Renewables require framework

Looking to shake things up in the renewable sector, the PTI government has come up with its own renewable energy policy. While the time had come for a new policy to be unveiled, there are also other aspects pertaining to development of the renewables sectors which should have been completed by now.

Unarguably, one of the most important ones has been the failure to come up with a competitive bidding framework for renewable projects. Much has been written in this space about the benefits of moving towards a reverse based auction mechanism to come up with tariffs for renewable energy projects.

The National Electric and Power Regulatory Authority (Nepra) requires the framework for auctioning rounds to be developed in alignment with the NEPRA Competitive Bidding (Approval and Procedures) Regulations 2014.

Think of this framework as the set of basic documents outlining the processes and procedures to be followed by participating companies in auction rounds such as a request for proposal (RFP). The organisation tasked with the development of the competitive bidding for renewables projects is the Alternative Energy Development Board (AEDB). But it seems the task is proving too difficult for the AEDB to execute as it has been more than two years now since Nepra directed the organisation to come with the framework. The frustration of the regulator can be gleaned from the past state of industry reports.

The State of Industry 2017 report released last year stated “After a lapse of more than year and a half, however, AEDB has not been able to come up with these documents, thus creating an overall uncertainty in the sector specifically for prospective investors in the renewable energy. The Ministry of Energy (Power Division) is therefore urged to take a clear and consistent policy about the induction of solar, wind and small hydropower projects. Accordingly, AEDB should initiate schedule for competitive bidding in solar and wind power projects at the earliest. “

If it is direction the AEDB needs then it utilise plenty of resources to come up with the framework. It can utilise guidelines from the International Renewable Energy Agency (IRENA) which has issued a number of documents in this regard to facilitate countries in coming up with effective auctioning frameworks. These include Renewable Energy Auctions: A Guide to Design (IRENA and CEM, 2015) and Renewable Energy Auctions in Developing Countries (IRENA, 2013).

But if it is institutional will which is missing, it will have been provided by the new government. If it wants to enable competitive bidding for renewable projects and promote competition in the space, the PTI government should expedite the framework development process by pushing the AEDB to come up with one as soon as possible.