LAHORE: Coal-based power generation is cheaper as compared to gas and oil by Rs5.60/kWh on the basis of plant load factors approved by National Electric Power Regulatory Authority (NEPRA).

Anjum Nasim, an energy expert, said that power generation based on natural gas is the least expensive form of power generation followed by coal, RLNG and RFO (oil). Tariffs of natural gas plants, on average, are 11% less expensive than tariffs on coal-based plants while tariffs for RLNG based plants are 36% more expensive than coal-based plants and tariffs on oil/RFO are 71% more expensive than coal-based plants.

However, he added, the overall oil/gas-based generation commissioned in 2010-2014 was 45% percent more expensive than coal-based generation under CPEC when oil/gas-based plants were assumed to operate at 60% capacity and coal-based plants at 85% capacity. Overall, he said, at NEPRA approved plant factors the difference between the weighted average of coal-based power plants and the weighted average of all other thermal power plants is Rs5.60/kWh.

He said the cost comparisons are sensitive to the plant load factors at which the capacity purchase charges are calculated. When costs are calculated at a common plant load factor of 85%, the cost differential is reduced to Rs3.98/kWh. He further pointed out that the environmental cost associated with coal-based power projects is substantially greater than the environmental cost of power generation from other fuel types such as natural gas and oil. Using median cost of CO2 emissions for 37 Organisation for Economic Co-operation and Development (OECD) countries as a proxy for environmental costs in Pakistan, the cost difference is reduced to Rs2.29 per kWh and the overall saving from coal-based generation reaches to Rs112 billion annually.

Umbreen Fatima, another energy sector expert, said the average long run cost of power generation of IPPs commissioned during 2010-2014 was Rs16.43/kWh (of which the average for natural gas-based generation was Rs9.69/kWh, for RLNG it was Rs15.40/kWh and that of RFO based generation Rs19.47/kWh) compared with the average long run cost of coal-based generation under CPEC of Rs12.45/kWh (for imported coal plants it is Rs11.05/kWh and plants using local coal have a cost of Rs14.54/kWh) provided all plants operate at 85% capacity factor throughout their operational life.

If we use estimates of the median cost of CO2 emissions for 37 OECD countries, which is $30 per tonne of CO2 emission, then power generation based on lignite coal, sub-bituminous coal, fuel oil, LPG/RLNG and natural gas would cost an additional Rs4.31, Rs3.97, Rs2.85, Rs2.28 and Rs1.69 per kWh respectively, she added.

It may be noted that the energy projects that had been prioritized under CPEC till 2019, consisted of coal, wind, solar and hydel based power projects with an installed capacity of 11,108 MW. Of these, coal-based power installed capacity is 8220MW (of which the data on 6600MW is available at NEPRA) and hydel based capacity is another 1590 MW. Solar and wind power capacity is only 12 percent of the total approved capacity.

Copyright Business Recorder, 2020