Capacity payments: Nepra terms power evacuation issues main cause of increase

National Electric Power Regulatory Authority (Nepra) on Thursday said that issues in power evacuation of the newly established projects are the main reason for the increase in capacity payments.

Addressing the participants of Energy Week-Transmission day, organized by Nepra, Member Nepra Rehmatullah Baloch said that issue of curtailed evacuation of power due to system constraints (i.e. transmission lines and grid stations) result in payment of capacity charges to GENCOs, IPPS and non-project missed volume (NPMV) to renewable generating companies which, in turn, leads to high cost of energy mix of CPPA-G.

He maintained that besides NTDC, licence has been awarded to Sindh Transmission and Dispatch Company (STDC) for transmission of power in the province pursuant to amended NEPRA Act, 2018. In the previous arrangement, NTDC was the only entity for the entire Pakistan excluding Karachi; however like Sindh other provinces may now also obtain licence for engaging in transmission of power business in their respective provinces along with NTDC. However, the question arises as to how this new arrangement would function smoothly.

Rehmatullah Baloch said that wheeling of electric power has been allowed under Nepra (Wheeling of Electric Power) Regulations, 2016 which provide generation licences for sale of power to BPCs by using transmission and distribution network of other companies. The issue pertaining to centralized verses self-dispatch, banking of energy, network losses, Use of System Charges (UoSC) need to be addressed in the current wheeling regime.

He further stated that the concept of HVDC transmission has been introduced for the first time in Pakistan. In this regard, 878 km, ±660 kV HVDC transmission line from Matiari to Lahore is under construction for evacuation of 4000 MW power from south to north. Scheduled COD of this project is 1 March, 2021 and the timely construction of interconnection facilities of the power plants for feeding in and the allied transmission lines for evacuation of power is imperative. He was of the view that delay may cause imposition of liquidated damages (LDs).

Alternate energy and power transfer through HVDC network are coming in the field. The existing Grid Code needs to be amended and aligned accordingly, he said. Baloch further stated that the transmission system security, reliability and stability need to be enhanced by developing benchmarks in light of the best international and regional practices to avoid cascaded outages, and major system disturbances in the form of partial system collapses or blackouts.

"Our workforce will also need to evolve. The present workers who are in the energy industry operating our power plants and other systems need to acquire new skills. These include how to use data, how to use the digital systems to enable the smart grid, how to run alternative energy and HVDC systems. This evolution is not just about the individual skills. They also need to learn new skills at the team level and at the macro level, to operate the entire system efficiently and optimally," he maintained.

The transmission session was attended by representatives of various power utilities such as NTDC, NUST, STDC, CPPA-G and AEDB. Moreover, power sector researchers and academia i.e. NUST, LUMS etc also shared their ideas and suggested the way forward for Pakistan to achieve the goal of sustainable development through effectiveness in transmission sector.

The transmission session concluded with the agreement that for reliable and sustainable electricity provisions transmission sector needs to be revamped keeping in view the new challenges.

In addition to transmission session, on fourth day another session was held wherein the international experts visiting from United Kingdom and Singapore discussed details of optimizing procurement of imported coal through competitive pricing mechanism. This session was held keeping in view the share of imported coal power plants in the generation mix and its financial implications on the fuel pricing mechanism. During the session the experts provided the global comparison of the international coal pricing and mechanism of price adjustment and its impact on electricity price.

The Innovation Session concluded with a vote of thanks from Chairman NEPRA, Tauseef H Farooqi. He also appreciated the efforts of the transmission day's managing team for conducting such a fruitful session.