National Electric Power Regulatory Authority 4. Islamic Republic of Pakistan
NEPRA Tower, Attaturk Avenue (East), G-511, Islamabad Ph: +92-51-9206500, Fax: +92-51-2600026 Registrar Web: www.nepra.org.pk, E-mail: [email protected] No. NEPRA/R/DL/LAG-450/0?"-- January 10, 2020
Mr. Charles Anton Milner, Director, 2- T.-a (44-4 quAi Lahore 54000.
Subject: Grant of Generation Licence No. SPGL/32/2020 Licence Application No. LAG-450 K1 Solar Power Lahore (Private) Limited (K1SPLPL)
Reference: KISPLPL's application vide letter dated nil (received on April 11, 2019). Enclosed please find herewith Determination of the Authority in the matter of Application of "K1 Solar Power Lahore (Private) Limited (KISPLPL)" for grant of Generation Licence along with Generation Licence No. SPGL/32/2020 annexed to this determination granted by the National Electric Power Regulatory Authority (NEPRA) to KISPLPL for its 15.00 MW Solar Power Plant located at Lot No. 302, New Chak No. 3, Rakh Mankera, Tehsil Mankera & District Bhakkhar, in the province of Punjab, pursuant to Section 14-B of the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997/Amendment Act, 2018.
2. Please quote above mentioned Generation Licence No. for future correspondence. \NER Rtc Enclosure: Generation Licence (SPGL/32/2020)
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(Syed Safeer Hussain) 10 0 12v Copy to: NEPO 1. Secretary, Ministry of Energy, Power Division, A-Block, Pak Secretariat, Islamabad.
2. Chief Executive Officer, NTDC, 414-WAPDA House, Lahore.
3. Chief Executive Officer, CPPA-G, ENERCON Building, Sector G-5/2, Islamabad.
4. Chief Executive Officer, Alternative Energy Development Board (AEDB), 2nd Floor, OPF Building, G-5/2, Islamabad
5. Chief Executive Officer, Faisalabad Electric Supply Company (FESCO), Abdullahpur, Canal Bank Road, Faisalabad.
6. Director General, Environment Protection Department, Government of Punjab, National Hockey Stadium, Ferozepur Road, Lahore. National Electric Power Regulatory Authority (NEPRA)
Determination of the Authority in the Matter of Application of K1 Solar Power Lahore (Private) Limited for the Grant of Generation Licence
January 4°, 2020 Case No. LAG-450
(A). Background
(i). In order to harness the potential of Renewable Energy (RE) resources in the country, the Government of Pakistan (GoP) formulated a policy titled Policy for Development of Renewable Energy for Power Generation 2006 (the "RE Policy"). The said policy had been in field since 2006 under which both Federal Government and the Provincial Governments had been supporting the implementation of RE projects in the country.
(ii). In consideration of the above, the Federal and Provincial Governments had been issuing Letter of Intent (Lol) to various developers for setting up different type of RE projects across the country. In this regard, Govt. of Punjab (GoPb) through Punjab Power Development Board (PPDB) issued Lol to a consortium of ib Vogt GmbH and Milner Vermogensverwaltungs GmbH /the Sponsor(s) for setting up an approximately 15.00 MW solar based generation facility/Solar Power Plant/Solar Farm at Rakh Mankera, Tehsil Mankera, District Bhakkhar in the province of Punjab. In order to implement the project, the Sponsors got incorporated a Special Purpose Vehicle (SPV) in the name of K1 Solar Power Lahore (Private) Limited (K1SPLPL).
(iii). According to the terms and conditions of the Lol, the Sponsors were required to carry out and complete the feasibility study of the project at internationally acceptable standards. In consideration of the said, the Sponsors hired the services of different consultants and completed the feasibility study of the project which was approved by the Panel of Exp appointed by
Page 1 of 17 PPDB. After the said, K1SPLPL decided to approach the Authority for the grant of generation licence.
(B). Filing of Application
(i). K1SPLPL submitted an application on April 11, 2019 for the grant of generation licence in terms of Section-14B/Section-15 of Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997 (the "NEPRA Act") read with the relevant provisions of the NEPRA Licensing (Application and Modification Procedure) Regulations, 1999 (the "Licensing Regulations").
(ii). The Registrar examined the submitted application to confirm its compliance with the Licensing Regulations and observed that the application lacked some of the required information/documentation. Accordingly, K1SPLPL was directed for submitting the missing information/documentation and the same was received on April 12, 2019. The Registrar submitted the application for the consideration of the Authority to decide the admission of the same or otherwise. The Authority considered the matter and found the form and content of the application in substantial compliance with Regulation-3 of the Licensing Regulations. Accordingly, the Authority admitted the application on May 23, 2019 for consideration of the grant of the generation licence as stipulated in Regulation- 7 of the Licensing Regulations. The Authority also approved a notice of admission to be published in the press for inviting comments of general public, interested and affected persons in the matter as stipulated in Regulation-8 of the Licensing Regulations. Accordingly, the said notices were published in one (01) Urdu and one (01) English newspapers on May 28, 2019.
(iii). In addition to the above, the Authority also approved a list of stakeholders for seeking their comments for assistance of the Authority in the matter in terms of Regulation-9(2) of the Licensing Regulations. Accordingly, letters were sent to different stakeholders as per the approved list on May 28, 2019, soliciting their comments for assistance of the Authority.
Page 2 of 17 (C). Comments of Stakeholders
(i). In reply to the above, the Authority received comments from two (02) stakeholders including Ministry of Science and Technology (MoST) and Central Power Purchasing Agency (Guarantee) Limited (CPPAGL). The salient points of the comments offered by the said stakeholders are summarized in the paragraphs as mentioned below:-
(a). MoST submitted that company is planning to set up a Photovoltaic (PV) based generation facility/Solar Power Plant/Solar Farm with a cumulative installed capacity of 15.00 MW near Mankera, district Bhakkar which will help to prevent/overcome the shortfall of electricity. The type of technology for the PV cells being deployed is Mono Crystalline which is recommended. It is recommended that Tier-I manufacturer of the PV Cells should be selected for the project which should be IEC and UL certified; and
(b). CPPAGL stated that it has neither issued any consent nor any Power Acquisition Request (PAR) in respect of the project being set up by the company. As per PC-4 (the Planning Code of the Grid Code), NTDC is required to prepare and submit to the Authority/NEPRA each year, a Ten-Year "Indicative Generation Capacity Expansion Plan (IGCEP)" covering 0-10 Year timeframe. The said plan identifies new capacity requirements, location and commissioning date which should satisfy Loss of Load Probability criteria, load growth forecast, operating reserve requirements, and other planning criteria. The Authority is required to be cognizant of the above provisions of the Grid Code while considering new addition of capacity into the national grid. The Cabinet Committee on Energy ("CCoE") has already decided that "...all projects based on wind, )iv Page 3 of 17 solar, small hydel and bagasse energy will be awarded through competitive bidding after the allocation of quota of RE by the Grid Code Review Panel. Accordingly, for any induction of additional capacity into the national grid, due consideration must be carried out at the NEPRA level prior to the grant of a generation license to the project. At present, any increase in capacity will place additional burden on the network as well as increase the financial impact on the end consumers. CPPAGL wishes to consider the induction of the proposed project into the system in view of the aforementioned. In light of the said, it is considered that the Authority must consider the application for grant of generation licence duly considering the demand vs. supply situation alongwith with the quantum of RE to be inducted in the National Grid.
(ii). The Authority reviewed the above comments of the stakeholders and in view of the observations of MoST and CPPAGL, considered it appropriate to seek the perspective of K1SPLPL. On the observations of MoST, it was submitted that the Lol issued to the company, envisaged setting up an approximately 15.00 MWp project. The size of the project have been optimized to 14.96 MWp keeping in view of the constraints pertaining to nearby located 66/11 kV grid station of Mankera to which the generation facility will be connected. The company confirmed that the proposed PV cells would be Tier-I.
(iii). About the comments of CPPAGL, it was stated the company is following the due process to get the consent of the Power Purchaser/CPPAGL and for filing PAR for which award of Generation Licence and award of tariff is a pre requisite. The Indicative generation plan and future demand forecast is the subject of Planning Department of NTDC which is to be approved by the Authority. The Govt. of Pakistan is considering the share of RE from existing 5% to 30% by 2030 in the total energy mix which will result in affordable electricity to the National Grid and reduction in burden to the end .:• er fuel adjust
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S,•• Page 4 of 17 charges for solar, no imported fuel cost). The Lol under discussion was awarded to the consortium after participation in the bidding of fifty (50) public sites announced by PPDB in 2015. The sponsor/consortium was awarded the pre- qualification letter after competing with other companies through PPDB bidding process of time. The consortium fulfilled all the pre-requisites of Lol, but public land at Lahore near Manawan was not awarded because the board of PPDB decided that cost of the land is too high in the area. Almost after two (02) years of wait and renegotiation of the matter with PPDB, a Lol was awarded against same pre-qualification, for anywhere in Punjab. Lol was issued in 2018, but the sponsors/consortium kept on developing the project since 2015 up till now, which shows the commitment of the sponsors towards the project since the award of Lol in 2018. The project company has achieved considerable progress and has met all the milestones of the project to apply for the generation Licence and filed a petition for tariff. It is pertinent to mention that the project was initiated well before a few other solar projects which GoPb initiated and now these projects have already been awarded the tariff by the Authority/NEPRA and the sponsors are keen to develop the project as per RE Policy 2006 as decided by CCoE. It is pertinent to mention that due to delay from GoPb in issuance of Lol, the sponsors are now at a disadvantage as compared to peer projects. It is submitted that the project be provided an equal opportunity with respect to its peers for the grant of generation licence and award of tariff on cost plus basis which will help sponsors to develop the project under the Lol. Regarding the Competitive Bidding (CB), the sponsors got the project on basis of a bidding process by GoPb and also currently there is no mechanism on bidding, which is in place. The project is located in north and is of smaller size and it is not possible for it to compete with large sized projects located in south. It is worth mentioning that project will be providing a number of advantages including low cost of interconnection being on 11 kV and improving the voltage profile of the area as currently, the power to Mankera grid is being fed from a 66kV transmission line form Bakhar-Mankera (measuring about 40 km in length) which results in higher losses. All these losses can be avoided once the proposed project is allowed to be set up.
Page 5 of 17 (iv). The Authority considered the above submissions of K1SPLPL and decided to proceed further in the matter as stipulated in the Licensing Regulations and NEPRA Licensing (Generation) Rules, 2000 (the "Generation Rules").
(1)). Evaluation/Findinqs
(i). The Authority has reviewed the submissions of K1SPLPL including the information provided in its application for the grant of generation licence, comments of the stakeholders and the rejoinder in the matter. The Authority has also considered the feasibility study of the project, interconnection & dispersal arrangement studies, etc., provisions of the RE Policy and the relevant rules & regulations.
(ii). The Authority has observed that the main sponsor of the project is ib Vogt GmbH whereas the other partners of the consortium includes Vogt Solar Limited and Milner Vermogensverwaltungs GmbH. It has been observed that ib Vogt GmbH was established in 2002 and has created business in more than fifty- nine (59) countries, operating internationally from its headquarters in Berlin, Germany and offices in UK, USA, Australia, Panama, Poland, Spain and South East Asia, as well as several joint ventures across Africa. The company focuses on developing and delivering high-quality large-scale turnkey PV plants worldwide. ib Vogt GmbH, as a manufacturer/independent integrated developer has a strong worldwide network of local development partners and provides high- quality turnkey PV plants, designed and engineered in Germany, to end investors internationally. It employs over 215 experts in all areas of the solar power plant value chain. ib Vogt GmbH has so far developed PV based solar generation facilities/power plants to the tune of 1159 MWp. ib Vogt GmbH enjoys a very strong financial strength which can be gauged from the fact that it has a total assets of around 134 million Euros (as per the audited financial statement of 2017). Similarly, the other joint venture (JV) partners i.e. Vogt Solar Limited and Milner VermOgensverwaltungs GmbH have also extensive experience and portfolio in the RE sector. The activities of Vogt Solar Limited includes project development, engineering, procurement and constru aeration and maintenance and ownership and asset management of its portfolio of solar farms. The company has built 400.00 MWp solar farms in UK so far and has developed expertise on solutions to maximize lifecycle performance of such farms. Vogt Solar Limited has a reasonable financial position with assets of around GBP 18.67 million as per the audited financial statement of 2017. As regard to the Milner Vermogensverwaltungs GmbH which is also a partner in the JV, holds solar farm assets to the tune of 30.00 MWp approximately. According to the audited financial statement of 2017, it has total assets to the tune of 35.42 million Euros. In consideration of the above, the Authority considers that main sponsor as well the other JV partners have good financial strength as well as technical expertise to develop the proposed project.
(iii). Based on the financial strength and other evaluation parameters, PPDB issued Lol for development of the project. In this regard, the Sponsors have acquired approximately a total of 63.00 acres of private land located at Lot No. 302, New Chak No. 3, Rakh Mankera, tehsil Mankera district Bhakkhar in the Province of Punjab. As explained above, for the implementation of the project, the sponsor has incorporated a SPV in the name of K1SPLPL under Section-32 of the Companies Ordinance, 1984 (Corporate Universal Identification No. 0103476, dated November 09, 2016). The Registered/Business office of the SPV is located at 216 Landmark Plaza, Jail Road Gulberg, Lahore Pakistan, in the province of Punjab. According to the Memorandum of Association, the objects of the company include, inter alia, business of power generation and its sale thereof. According to the submitted information, the total outlay of the project will be approximately US $ 14.58 million which will be financed through a combination of debt (US $ 11.66 million) and equity (US $ 02.92 million) in a ratio of 80:20 which is in line with the benchmark set out in different determinations of the Authority in similar cases. It has been observed that the sponsors have taken up the matter with multiple banks and other lending institutes which have expressed their interest due to strong footprint of the sponsors in RE for financing the debt portion of the project. In consideration of the said, it is considered that sponsors have strong financial and technical background to carry out the project.
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NEPR1 (iv). According to the terms and conditions of the Lol, the sponsors carried out a feasibility study of the project including, inter alia, solar power plant equipment details, PV cell sitting details, power production estimates based on solar irradiation data of the project site, soil tests reports, technical details pertaining to selected photovoltaic (PV) cells and other allied equipment to be used in the solar power plant, electrical studies, environmental study and project financing etc.
(v). The Authority has reviewed the feasibility study of the project and same reveals that the company has considered various world class manufacturers of PV cells including Hanwha Q CELLS Co., Ltd., JA Solar Holdings Co., Ltd, Trina Solar Limited, First Solar, Inc., Jinko Solar Limited, Motech Industries Inc., Tongwei Solar Company Limited, Yingli Solar Limited, Canadian Solar Inc., Shunfeng International Clean Energy Limited and China Sunergy (Nanjing) Co., Ltd (CSNCL) and LONGi Solar Limited (LSL). After duly considering various factors including (a). Solar resource position of the proposed location; (b). Capital cost of equipment/PV Cells; (c). Lead time for supply of equipment/PV Cells; (d). Expected energy yield of PV Cells; (e). Reliability and compliance with Grid Code; (f). Availability of suitable operation and maintenance teams (including easiness/availability of spare/replacement parts for PV Cells etc.), the company decided to select PV cells of LSL with single axis tracking. The feasibility study also optimized the size of the proposed generation facility/Solar Power Plant/Solar Farm to approximately 15.00 MW, having 41580 x 360 WP Mono Crystalline PV Modules. It is pertinent to mention that LONGi Solar is a world leading manufacturer of high-efficiency mono-crystalline solar cells and modules. The Company, wholly owned by the LONGi Group (SH601012), has focused on p-mono for 19 years and is today the largest supplier of mono- crystalline products in the world, with total assets above US $ 05.71 billion (2018Q3) LONGi Group has plans to reach 45 GW mono-crystalline wafer production capacity by 2020. The shipment of Solar module of LONGi in 2018 ranked top 4 in the world, and mono module shipment has remained No.1 in the world from 2016 to 2018. In view of the above, it is considered that the sponsors of the project have selected top of the line Tier-I company for supply of the PV panels. Further to said, the technology selected for PV cells for the project is monocrystalline which is a mature technology and is widely used due to its better energy yield to cost ratio. Accordingly, it can be safely said that the selected technology for PV cells is mature, cost effective and time tested. In view of the said, the Authority considers that the selected technology has distinctive features including versatility, flexibility and good performance.
(vi). The Authority has observed that the sponsors of the project carried out the required GIS to determine the arrangement for dispersal of electric power from the proposed generation facility/Solar Power Plant/Solar Farm. According to the said study, the interconnection arrangement for dispersal of electric power will be on 11kV voltage and will be consisting of a Triple Circuit (T/C) transmission line (on ACSR OSPREY Conductor measuring around 4.50 km approximately) for connecting the generation facility/Solar Power Plant/Solar Farm to 66 kV Mankera Grid Station of FESCO. In this regard, FESCO has also vetted/approved the above mentioned GIS, confirming that all the relevant parameters are within permissible limits of the Grid Code.
(vii). The Authority observes that the proposed project, for which generation licence is being sought, is based on RE source and does not cause pollution as in the case of conventional power plants. However, the operation of the generation facility/Solar Power Plant/Solar Farm may cause soil pollution, water pollution and noise pollution during construction and operation. In this regard, the Authority has observed that K1SPLPL carried out the Initial Environment Examination (IEE) study for the project and submitted the same for the consideration and approval of Environmental Protection Agency, Government of Punjab (EPAGoPb). In this regard, EPAGoPb had already issued a No Objection Certificate (NOC) to the company for the construction of the project.
(viii). In terms of Rule-3 of the Generation Rules, the Authority may grant a generation licence to any person to engage in the generation business. The said rule stipulates various conditions pertaining to the grant of generation licence NNER R
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as explained in Rule-3(2), Rule-3(3), Rule-3(4) and Rule-3(5) of the Generation Rules. In the particular case under consideration, the Authority considers that conditions of Rule-3(2) and Rule-3(3) stand satisfied as K1SPLPL has provided details of location, technology, size, net capacity/energy yield, interconnection arrangements, technical limits, technical functional specifications and other details specific to the generation facility/Solar Power Plant/Solar Farm. The provision of Rule-3(4) of the Generation Rules regarding holding a public hearing is not applicable as there was no issue which required this exercise.
(ix). The Rule-3(5) of the Generation Rules stipulates that the Authority may refuse to issue a generation licence where the site, technology, design, fuel, tariff or other relevant matters pertaining to the generation facility proposed in an application for a generation licence are either not suitable on environmental grounds or do not satisfy the least cost option criteria. In this regard, the Rule- 3(5) of the Generation Rules also stipulates the conditions pertaining to least cost option criteria which include (a). sustainable development or optimum utilization of the renewable or non-renewable energy resources proposed for generation of electric power; (b). the availability of indigenous fuel and other resources; (c). the comparative costs of the construction, operation and maintenance of the proposed generation facility against the preferences indicated by the Authority; (d). the cost and right-of-way considerations related to the provision of transmission and interconnection facilities; (e). the constraints on the transmission system likely to result from the proposed generation facility and the costs of the transmission system expansion required to remove such constraints; (f). the short-term and the long-term forecasts for additional capacity requirements; (g). the tariff resulting or likely to result from the construction or operation of the proposed generation facility; and (h). the optimum utilization of various sites in the context of both the short-term and the long-term requirements of the electric power industry as a whole.
(x). The Authority considers that the proposed project will result in optimum utilization of the RE of the province of Punjab which is untapped, resulting in pollution free electric power. It is pertinent to I - • a that solar is an ER R E Q <1 i.•fZ- 0 .1. tu -J EGISIRAR; 1 Page 10 of 17 indigenous RE resource and such resources should have a preference for the energy security. There is a global trend of reduction in the prices of PV Cells which results in lower tariffs as is evident from various determinations of the Authority. These lower tariffs will result in reduction of the overall basket price which will be beneficial to the public at large.
(xi). As explained in the preceding paragraphs, the sponsor of the project carried out the GIS which concludes that the project will not face any constraints in transmission system. Further, being located at reasonable distance from the thin population of the area, the project will not result in cost and right-of- way issues for the provision of transmission and interconnection facilities. In view of the said, the Authority considers that the project of K1SPLPL fulfills the eligibility criteria for grant of generation licence as stipulated in the NEPRA Act, rules, regulations and other applicable documents.
(E). Grant of Generation Licence
(0- The sustainable and affordable energy/electricity is a key prerequisite for socio-economic development of any country. In fact, the economic growth of any country is directly linked with the availability of safe, secure, reliable and cheaper supply of energy/electricity. In view of the said reasons, the Authority is of the considered opinion that for sustainable development, all indigenous power generation resources including RE must be developed on priority basis.
(ii). The existing energy mix of the country is heavily skewed towards thermal power plants, mainly operating on imported fossil fuel. The continuous import of fossil fuel not only creates pressure on the precious foreign exchange reserves of the country but is also an environmental concern. Therefore, in order to achieve sustainable development, it is imperative that indigenous RE resources are given priority for electric power generation and their development is encouraged. Recently, the world market for RE technologies have seen a sharp declining trend in terms of prices, making these technologies very attractive and cost effective for generation of electric power. Further, velopments in
Page 11 of 17 the sector which are paving the way to address the intermittency issues of these technologies. In view of the said, the Authority is of the considered opinion that there is a worldwide trend to increase the share of RE in the energy mix of any country and it is very likely that the Govt. of Pakistan will also be considering to increase the share of RE substantially in the coming years.
(iii). The current case under consideration of the Authority is that K1SPLPL which plans setting up a PV based solar generation facility/Solar Power Plant/Solar Farm at Rakh Mankera, tehsil Mankera, district Bhakkhar in the province of Punjab of an approximate installed capacity of 15.00 MWp As explained in the preceding paragraphs the proposed project not only fulfils the eligibility criteria for grant of generation licence as envisaged in the existing regulatory regime but also majority of the stakeholders are in support of the project except CPPAGL which raised certain concerns which the Authority considers appropriate to address through this determination.
(iv). The concerns of CPPAGL includes (a). No PAR for the proposed project has been given; (b). According to Grid Code, IGCEP is a requirement identifying new capacity requirements, location and commissioning date. The Authority is required to be cognizant of the above provisions of the Grid Code while considering new addition of capacity into the national grid; (c). CCoE has already decided that projects based on wind, solar, small hydel and bagasse energy will be awarded through CB after the allocation of quota of RE by the GCRP; (d). Any induction of additional capacity into the national grid, due consideration must be carried out by the Authority prior to the grant of a generation license to the project; (e). Any increase in capacity will place additional burden on the network as well as increase the financial impact on the end consumers; and (f). the demand vs. supply situation alongwith with the quantum of RE to be inducted in the National Grid may be considered.
(v). Regarding the observation of the CPPAGL that it did not provide any PAR to the project, the Authority hereby clarifies that case under consideration of the Authority is that a new application for the grant of Generation
Page 12 of 17 Licence. The governing regulatory instruments for the said include the Licensing Regulations and the Generation Rules which do not require any PAR. About the IGCEP, the Authority considers that the same is a regulatory requirement however, the same was never complied with for one reason or the other. Lately, NTDC has submitted an IGCEP which has been returned due to serious observations and shortcomings. In view of the said, it is clear that as of now there is no such document which is being referred by CPPAGL however, the Authority does not consider it as bottleneck in performing its regulatory functions in granting a generation licence to a company which has complied with all the regulatory requirements. As regard, future RE Projects to be inducted through CB as per decision of CCoE dated December 12, 2017, the Authority hereby clarifies that it considers the said mythology the most prudent way to add more capacity however, in this regard necessary framework for carrying out the bidding must be in place which is currently not there. Further, the binding of decision of the CCoE or otherwise, the Authority in its previous determinations for determining the tariff for the wind projects has given its determination and reiterates the same.
(vi). On the issue of increase in capacity and the resulting additional burden, the Authority has given a detailed determination in the case of the Application of Kulachi Solar Power (Private) Limited and reiterates its findings in this regard confirming that around thirty (30) power projects on different fuels with cumulative installed capacity of around 11000 MW are facing delays due to different problems/issues as explained above and their Commercial Operation Date (COD) is not certain. In view of the said, the Authority considers that CPPAG has made cursory remarks based on unauthentic data/analysis and considering the said is not considered appropriate to deny the company a generation licence. The Authority once again reiterates that CPPAGL and NTDC should carry out a proper demand-supply assessment/analysis truly aligned with the actual implementation schedule of the projects to determine whether practically there is any surplus electric power or not. The Authority is also of the considered opinion that with the delays being experienced by the major projects it is very unlikely that there will be any surplus as being feared by CPPAGL
Page 13 of 17 (vii). Regarding the observations of CPPAGL of stranded cost due to surplus capacity, the Authority has serious concerns on this that there may be any surplus in the system as explained in the preceding paragraphs. In this regard, the Authority is of the considered opinion that CPPAGL in consultation with the XW-DISCOs must make concrete efforts and take necessary steps to stimulate the demand of the end consumers/users including industrial, commercial and domestic consumers, etc. In this regard, the Authority will like to highlight that reportedly about 0.50 million connections are pending and are not being provided electricity for one context or the other. The Authority reiterates that instead of propagating about surplus capacity, efforts must be made to clear the pendency of new connections expeditiously so that the electric density of the country is improved which is currently one of the lowest in the region.
(viii). About the observations of CPPAGL that GCRP has not determined the quota of the future RE projects, the Authority will like to highlight that GoP is contemplating an aggressive plan to increase the share of RE in the energy mix of the country to 20% by 2025 and to 30% upto 2030 from the current level of less than 5%. Therefore, instead of taking the position that GCRP has not determined the quota of RE therefore, the grant of generation Licence may not considered instead CPPAGL must liaison with all the relevant stakeholders so that the share of RE is ascertained in light of initiatives being taken to increase the portion of RE in the overall energy mix of the country which is now very attractive in terms of decreasing cost and will result in reduction of the overall energy cost for the system thus benefitting the end consumers of all kind.
(ix). In view of the above, the Authority considers that the proposed project of K1SPLPL will help in diversifying the energy portfolio as well increasing share of RE in the country. Further, it will not only enhance the energy security of the country by reducing the dependence on imported fuel but will also help in reducing carbon emissions by generating clean electricity, thus improving the environment.
Page 14 of 17 (x). As explained in the preceding paragraphs, K1SPLPL has provided the details of location, technology, size, net capacity/energy yield, interconnection arrangements, technical details and other related information for the proposed generation facility/Solar Power Plant/Solar Farm. In this regard, the Authority has observed that Sponsors/K1SPLPL has acquired private land to the tune 63.00 acres for setting up the generation facility/Solar Power Plant/Solar Farm. The said details are being incorporated in the generation licence. The Authority directs K1SPLPL to utilize the allocated land exclusively for the proposed generation facility/Solar Power Plant/Solar Farm and not to carry out any other activity on the said allocated land except with the prior approval of the competent authority.
(xi). The term of a generation licence under Rule-5(1) of the Generation Rules is required to commensurate with the maximum expected life of the units comprised in a generation facility, except where an applicant for a generation licence consents to a shorter term. According to the information provided by K1SPLPL, its generation facility/Solar Power Plant/Solar Farm will achieve COD by June 30, 2020 and will have a useful life of more than twenty five (25) years from its COD. In this regard, K1SPLPL has requested that the term of the proposed generation licence may be fixed as twenty five (25) years. The Authority considers that said submission of K1SPLPL about the useful life of the generation facility/Solar Power Plant/Solar Farm and the subsequent request to fix the term of the generation licence is consistent with international benchmarks therefore the Authority fixes the term of the generation licence as twenty five (25) years from COD of the project.
(xii). Regarding the tariff, it is hereby clarified that under Section-7(3)(a) of the NEPRA Act, determining tariff, rate and charges etc. is the sole prerogative of the Authority. In this regard, it is pertinent to mention that K1SPLPL has filed a tariff petition for determination of its tariff on cost plus basis. The Authority has admitted the same and is expected to be decided in due course of time. Further, to the said, CCoE through its decision dated April 04, 2019 has decided that projects of RE at the stage of Lol will be going through Competitive Bidding (CB). In view of the said, it is still not clear whether K1SPLPL will be having a cost plus
Page 15 of 17 tariff or a tariff through CB. In view of the said, the Authority considers appropriate to direct K1SPLPL to charge the power purchaser only such tariff which has been determined, approved or specified by it. In view of the said, the Authority decides to include a specific article in the generation licence. Further, the Authority directs K1SPLPL to adhere to the said in letter and spirit without any exception.
(xiii). About the compliance with the environmental standards, as discussed in the preceding paragraphs, K1SPLPL has provided the NOC from EPAGoPb and has confirmed that the project will comply with the required standards during the term of the generation licence. In view of the importance of the issue, the Authority has decided to include a specific article in the generation licence along with other terms and conditions making it obligatory for K1SPLPL to comply with relevant environmental standards at all times. Further, the Authority directs K1SPLPL to submit a report on bi-annual basis, confirming that operation of its generation facility/Solar Power Plant/Solar Farm is in compliance with the required environmental standards as prescribed by the concerned environmental protection agency.
(xiv). The proposed generation facility/Solar Power Plant/Solar Farm of K1SPLPL will be using RE resource for generation of electric power. Therefore, the project may qualify for the carbon credits under the Kyoto Protocol. Under the said protocol, projects coming into operation up to the year 2020 can qualify for the carbon credits. K1SPLPL has informed that the project will achieve COD by June 30, 2020, which is within the deadline of the Kyoto Protocol. In view of the said, an article for carbon credits and its sharing with the power purchaser has been included in the generation licence. Accordingly, the Authority directs K1SPLPL to initiate the process in this regard at the earliest so that proceeds for the carbon credits are materialized. K1SPLPL shall be required to share the proceeds of the carbon credits with the power purchaser as stipulated in the generation licence.
(xv). In view of the above, the Authority hereby approves the grant of generation licence to K1SPLPL on the terms and c. • • tions set out in the
Page 16 of 17 generation licence annexed to this determination. The grant of generation licence will be subject to the provisions contained in the NEPRA Act, relevant rules, regulations framed thereunder and other applicable documents.
Authority:
Engr. Rafique Ahmed Shaikh (Member)