So much has been said on rental power in Pakistan. Interestingly, it is still a little understood and a widely hypothesised phenomenon. In this article we would try to understand the facts behind the idea - especially in the context of Pakistan, a country with its own unique circumstances.
What is a Rental Power Plant?
Rental Power Plants (RPPs), in the Pakistani context, generally refer to relatively small, portable and thermally-powered power plants that are used as a short-term, quick-fix arrangement to fill in demand gaps for electricity until planned IPP capacity comes on line. These plants have limited generation capacity (generally between 50 MW to 250 MW), are easy to install, move and reinstall, and have life expectancy of at least 3 to 5 years. Lately, they have actively been promoted as a stopgap solution to address emergency requirements in Pakistan due to their short lead times as typically such plants can be commission within four to six months.
Rental power is not a new phenomenon for the developed world - although it is almost never used as a regular or permanent source of power. RPPs, just like any other equipment for hire, can be employed with immediate effect and without committing capital for the full price of the equipment. However, it is invariably an expensive alternative on a per-unit basis. Therefore, it is generally used to provide temporary service for short-term projects or installed for special occasions.
Only in developing countries, RPPs have found a strategic position in the power sector (examples include Bangladesh and of course Pakistan). Rapid economic growth over the past decade, poor maintenance of infrastructure and inadequate expansion in economic means of generation, have led to a crisis-like situation in many developing countries. Thus, RPPs which should be employed as an alternative of last resort, become a key element in the power scenario for a considerably long period of three to seven years. But, despite the high operational costs and temporary nature, RPPs do have certain clear advantages over regular power plants as summarized below:
RPPs provide a short-term solution on an urgent basis
-- Perfect for temporary projects and filling in interim gaps, helps avoid committing huge capital flows into the purchase of plant
-- Provide continuity for a country's economic growth and help avoid losses incurred due to load shedding, business closedowns and cancelled shipments.
-- Usually portable and may be easily moved for reinstallation at other locations
-- Easy to install, saves time on construction and set-up.
Legal and regulatory requirements simplified to avoid long lead times. Power sold to Gencos and IPPs already on the grid, who are responsible for facilitating RPPs commissioning, instead of signing independent agreements with NTDC and obtaining tariffs and licenses from NEPRA
-- High plant availability to match new IPPs