ISLAMABAD:Stakeholders from both the government and private sectors have rallied behind K-Electric’s proposed centralized solar energy projects, urging the National Electric Power Regulatory Authority (NEPRA) to expedite tariff approvals.
These projects, which promise significant cost savings and reduced reliance on imported fuels, are seen as crucial for Pakistan’s transition to affordable and sustainable energy. The endorsement came during a public hearing held by NEPRA to review K-Electric’s Auction Evaluation Reports (AERs) for its 120 MW and 150 MW solar projects in Deh Halkani and Deh Metha Ghar, respectively, both located in Sindh.
These projects are part of KE’s broader 640 MW renewable energy initiative announced earlier in 2024, which also includes 150 MW solar projects in Winder and Bela (Balochistan) and a 220 MW hybrid project in Dhabeji.
KE officials stated that the addition of the 120 MW and 150 MW solar plants will displace expensive fuel-based generation, resulting in estimated annual savings of PKR 3,477 million and cumulative savings of PKR 86,937 million over 25 years.
In terms of foreign exchange, these projects are projected to save nearly USD 765 million over the same period.
Company representatives emphasized that the bidding process was fully transparent, in line with NEPRA’s regulatory framework. Both physical and electronic submissions were accepted, reinforcing the integrity of the process.
The winning bid was submitted by KAPCO after broad market engagement, including advertisements in both local and international media.
However, NEPRA raised concerns about the acceptance of a single bid and the lack of a second round of bidding. In response, KE explained that procedural delays had impacted feasibility timelines, potentially discouraging other bidders.
The company maintained that the decision was based on benchmarking with similar projects and the pressing need to deliver low-cost energy to consumers.
NEPRA also scrutinized the business plan’s prudence, particularly in relation to the debt-equity structure and assumptions about fuel displacement. KE defended its projections, citing comprehensive displacement analysis and standard prudency checks.
KE officials projected annual fuel savings of up to PKR 1.8 billion and foreign exchange savings exceeding USD 30 million from the new projects, with potential total savings of PKR 12 billion annually across the entire 640 MW renewable portfolio.
The proposed tariff is levelized rather than cost-plus, and KE asserted that it is both competitive and economically viable under current market conditions. Transmission infrastructure requirements have already been assessed with World Bank assistance, and the necessary no-objection certificates (NOCs) have been obtained.
Stakeholders praised the proposed tariff structure. Rehan Javed described it as highly beneficial for both consumers and the government, stressing the importance of swift approvals related to right-of-way and infrastructure development.
He also recommended involving HESCO and SEPCO in future planning to promote industrial growth in the southern regions and reduce logistics costs.
A participant in the hearing urged NEPRA to clarify the timeline for announcing its decision so that the benefits can be promptly passed on to consumers. NEPRA’s member responded that a final decision is expected within two months.
Irfan Yousuf, Transaction Advisor to the Government of Sindh, expressed confidence in the integrity and competitiveness of KE’s bidding process, noting that all bidders had been given a fair opportunity to participate.
Mehfooz A. Qazi, Project Director of the Sindh Solar Energy Project (SSEP), offered poetic praise for the solar projects and recounted the history of tariff reforms and the policy environment that enabled the current renewable energy momentum. He appealed to NEPRA to finalize the tariff before the bid validity period expires, calling these solar ventures essential for the country’s energy future.
