View of Foregoing, CPPAGL Suggested (A)
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National Electric Power Regulatory Authority Islamic Republic of Pakistan NEPRA Tower, Attaturk Avenue (East), G-5!1, Islamabad Ph: +92-51-9206500, Fax: +92-51-2600026 , E-mail: registrarnepra.org.Pk Registrar Web: www.nepra.org.pk No. NEPR,DL/LAG-463/9 390 6 September 10, 2020 Mr. Mujtaba Haider Khan, Chief Executive Officer, Grid Edge (Private) Limited, 3rd Floor, Dawood Centre, MT Khan Road, Karachi Contact No. 021-35632200 Subject: Grant of Generation Licence No. SGC114412020 Licence Application No. LAG-463 Grid Edge (Private) Limited (GEPL) Reference: GEPL 's application submitted vide letter dated August 07, 2019. Enclosed please find herewith Generation Licence No. SGC/144/2020 granted by National Electric Power Regulatory Authority (NEPRA) to Grid Edge (Private) Limited (GEPL) for its 03.06 MW Solar Power Plant located at Crescent Bahuman Limited, Tehsil Pindi Bhattian, District 1-Tafizabad, in the Province of Punjab, pursuant to Section 14B of the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997/Amendment Act, 2018. Further, the determination of the Authority in the subject matter is also attached. 2. Please quote above mentioned - u - ration Licence No. for future correspondence. R Enclosure: As Above (Syed Safeer Hussain) Copy to: 1. Secretary, Ministry of Energy, Power Division, A-Block, Pak Secretariat, Islamabad. 2. Chief Executive Officer, Alternative Energy Development Board (AEDB), 2' Floor, OPF Building, 0-5/2, Islamabad. 3. Chief Executive Officer, CPPA-G, ENERCON Building, Sector G-5/2, Islamabad. 4. Managing Director, NTDC, 414-WAPDA House, Lahore. 5. Chief Executive Officer, Faisalabad Electric Supply Company Limited, Abdullahpur, Canal Road, Faisalabad. 6. Director General, Environmental Protection Department, Government of Punjab, National Hockey Stadium, Ferozpur Road, Lahore National Electric Power Requlatory Authority (NEPRA) Determination of the Authority in the Matter of Application of Grid Edqe (Private) Limited for Grant of the Generation Licence September 2020 Case No. LAG-463 (A). Filinq of Application (i). Grid Edge (Private) Limited (GEPL) submitted an application on August 09, 2019 for the grant of generation licence in terms of Section-14B of the 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 uLicensing Regulations"). (ii). The Registrar examined the submitted application and found that application was deficient in terms of the Licensing Regulations. Accordingly, the Registrar directed GEPL for submitting the missing informationldocuments as required under the said regulations. GEPL completed the submission of missing information/documentation by September 05, 2019. Accordingly, the Registrar submitted the matter for the consideration of the Authority to decide the admission of the application or otherwise. (iii). 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 October 25, 2019 for consideration of the grant of the generation licence as stipulated in Regulation-7 of the Licensing Regulations. The Authority also approved an advertisement to invite comments of general public, interested and affected persons in the matter as stipulated in Regulation-8 of the Page 1 of 14 Licensing Regulations. Subsequently, notices were published in one (01) Urdu and one (01) English newspaper on October 30, 2019. (iv). In addition to the above, the Authority approved a list of stakeholders seeking their comments for its assistance 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 October 30, 2019, soliciting their comments for assistance of the Authority. (B). Comments of Stakeholders (i). In reply to the above, the comments were received from two (02) stakeholders including Central Power Purchasing Agency (Guaranteed) Limited (CPPAGL) and Ministry of Science and Technology Govt. of Pakistan (MoST). The salient points of the comments offered by the said stakeholder are summarized in the paragraphs as below: (a). CPPAGL submitted that GEPL plans to set up a 3.06 MW Photovoltaic (PV) based generation facility for supplying to Crescent Bahuman Limited (CBL). In this regard, the Authority is required to scrutinize all the applications for the grant of generation licence based on the Least Cost Option Criteria (LCOC) as stipulated in the NEPRA Licensing (Generation) Rules, 2000 (the "Licensing Rules") including (a). the costs and rights-of- way considerations related to the provision of transmission and interconnection facilities; (b). 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; (c). the short-term and the long-term forecasts for additional capacity requirements; (d). the tariffs resulting or likely to result from the construction or Page 2 of 14 operation of the proposed generation facility; and (e). 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. As per the existing tariff structure for the end consumer, the major portion of fixed charge (Capacity, UoSC, MOF, DM) is being recovered through sale of energy to end consumers (i.e. Volumetric Charges). As a result, the more the number of units being sold, the less will be the per unit rate for the fixed capacity charges and vice versa. (b). In the view of foregoing, CPPAGL suggested (a). a Quantum for Distributed Generation needs to be ascertained in light of the demand projections (against which agreementslprocurements have already taken place) while keeping in view the energy charge avoided by the Distributed Generation consumers/source against which the capacity charge was supposed to be recovered (as per existing tariff structure of the end consumers); (b). a uniform tariff required to be introduced (in the existing end consumer tariff setting framework) for the Grid Connected Distributed Generator Consumer (be it for Net-Metering or Self-Consumption) by incorporating a new tariff category in the Schedule of Tariff (SOT); (c). A separate Category for Grid- Connected Distribution Generation (be it for Net- Metering or Self-Consumption) needs to be introduced through a Central Planning Mechanism in order to ensure proper registration and charge of respective tariff; (d). The design of the competitive wholesale market i.e. CTBCM has already been submitted to the Authority for its approval. Unless the design of the competitive wholesale market is approved and the wholesale market Page 3 of 14 become functional, the retail suppliers could not carry out the sales/purchase transactions without any market framework. Therefore, the first prerequisite in this regard is to have an approved model of the competitive wholesale market from the regulator in order to proceed further towards the retail market; and (c). MoST stated that installation of the PV based generation facility at CBL will help in overcoming electricity shortage and decrease load on the grid of the area. In this regard, Polycrystalline PV modules are being proposed for the proposed generation facility and it is recommended that the same must be from the Tier-I manufacturers as well as IEC and UL certified. (ii). The Authority considered the above comments and in view of the observations of CPPAGL and MoST, considered it appropriate to seek the perspective of GEPL in the matter. In reply to the comments of CPPAGL, it was submitted that the relevant rules and regulations does not restrict the Bulk Power Consumer (BPC) to shift load to captive or RE in line with government policy of reducing carbon footprint and sustainable indigenous energy sources. The demand fluctuation by BPC can be attributed to reasons including but not limited to business cycle, seasonality and market trends. There is no regulation which imposes energy charge in case consumer uses less electricity for any reason. The proposed BPC has its own Captive Power Plant using furnace oil and its reliance on grid is already minimal (i.e. less than 10% of its energy needs) and with this project, the consumer will end up relying more on grid because solar integration in this case is aimed at reducing dependency on captive fuel mix. Regarding the observation of CPPAGL that the CTBCM must be approved before considering the case of GEPL for the grant of the generation licence. In this regard, the Authority has already approved the CTBCM. About the Page 4 of 14 observations of MoST, it was confirmed that the proposed PV modules will not only be of Tier-I manufactures but will also be IEC and UL certified. (iii). The Authority considered the above submissions of GEPL and considered it appropriate to proceed further in the matter of the application of GEPL for consideration of grant of Generation Licence as stipulated in the Licensing Regulations and NEPRA Licensing (Generation) Rules, 2000 (the "Generation Rules"). (C). Evaluations/Findincis (i). The Authority examined the submissions of GEPL including the information provided with its application for the grant of Generation Licence, the comments of the stakeholders, rejoinder submitted by company/applicantlGEPL, the relevant rules & regulations in the matter. (ii). The Authority has observed that the applicant i.e. GEPL is an entity incorporated under Section 16 of the Companies Act, 2017 (XIX of 2017), having Corporate Universal Identification No. 0122474, dated August 08, 2018 complying with the provisions of Section-24 of the NEPRA Act. Further, it has also been observed that GEPL is a private limited company with the principal line of business of to generate, accumulate, transmit, distribute, purchase, sell and supply electric power or any other energy and power generated by any source i.e. conventional or non-conventional resources. (iii).