be through competitive bidding only and not on upfront or cost-plus tariffs. The National Electric Power Regulatory Authority (Nepra) may allow upfront or cost plus tariffs for new technologies if it deems appropriate to promote new technologies.