ISLAMABAD: Pakistan Wind Energy Association (PakWEA) has reportedly protested at the "continuous curtailment" of wind power by the National Power Control Centre during peak wind months which is being termed a "violation" of Energy Purchase Agreements (EPAs) and tariff determinations.
The Association's Chairman Rumman A. Dar conveyed his concerns to the Minister for Power, Omar Ayub, Chairman Nepra and other government decision makers.
The sponsors of several new wind power projects, some funded by the International Finance Corporation (IFC), an arm of the World Bank is also facing undue hurdles from the government's concerned agencies.
The project sponsors have held a meeting with the Minister and apprised him about the difficulties the projects sponsors are facing. Several meetings were also held with senior officials of Power Division, National Transmission and Despatch Company Ltd. (NTDC), Central Power Purchase Agency (Guarantee) Ltd. (CPPA-G) and National Power Control Center (NPCC) on curtailment of supply.
Earlier meetings on continuing curtailment of wind power plants were also held with NTDC and NPCC on October 10, 2019 and October 18, 2019. As per the EPA executed by the Wind Power Plants (WPPs) with NTDC and CPPA, the entire throughput (i.e. generation) of the WPPs is to be mandatorily purchased by the purchaser i.e. NTDC/CPPA.
As per the Government's policies between a Power Purchase Agreement (PPA) and an EPA where there is a concept of capacity payment the parties signed a PPA but where there was no capacity payment, the parties entered into an EPA with the assumption in accordance with the policy and the tariff ruling, that the whole of the energy produced will be dispatched and received by the purchaser. The concept of mandatory purchase built into the EPAs is in accordance with the policy for development of Renewable Energy, 2006 pursuant to which each of WPPs was developed.
A confirmation from NTDC was also obtained directly by the National Electric Power Regulatory Authority (Nepra) prior to the award of the tariff to WPPs. Pursuant to the confirmation issued in the form of Power Acquisition Request (PAR), NTDC had confirmed that it would have necessary infrastructure in place for evacuation of the entire throughput (i.e. generation) of WPPs. The PARs have been issued by NTDC in favor of Nepra for each of WPPs.
According to the Association, WPPs are protected under the entire documentation forming part of the concession arrangement with NTDC/CPPA, i.e. EPAs, the RE Policy, the PARs and the tariff determination pursuant to which the entire throughput of the WPPs is to be mandatorily purchased by the purchaser.
However, in spite of all formal agreements and commitments, "in Association's utter disappointment and frustration," the WPPs continue to be curtailed as per the instructions of NPCC, which is against the contractual provisions of the EPA, the RE Policy, the PARs and the tariff determination.
The Minister for Power has been apprised that generation during the months between April to September (high wind season) accounts for approximately 70%-75% of the annual generation of WPPs. Generation is completely dependent on prevailing wind speeds which vary during the course of a day as well. It has been noted multiple times that each time when wind speed is high, instructions for curtailment are issued and as wind eases such instructions are eased.
"This act in itself shows the intent to afflict financial harm on the WPPs as any period of curtailment results in irreparable loss to WPPs (since WPPs are dependent on a single-part tariff as opposed to a tariff that is bifurcated between capacity and energy payments)," Rumman Dar said, adding that curtailment during the period from April to September will result in WPPs not even being able to achieve the capacity factor stipulated in their respective tariff determinations and would render these projects as unviable.
Wind plants are of the view that it is clear that there are no technical constraints in the NTDC grid system leading to curtailments as WPPs developed under the cost-plus tariff (having wind speed risk coverage, therefore capacity payment type structure) are not issued any curtailment instructions whereas WPPs developed under the feed-in tariff (issued by NEPRA in 2013 and 2015 without wind speed risk coverage) continue to be curtailed .
"The continuing curtailment is also against the verbal commitments made by representatives of the MoE, NTDC, and NPCC who promised not to curtail during the months between April to September," he continued.
Meanwhile, the Association has also written a separate letter to Nepra, saying that PakWEA does not have a right to negotiate on behalf of any particular project or its developers or financiers and continues to act solely as a conduit to share details of the issues being faced by the wind power projects and provide information asked by the regulator.
Copyright Business Recorder, 2020
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