Industry backs early approval of solar projects

Express Tribune

15-04-2025

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Stakeholders from the industry and the government have voiced strong support for the early approval of centralised solar projects while citing their competitive tariffs and potential to reduce national electricity costs and subsidies.
At a public hearing convened by the National Electric Power Regulatory Authority (Nepra) on K-Electric's (KE) auction evaluation reports for its 120-megawatt and 150MW solar projects in Deh Halkani and Deh Metha Ghar, respectively – both located in Sindh – the stakeholders shared their views on the proposed tariffs and project execution.
The Request for Proposals (RFP) for KE's 640MW renewable energy projects had been floated early in 2024. In December 2024, Nepra conducted hearings on the power utility's 150MW solar projects in Winder and Bela (Balochistan), followed by hearings in February for its 220MW hybrid project in Dhabeji.
Company officials highlighted that they had assessed the reduction in KE's generation cost through the addition of 120MW and 150MW projects and the expected displacement of power generation based on expensive fuel.
It was ascertained that annual savings would be Rs3,477 million while aggregate savings over 25 years would go up to Rs86,937 million. These projects will also help realise foreign currency savings of $765 million in the entire time frame.
KE officials emphasised that the bidding process had been carried out transparently and in accordance with the regulatory guidelines. They mentioned that the inclusion of both physical and electronic submissions pointed out the company's dedication to fairness and openness throughout the process.
The officials stressed that the bidding process, which yielded a tariff bid from Kapco, followed Nepra's guidelines and was conducted transparently, including advertisements in the international and local newspapers.
Nepra voiced concern over the justification of accepting a single bid and asked why a second round was not initiated. KE responded that procedural delays impacted feasibility timelines and may have deterred other bidders.
KE said that the decision was based on comparative benchmarking with similar projects and the urgency of delivering low-cost energy to consumers.
Nepra also discussed the prudence and assumptions underpinning the business plan, particularly regarding the debt-equity structure and fuel displacement figures.
KE officials responded that all the standard prudency checks had been observed, with estimated annual fuel savings of Rs1.6 billion and Rs1.8 billion from these projects, alongside potential annual foreign exchange savings of over $30 million.
They added that across KE's full portfolio of 640MW of renewable energy projects, expected savings could reach up to Rs12 billion per annum.
The proposed tariff is levelised – not cost-plus – and was defended as competitive and economically justified under the current market conditions. KE reiterated that the associated transmission infrastructure had already been assessed with support from the World Bank and necessary NOCs were secured.
The proposed tariff structure was lauded, with hearing participant Rehan Javed describing it as very good and advantageous for both consumers and the government. He emphasised the affordability of the tariff and stressed the need for expediting approvals pertaining to the right of way and transmission infrastructure.
It was suggested that Hesco and Sepco should also be involved in future planning to encourage industrial growth in the south and reduce transportation costs.
Another participant requested Nepra to share the timeline for issuing a decision on KE's renewable energy projects so that the benefit could be passed on to consumers; to which Nepra member assured that it would be announced within two months.
Transaction Adviser to the Government of Sindh Irfan Yousuf expressed confidence in the competitiveness of the process and emphasised that it was conducted transparently and provided all bidders with an equal opportunity to participate.