ISLAMABAD: The Cabinet Committee on Energy (CCoE), which is scheduled to meet on Thursday (today), will consider revised assumption inputs for Indicative Generation Capacity Expansion Plan (IGCEP), official sources told Business Recorder.
Sharing details, sources said, National Transmission & Despatch Company (NTDC) is mandated for preparation of IGCEP on annual basis for review and approval of Nepra, under the provisions of the Nepra approved Grid Code. NTDC prepared the IGCEP 2047 and submitted it to Nepra on April 20, 2020. Nepra conducted a public hearing on the submitted IGCEP on July 15, 2020 as a part of review and approval process.
After hearing, Nepra returned the IGCEP to NTDC on August 20, 2020 with certain directions for changes in the IGCEP report. Accordingly, NTDC responded to Nepra on September 4, 2020 and communicated its consent to manage quick compliance, seeking clarity on certain directions and requested Nepra to review certain directions which contradict the ARE Policy 2020, approved by CCoE on April 4, 2020.
Power Division maintained that wholesale generation cost accounts for 80-85% of the end consumer costs. Therefore, generation planning needs a clear roadmap. The IGCEP is a 10-year plan to be updated on an annual basis and required to be submitted by NTDC to the regulator by April 15 every year under the regulatory framework and limit impact on the end-consumer tariffs by CPPA-G over the horizon of 10 years.
Since the exercise for preparation of the plan for the year 2020 (for a 27 year period) has not reached fruition so far, Power Division has proposed that the exercise should be abandoned and a new exercise for the year 2021 may be initiated. Power Division argued that the assumptions underlying the preparation of IGCEP 2021 for the next ten years need to be approved by the CCoE and ratified by the Cabinet before its preparation. This is necessary because the assumptions reflect certain policy principles and impact the cost of generation through the upcoming projects and set the direction of the generation side of the power sector for future.
Accordingly, Power Division, in consultation with NTDC, has proposed a set of policy assumptions for preparing IGCEP 2021 for consideration of CCoE. After approval of CCoE and ratification by the Cabinet, directions will be issued to NTDC to prepare the plan. These policy assumptions would be fed into the tool (Plexos) to be used for the generation of the plan and would serve as constraints while determining the prioritized list of projects on the principle of least cost of energy. These constraints on the ideal least cost scenario fall in the following broad categories: (i) projects that have achieved financial close and are required to fulfill COD deadlines; (ii) projects declared as strategic by the government e.g. nuclear, Diamer Bhasha; (iii) projects that are committed (with specific timelines) under G2G/multilateral arrangements (if the projects under G2G agreements do not have specifically stipulated timelines for completion, the Plan would optimize their completion date based on the cost of energy from such projects); and (iv) renewable targets for new projects to be governed on the basis of least cost principle as per RE Policy.
The CCoE to be presided over by Minister for Planning, Development and Special Initiatives, Asad Umar will also consider the National Electricity Policy 2021.
Copyright Business Recorder, 2021