ISLAMABAD: National Electric Power Regulatory Authority (Nepra) has approved upfront tariffs for wind power projects, according to which tariff for local investment will be 17.28 cents/kWh whereas for foreign investment it will be 12.61 cents/kWh. This tariff will only be available to the companies that will achieve financial close by December 31, 2012. Moreover, this tariff will only be valid in case of approval given for the first 1,500 MW produced by the companies.
The power purchaser will not take the wind risk and relevant wind power generation companies will be required to account for the risk. The levelised tariff discounted at 10 per cent per annum has been worked as $14.6628/kWh. Only wind power generation companies meeting the following conditions will be eligible for this tariff: (i) companies recommended by the Alternative Energy Development Board for the grant of upfront tariff; (ii) companies whose proposed plant and machinery is new and certified to be of the acceptable quality by the AEDB and; (iii) companies with installed capacity in the range of 05 MW to 250 MW.
According to the determination, no adjustment for certified emission reductions has been accounted for. However, upon actual realisation of carbon credits, the same will be distributed between the power purchaser and the power producer in accordance with the government policy, as amended from time to time.
The targeted maximum construction period after financial close is 18 months. No adjustment will be allowed in this tariff to account for financial impact of any delay in project construction. However, the failure of a project to complete construction within 18 months of financial close will not invalidate the tariff granted to it. This upfront tariff will be applicable for a period of 20 years from the commencement of commercial operations. The decision to opt for upfront tariff once exercised will be irrevocable. The upfront tariff granted to any company will no longer remain applicable/valid in case financial close is not achieved by the relevant company, within 12 months upfront tariff award.
This tariff has been calculated on the basis of project financing structure of equity plus 100 percent foreign loan. All companies are eligible to apply for this tariff, irrespective of their actual financing structure. Indexations in this case will be allowed in accordance with the mechanism for indexations applicable for tariff calculated on the basis of project financing structure of equity plus 100 percent foreign loan (100 per cent local loan(s) and mixed loans ie mixture of foreign and local loans.
In view of material variations between the cost of local and foreign financing, the companies with the proposed loan composition other than the one mentioned above ie 100 percent foreign, have the one-time option to make an irrevocable request for allowing a tariff computed in accordance with their proposed loan composition.