The National Electric Power Regulatory Authority’s (NEPRA) recently announced proposal for revising the upfront tariff of wind energy has evoked a strong reaction from investors and developers in wind power, says a provincial government handout.
A delegation comprising foreign and local investors in wind power IPP’s sought an emergent meeting with Secretary Energy Department Government of Sindh in response to the recent proposal of NEPRA for revising the upfront tariff.
According to energy department Sindh, an investor from China stated that this move of NEPRA was reflective of a strong intent on the part of government to discourage further investments in this sector. Another developer iterated that NEPRA’s new proposal of upfront tariff had suggested a levelised tariff of 10.8688 cents per kilowatt hour (kWh) for the wind power projects built with 100 per cent local debt and 9.1545 cents per kwh for the project set up with 100 percent foreign debt.
The handout said this drastic turnaround had sparked a strong resentment in investors and developers who were seriously pursuing developing large scale wind projects in the country’s best wind corridor in Thatta and called NEPRA’s announcement a measure to deter the foreign investments in the energy sector and to perpetuate the persisting energy crisis.
The handout said experts had highlighted that the new tariff had been proposed with a vertical reduction of 32 per cent costs of the NEPRA’s already announced tariff expired few days ago on 31st of March 2015. The proposed upfront tariff announced by NEPRA within 10 days of the financial close of several wind projects was reflective of serious move to undermine the sustainability of government policies and tends to turn-around the positive trend of investments in Pakistan.
Furthermore, NEPRA has inexplicably increased minimum plant capacity factor to 38.44 per cent from its earlier announced benchmark of 31 per cent. This seems to be another blow at discouraging the wind power development and foreign investments. A number of EPC contractors have worked on the plant capacity factors and no one has so far attained more than 35 per cent capacity factor. Even, the AEDB’s approved third party Denmark-based consultant Risoe has so far indicated maximum of 36 per cent capacity factor in the area.
It is not understandable that how 38.44 per cent capacity factor has been calculated. The investors and their technical experts showed various data tables and workings in the wind corridor for the last eight years and expressed astonishment at the unrealistic arithmetic’s used for developing the proposed tariff model.
The Sindh secretary energy department informed the investors that 39 companies were actively engaged to develop 3000 MW wind power. The secretary energy reaffirmed on the vision of the government of Sindh to mitigate the persisting energy crisis through development of indigenous wind and coal resources in the province and assured the foreign investors that the government of Sindh would take up all the issues of the foreign investors at the appropriate forum.