KE seeks regulator’s nod for competitive procurement of energy from solar projects

KARACHI: The K-Electric Limited (KEL) has approached the National Electric Power Regulatory Authority (Nepra), seeking approval to carry out competitive bidding for the procurement of energy from three solar projects in Balochistan.

These three solar plants of 50MW capacity each are situated in Vinder, Bela and Uthal in Balochistan.

In this regard, the K-Electric has submitted the request for proposal (RFP). The power utility has around 2.9 million industrial, commercial, agriculture and residential consumers and is supplying electricity to over 20 million people. It not only produces electricity from its own generation units but has arrangements with external power producers, as well.

The installed capacity of KE’s own plants will increase to 2,817MW; following the commissioning of 900MW BQPS III Plant, which is expected to complete in CY 2021.

Further, the power utility has arrangements with external power producers for over 1,900MW, which includes supply from various independent power producers (IPPs), national grid and Kanupp.

Given the low power generation tariffs for the solar power generation projects, these projects are expected to lower the overall generation cost for the KE consumers.

According to Nepra, solar tariffs are dependent on multiple factors, which include solar irradiance in the area of installation, cost of capital of the country and sizing of the project.

“[The] comparison of solar tariffs across countries has to be made while considering all these factors and other considerations, including the state of maturity of the sector in the form of installed capacity base and local manufacturing,” the authority noted.

The authority also noted that it had time and again clarified that it decided to induct solar energy through competitive bidding and directed the relevant agencies to develop the request for proposal for that purpose.

The Competitive Bidding Tariff (Approval Procedure) Regulations were notified in 2014. Due to non-finalisation of RFP by any agency after the lapse of considerable time, the process of competitive bidding has not taken place.

The request for proposal is the document that includes the necessary information, benchmark parameters, terms and conditions and the bid evaluation criteria for the competitive bidding regime.

Under the cost-plus tariff, a power producer pays its actual cost plus an agreed profit, whereas tariff-based competitive bidding is the price discovery mechanism in which various generators bid and one with the lowest bid gets the contract.