ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) has returned the Power Division's flawed Indicative Generation Capacity Expansion Plan (IGCEP), saying that the 27-year plan should be based on World Bank and IMF projections.
According to a letter, written by Nepra, pursuant to clause PC-4 of the Planning Code of Grid Code, NTDC submitted an IGCEP for the period from 2018-2040 on February 26, 2019 for review and approval of Authority. In this regard several deficiencies were pointed out and accordingly NTDC was directed to submit a revised plan, duly incorporating the observations of the Authority.
On April 20, 2020, NTDC submitted the revised IGCEP covering period of 2020 to 2047 for the approval of the Authority. The Authority sought comments of stakeholders on the submitted IGCEP whereby a number of issues were highlighted which are as follows; (i) IGCEP is not accompanied by the Transmission Plan and in absence of the same how the submitted IGCEP can be considered as least cost plan? ;(ii) Demand Side Management (DSM) initiatives have not been considered in the submitted plan;(iii) several projects which have completed their milestones have not been considered as committed projects? ;(iv) strategic projects of national importance such as Diamer-Bhasha Dam have been considered for implementation very late contrary to the expected COD of the projects;(v) instead of actual projects, block allocations have been made for various wind and solar projects;(vi) a number of projects with Open Cycle Gas Turbines (OCGT) have been considered with very low plant factor however, the option of utilizing existing plants has not been considered ;(vii) a large number of mine mouth projects on local coal have been considered but it is not clear whether any study about the availability related resources like water availability, dispersal arrangement has been made or not. Further, it is not clear whether any block optimization of the Thar coal has been considered or not and ;(viii) The IGCEP has not considered cost optimization issues specially pertaining to Hydel Power Projects (HPPs) which are developed on BOOT basis and transferred to the federal/provincial government at notional price and is further useable for a considerable period of time. Therefore, life cycle cost of hydropower projects be given extra weightage.
In consideration of, the Authority conducted a public hearing on July 15, 2020 for discussing the above mentioned issues. In this regard, the stakeholders specially the provinces, WAPDA, PPIB and the developers of the projects reiterated the above raised objections and stressed that unless their observations are addressed the approval of IGCEP may not be accorded.
The Authority is of the view that some important aspects pertaining to the submitted plan need attention and are required to be incorporated in the IGCEP.
The regulator, in its observation has stated that the IGCEP must clearly define criterion for least cost option, strategic projects and committed projects etc. The IGCEP must consider the proposed COD(s) of the projects for which: (i) bidding has already been conducted; (ii) PPIB has been issued LoS; (iii) projects under G2G initiatives of the provincial governments HPPs with feasibility studies completed and duly recommended by provincial government as per proposed COD(s); and (v) projects having generation licence and tariff from Nepra before the notification date of the new RE policy, as committed projects or candidate projects as per the proposed COD.
Nepra has further suggested that in the IGCEP, efforts should be made to curtail the OCGT(s) to cater for intermittency of RE by replacing with HPP(s) diesel generation sets DGs, existing gas turbines - completing term of PPA(s), latest technological development, hybrid of wind and solar, implementation of SCADA-III etc and some allocation for small hydro be given under the RE projects allocation.
Some other observations and recommendations of Nepra are as follows: (i) the IGCEP should review those projects which are completing their term of PPAs in the near future but are strategically important for the stability of the system such as Habibullah Coastal which is critical for the city of Quetta and adjoining areas;(ii) the impact of COVID-19 and latest projections on GDP growth made by IMF, may be used in the IGCEP to account for the actual capacity requirement in the years 2020 onwards;(iii) a scenario must be run/developed in the IGCEP without putting any constraint except the existing constraints in the system to determine the demand supply situation; (iv) in order to have a real time optimization, the IGCEP must use the present cost of projects instead of historic PC-1/feasibility stage cost clearly reflecting the impact of rupee devaluation etc.; (v) although the 1% LOLP is as per the Grid Code however, it is very idealistic and not achievable due to cost impacts on end consumers. In view of this, a scenario with alternate value, ie, 2% of LOLP may be developed and its impacts may be analyzed; (vi) the review of the IGCEP reveals that only a system capacity factor of approximately 35% is being achieved which is very low and results in higher consumer end tariff. In view of this, a scenario may be developed with higher capacity factor of 40% or 45% or 50% to have an impact of this; (vii) the IGCEP must look into option(s) to specify some targets for areas for which feeding from grid is economically not viable thus considering the possibility to determine the quantum for off grid arrangements/distributed generation; (ix)
The relevant agencies (NEECA, AEDB & WAPDA) which have not provided the required data as per the format provided by NTDCL, are required to share it immediately so that it is used in the proposed/next iteration of the IGCEP; (x) NTDC should review the input data (ie, capacity factors, load factors, cost numbers, CODs, and tariffs) of all the technologies included in the IGCEP with the help of experts and ensure that all the inconsistencies are removed; (xi) NTDC should start preparing the transmission expansion plan taking the current IGCEP document as input. Once prepared, it will always be possible to update the document based on modifications in IGCEP; (xii) IGCEP has assumed wind power projects in the North and Mid- country whereas, wind power potential lies in the South and South-West Pakistan. This assumption needs to be reviewed in terms of the locational study for variable renewable energies prepared by the World Bank;(xiii) IGCEP should try to do away with the block allocations made and instead specific projects may considered. Further, IGCEP should rationalize the implementation of future projects to create a balance of execution in the public and private sectors and; (xiv) the impact of future power generation on the basket tariff needs to be critically reviewed in this regard, assistance may be obtained from CPPA-G to run analysis and present the outcome as part of the next version of IGCEP.
Nepra has further stated that the Authority considers that for any generation expansion plan the Government has to decide the fuel mix keeping in view its future vision, international trends, technological advancements and contemporary trends across the globe for cheaper sources of energy. Further, the Government has to decide the generation based on its future growth trajectory/forecast. The affordability of cost of generation, regional development, replacement of thermal generation with renewables as base load (with storage), share of provinces, share of nuclear etc. All of the factors / considerations fall under the mandate of Federal Government and the Provincial Governments.
After giving detailed reasoning of shortcomings in the plan, Nepra has returned the IGCEP to NTDC with the directions that approval of the competent forum in the federal government is required and may be obtained before resubmitting it for the regulatory approval. Further, a list of projects (ie, RE and hydel) for which the Authority has approved the generation licence and determined tariff or otherwise work on the projects is at advanced level of execution should be considered as committed projects for the next iteration of the IGCEP.
Copyright Business Recorder, 2020