EDITORIAL: There is utter confusion on the future course of power sector planning. Earlier this week, Nepra (National Electric Power Regulatory Authority) was baffled by the Ex-Wapda power distribution companies’ (XWDISCOs’) combined five-year power acquisition plan (PAP).
There is Indicative Generation Capacity Expansion Plan (IGCEP) made by the government which commits projects against the projected nationwide demand of electricity, and the PAP, which is presented by Discos to identify which power generating projects they will purchase from.
In an ideal case, the IGCEP should dictate the PAP, but instead in the hearing, the DISCOs were telling Nepra that they have dropped 8,000MW of electricity from their plan. There is a chicken and egg problem.
In 2023, IGCEP was made for seven years — FY23-30. Meanwhile, the PAP is being made for a shorter five-year window of FY23-27, which is being discussed for over 6 months since its submission to the regulator, based on the last IGCEP. Both documents are updated annually.
So, it also appears that there is a race against time to approve the current versions before they are revised. Further, if annual iterations can add or drop “approved” projects seemingly at a whim, no wonder then that the circular debt has been building itself up. The planning is also circular in nature.
Another key missing element in this process is the Transmission System Expansion Plan (TSEP). Nepra in its State of Industry Report 2022 has explicitly mentioned that the Transmission System Expansion Plan must be integrated with IGCEP for a consolidated way forward for the power sector. Otherwise, it would not be possible to address the electricity evacuation and system constraints.
We have seen in the past that the addition to power generation capacity has not been accompanied by adequate investment in the transmission system – for example, a lot of generation capacity is being added to South of country to serve the demand in the North but the evacuation capacity from South to North was never developed.
In other words, generation and transmission aspects have not been in synch, which they must be for optimum functioning of the power sector. The government is clearly missing something. For example, what happens if the transmission costs make the cheap generation prohibitively expensive to buy? Integrated coordinated planning could avoid such pitfalls, so to speak.
XWDISCOs are not thinking from the long-term perspective. One key area of focus in this exercise is addition of cheapest possible generation. It is mostly from a renewable source. The plan has a key feature of getting energy from the cleaner sources. However, there was no consideration on the potential impact on electricity tariffs, which are already becoming unaffordable. Then they have not considered the numerous baseload plants, which have already been added and are being planned. On the flip side, the demand for power is not going up in tandem.
XWDISCOs are simply not viewing the issue from the affordability lens and a long-term perspective. And, there are other hiccups in the power sector planning such as a cash-strapped National Transmission & Distribution Company (NTDC) that has submitted a revised investment plan, including CASA-1000 (the Central Asia-South Asia power project).
How can a country with excess generation capacity facing balance of payment constraints plan to import electricity with high wheeling costs? It simply does not add up. In a nutshell, there is no coherence in the overall planning, and that is perhaps because of too much involvement of government in energy planning and execution. XWDISCOs lack vision and NTDC has its own limitations. And, in such an unconducive environment planning process is being conducted and presented.
The planning by (K-Electric) KE is up to the mark in this regard. The company takes transmission bottlenecks very seriously. It talks about interconnection and integration to ensure uninterrupted power supply coming to its network from NTDC. Furthermore, the KE’s plan is significantly towards renewables, and as per its math, there is price reduction even after incorporating the currency depreciation.
Copyright Business Recorder, 2023