The Cabinet Committee on Energy (CcoE) has directed Power Division to determine merit order for 'must run' power plants on the basis of economic viability except for nuclear power plants, official sources told Business Recorder.
Presided over by Prime Minister Imran Khan, the committee has been informed that 'must run' power plants are those where natural resource cannot be stored. If electricity is not despatched, the resources go waste. In case of hydel, the driver is water indent and the cost of power is the lowest. Nuclear plants once started have to remain at fixed generation level because of technology constraints. The cost of nuclear power is still lower and qualifies for merit order. In case of bagasse, it is must run during crushing season.
Power Division briefed the meeting that natural resource cannot be controlled and energy is generated as and when resources remain available. In case of solar and wind, there is not full cost and the entire cost is for the energy produced which cannot be stopped or stored. The Renewable Energy Policy, 2006 requires payments for the entire available energy. Must run condition of plants is a part of their Energy Price Agreements (EPAs). However, it may be noted that the current tariffs for solar and wind are much less than already contracted projects. With increase in intake from renewable energy y projects, the cost will come down.
According to sources, Power Division apprised the meeting that there are 108 plants having total installed capacity of 33,836 MW with de-rated capacity of 32,006 MW which includes 61 must run power plants having installed capacity of 12,969 MW with the de-rated capacity of 12,856 MW.
In November, the price of one unit of electricity produced by hydel was Rs 5.17 per unit, domestic gas, Rs 7.54 per unit, nuclear, Rs 8.71 per unit, bagasse, Rs 10.78 per unit, import from Iran, Rs 11.57, coal, Rs 12.05 per unit, RLNG, Rs 14.28 per unit, wind power, Rs 16.93 per unit, solar, Rs 19.86 per unit and furnace oil, Rs 22.05 per unit. The total average tariff was Rs 10.50 per unit.
The cost analysis of 2017-18 shows that energy generated from hydel was 28,239 million units, monthly average megawatts were 3,224 at a cost of Rs 135.265 billion. Energy generated from solar was 702 million units - average 80 MW with a cost of Rs 12.931 billion, and energy generated from wind was 2,145 million units - average 245 MW with a total cost of Rs 41.248 billion. Total electricity generate from bagasse was 1,060 million units - average 121 MW at a cost of Rs 10.282 billion and 8,720 million units from nuclear- average 995 MW at a cost of Rs 76.474 billion. This shows that total 40,866 million units were generated - average 4,665 MW at a total cost of Rs 276.200 billion.
Power Division further informed the meeting that out of 97.3 billion units generated, 2.8 billion units (2.88 per cent) were generated by solar and wind power projects. With the contracted tariff of solar and wind at that time, this generation cost Rs 54 billion (3.36 per cent) out of a total generation cost billed at Rs 1.609 billion.
During discussion, the committee urged that a new policy along with 25 years composite energy strategy is need of the hour.
In December 2018, Power Division briefed the meeting about current position of fuel-wise capacity in the country. It was stated that power is being generated through hydel (27%), RLNG (26%), oil (16%), gas (12%), coal (9%), nuclear (5%) and renewable (5%). Total number of power units in the country is 1077 with installed capacity of 33,836 MW. Their de-rated capacity is 31,006 MW. The meeting was informed about the merit order. It was stated that merit order is a way of ranking available electricity generation plants, which is based on ascending order of price. Merit order is set in accordance with approved tariff by NEPRA, current fuel price and O&M charges. Lowest cost plants are first dispatched to meet demand and higher cost plants are dispatched in the last. Dispatching generation in this way minimises cost of production of electricity. Power plants are operated on the basis of dispatch merit order approved by a technical committee. It was stated that there is a standard operating procedure (SOP) to process and revise merit order for operation of plants. According to this procedure, CPPA-G intimates the revised applicable fuel prices and variable O&M cost based on NEPRA tariff fortnightly in respect of GENCOs and IPPs (thermal power plants).
The Power Division further updated the meeting on month-wise utilisation of RLNG in 2018. It was informed that RLNG could not be utilised against its allocation due to host of reasons viz: late commissioning of RLNG plants, forced outages, availability of higher hydel generation, and drop of temperature especially in October and November, 2018. It was pointed out that RLNG consumption may decrease in drawl of load/ demand on lower side or tripping of RLNG plants. It was observed in this regard that sudden change in temperature is one of the factors affecting demand & supply of power, which entails change in demand of fuel for plants. However, firm demand of fuel for power generation can be anticipated by using artificial intelligence to avoid wastage of huge public exchequer on unnecessary purchase of fuel.
The Prime Minister observed that recent crisis of gas supply could have been avoided through better anticipation and management. It was instructed that inquiry report in this regard be submitted in time. Underscoring the need for improved coordination among the relevant departments and addressing governance issues, the Prime Minister urged for timely and accurate estimation about demand and supply in power sector in order to avoid any interruption in the future. The need to devise better forecasting methodology was also reiterated.
During discussion on the subject, it was highlighted that presently quite a few ships carrying coal are standing at Karachi Sea Port which need to be cleared on an urgent basis so as to ensure uninterrupted supply of coal to power plants in order to avoid any closure.
The CCoE desired to have a monthly report of power distribution companies on their respective transmission and distribution losses and update on recoveries of receivables. It was also observed that draft of renewable energy policy that has been pending since long should be expedited. On multiple observations of improper minuting of the meetings of CCoE, it was directed that Cabinet Division should be extra careful in properly drafting minutes without missing any important direction or decision.
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