Power Division has finalised draft Renewable Energy Policy 2019 to be presented to the Federal Cabinet for approval, envisaging 25 percent of total generation capacity from Alternative and Renewable Energy Technologies (ARET) by 2025 and 30 percent by 2030, well-informed sources in PPIB told Business Recorder.
The policy which was circulated to the stakeholders concerned for comments, is structured to cover projects to be inducted in the NTDC system, Karachi Electric (KE) or any other privatized utility in the future, to the extent that they wish to avail the available concessions. However, any contractual arrangements for projects in KE or a privatized utility shall remain the responsibility of the parties. Nepra shall be responsible for ensuring least cost generation for KE in procurement of its additional needs.
The policy covers all projects to be implemented with alternative and renewable energy technologies for producing power whether for sale to a public utility or for private sale to a consumer if the producer wishes to avail any or all incentives available in this policy.
This includes projects that may be developed in private sector, public sector, or in Public Private Partnership (PPP) mode. To the extent that a consumer wishes to generate power for his/her own use, certain concession available under this policy would apply, and are already codified in other regulations or statutory orders and, therefore do not require any specific action by such a consumer under this policy per se.
The technologies covered under this policy are both conventional renewable energy including solar, wind, geothermal, biomass, as well as alternative technologies like biogas, syngas, Waste to Energy (WtE), storage systems, ocean/tidal waves, as well as all kinds of hybrids. However, hydel projects shall not be covered under this policy. In addition any proprietary technology, or new technology to be developed during the applicability of the ARE policy, would also fall under its ambit.
All relevant parties shall be bound by the terms of this policy including but not limited to, NTDC, CPPA-G, Discos, AEDB, Nepra, KE and provincial energy boards to the extent they fall within this policy.
The Government of Pakistan (GoP) initiated development of Alternative and Renewable Energy (ARE) sector under a phased, evolutionary approach constituting a strategic policy implementation roadmap under a policy for development of Renewable Energy for power generation, 2006( RE Policy 2006) to increase the development of ARE Technologies (ARETs) in Pakistan. ARE promises a higher proportion of the national energy supply mix and helps ensure universal access to electricity in all regions of the country.
The GoP's strategic objectives of energy security, affordability of electricity, availability for all, environmental protection, sustainable growth and social equity are further harnessed under the ARE Policy 2019, developed by the Power Division in consultation with key stakeholders. ARE Policy 2019 aims to create a conducive environment for the sustainable growth of ARE sector.
Alternative and renewable energies have seen growth in different parts of the world in the last decade in terms of development, technological advancement and cost competitiveness. Experience under RE Policy 2006 coupled with international best practices provide the basis for more comprehensive framework for ARE Policy 2019.
It has an expanded scope of encompassing all alternative and renewable energy sources, competitive procurement and also addresses areas like distributed generation system, off-grid solutions, B2B methodologies , and rural energy services. It carries forward most of the liberal and attractive incentives of RE Policy 2006 to maintain the investors' confidence, and places greater emphasis on aggressive growth of grid-connected ARET applications as well as a programmatic development of depressed ARE power generation market on more competitive terms.
It has been decided that rather than induct RE projects on a reactive basis, a new policy direction be set whereby Pakistan intends to have 20 per cent of its capacity from ARET technologies by 2025 and 30 per cent by 2030.
According to a study recently conducted by consultants for the GoP, such targets can be achieved but will require upgradation of the transmission infrastructure, this exercise will be undertaken in parallel. This target, together with over 30 per cent hydel, will result in one of the most environmentally friendly and affordable electricity mix compared to the heavy mix of imported fossil fuels in the past.
Salient features of the ARE Policy 2019 include variety of investment options for tapping different ARE resources different ARE resources for off-grid applications as well as encouraging consumer driver applications and initiatives.
According to the draft RE policy 2019, any production and use of electricity for self-consumption shall be treated as part of the normal business process for the purposes of income tax, but the sale of electricity from such projects to another entity, shall be exempted from income tax.
Any equipment imported for such projects shall enjoy same custom duty exemptions as enjoyed by projects intending to sell to the grid.
All the same incentives that are applicable to grid based projects shall remain available for private projects. The draft RE Policy 2019 further states that alternative / renewable energy based Independent Power Producers (ARE-IPPs) will be ARE based power generation companies established for dedicated sale of power under guaranteed agreements with NTDC/ CPPA-G/ Discos.
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