Guidebook Launch, Exploring CTBCM & Power System Planning
Venue: Ballroom A Hall, Pearl Continental Hotel Karachi, March 2nd, 2023
10:00 AM – 2:00 PM
Karachi: Renewables First (RF), an energy and environment think tank, launched an On-Grid Renewables Project Development Guidebook in the presence of RE developers and held an intensive consultative session around Competitive Trading Bilateral Contract Market (CTBCM) to bring their major concerns and suggestions to light. Energy experts from RF also introduced their national electricity generation model developed on PLEXOS, a modeling tool, and shared their findings on the true least-cost potential of renewable energy in Pakistan along with other associated costs.
The event was attended by more than 50 private developers, banking sector representatives, and investors. The on-grid developers’ guidebook was introduced by Basit Ghauri from RF. He informed the audience of its salient features and the organization’s vision to strengthen RE markets. The guidebook is intended to act as a single go-to knowledge repository for all Renewable Energy stakeholders in Pakistan for RE project development in the country from conception to construction.
Representatives from RF also informed the audience that they have been engaged in conducting an independent study on the true least-cost potential of renewables in the national electricity grid. Ammar Qaseem, Energy Expert from RF, shared the preliminary findings of the study while identifying some glaring issues in the national power planning document (IGCEP). He highlighted that the current NTDC models do not incorporate complete costs of the generation expansion, whereby the actual investment requirement exceeds by a staggering amount of $21 billion. It was discovered that only 56% of the committed projects qualify for development under the least cost criteria. According to the findings of the new study, up to 34 GW of VRE can be injected into the national grid on a least-cost basis, as opposed to the NTDC projections of less than 21 GW. The new study, however, does not take transmission and prediction limitations of the national grid into account, which remain a major determinant of RE acceleration in the country.
In the last session on CTBCM, Abubakar Ismail, Lead Manager of Amreli Steels, presented a detailed explanation of how CTBCM works.
This was followed by the identification of some key challenges by Shehram Alam from RF and industry leaders who called for more clarity on the opening up of energy markets and competitive trading. Sohail Zaidi from Bridge Factor, a transaction advisory firm, emphasized the need to safeguard RE developers against the risks of excessive marginal costs and the use of system charges through capping mechanisms.
Omar Malik of PITCO, said, “Better clarity on marginal cost and its future value, as well as the weather wheeling costs, will remain consistent over time, is critical to successful financial closure of these projects. This is important for not only investor confidence but also critical to lender due diligence of the bankability of these projects.”
Talal Amjad, Chief Financial Officer of REON Energy, highlighted the poor experience of RE developers in the past concerning wheeling and expressed his reservations regarding the participation of RE developers in the proposed CTBCM model. He also raised concerns on firm capacity obligations including the methodologies for calculating firm capacity of renewables and the lack of clarity on consumer migration policy from one supplier to another.
Tayyaba Rasheed from Faysal Bank argued that CTBCM would change how banks look at the energy sector and would have to undergo a paradigm shift in their practices to adapt to the new market conditions. As the concessionary scheme for RE by the State Bank of Pakistan remains unavailable, financing RE projects under the CTBCM scheme will remain a challenge. Usman Hassan from Engro Energy mentioned that while the market conditions are challenging at the moment, Engro is bold and willing enough to enter RE markets.
The event concluded positively with hopes for a green and clean energy future.
ABOUT RENEWABLES FIRST
Renewables First is a Pakistan-based think tank for energy and the environment. It is striving for a just and inclusive energy transition in Pakistan by forging collaborations between the market and the government through multi-stakeholder engagements.
The RE Developers Forum is an initiative of RF, taken last year to educate, train, and strengthen local RE markets. The forum hopes to open up new partnerships and networking opportunities for its members and support the development of the private sector and strong domestic supply chains. The last meeting of the RE Developers’ Forum was organized on 22 Aug 2022 in Karachi. Attended by several industry experts, developers, and renewable energy professionals who shared their concerns around CTBCM, project approvals, one-window solutions, wheeling, market growth, investor confidence, and privatization of DISCOs and auctions.
For more information contact
Media and Research Coordinator, Renewables First
Coordinator Renewable Energy Coalition Pakistan, Communications & PR Manager, Renewables First
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