CCoE endorses National Electricity Policy 2021 for submission to cabinet

ISLAMABAD   –  The Cabinet Committee on Energy endorsed and recommended the National Electricity Policy 2021 and Indicative Generation Capacity Expansion Plan (IGCEP) for presentation to the Cabinet.

The CCoE was requested by the power division that since the exercise for preparation of the plan for the year 2020 (for a 27 years period) has not reached fruition so far, it is proposed that the exercise should be abandoned and a new exercise for the year 2021 may be initiated, official source told The Nation. 

A meeting of the Cabinet Committee on Energy (CCoE) was held under the chairmanship of Federal Minister for Planning, Development, and Special Initiatives Asad Umar here on Thursday. 

Power Division presented the summaries of the National Electricity Plan 2021 and Indicative Generation Capacity Expansion Plan (IGCEP).

The CCoE was informed that National Transmission & Despatch Company (NTDC) is mandated for preparation of the Indicative Generation Capacity Expansion Plan (IGCEP) on annual basis for review and approval of Nepra, under the provisions of Nepra approved grid code. As per the IGCEP 2021, with the GDP growth of 5.5 per cent   and peak demand to grow at a yearly average of about 5.1per cent reaching about 103 GW by 2047. 

The plan envisages that in order to meet the demand of 103GW by the year 2047, a total of 168,246MW of nominal generation capacity was required.

According to a summary presented to CCoE, National Transmission & Despatch Company prepared the Indicative Generation Capacity Expansion Plan (IGCEP) 2047 and submitted the same to Nepra on April 20, 2020. Nepra conducted public hearing on the submitted IGCEP on July15, 2020 as a part of review and approval process. After hearing, Nepra returned the IGCEP to NTDC on August 20, 2020 with certain directions for changes in the IGCEP report (Aanex-l1). Accordingly, NTDC responded to the Nepra  on 4th  September, 2020 and communicated consent to manage quick compliance, seeking clarity on certain directions and requested Nepra  to review certain directions which contradict with the ARE Policy 2019, CCoE decision dated 4th  April, 2020 and  or certain provisions of the grid code. 

The wholesales generation cost accounts for 80-85 per cent of the end consumer costs. Therefore, the generation planning needs a clear roadmap. The IGCEP is a ten-year plan to be updated on an annual basis and required to be submitted by NTDC to the regulator by 15 April every year under regulatory framework and its impact on the end-consumer tariffs by CPPA-G over the horizon of 10 years. Power Division is also of the view that the assumptions underlying the preparation of IGCEP 2021 for the next ten years need to be approved by the CCoE and ratified by the Cabinet before its preparation. This is necessary because the assumptions reflect certain policy principles and impact the cost of generation through the upcoming projects and set the direction of the generation side of the power sector for future. Accordingly, Power Division, in consultation with NTDC, proposes a set of policy assumptions for preparing Indicative Generation Capacity Expansion Plan (IGCEP) 2021 for consideration of CCoE. After approval of CCoE and ratification by the Cabinet, directions will be issued to NTDC to prepare the plan. These policy assumptions would be fed into the generation expansion planning tool/software to be used for the development of subject generation plan and would serve as constraints while determining the prioritized list of projects on the principle of least cost of energy. These constrains on the ideal least cost scenario fall in the following broad categories: 

Projects that have achieved Letter of Support and are required to fulfill COD deadlines, projects that are committed (with specific timelines) under G2G/multilateral arrangements, the projects under G2G agreements do not have specifically stipulated timelines for completion, the plan would optimise their completion date based on the cost of energy from such projects. 

Renewable targets for new projects to be governed on the basis of least cost principle as per ARE Policy 2019. Due to capacity factor advantage, RE projects additions shall be through utilising hybrid RE resources (50 per cent CF for hybrid vs 33 per cent & 19 per cent for wind & solar alone respectively). 

The Cabinet Committee on Energy endorsed and recommended the National Electricity Plan and Indicative Generation Capacity Expansion Plan (IGCEP) for presentation to the Cabinet. The Ministry of Energy was advised to include the opinion of the Law Division on certain observations raised by the participants during the meeting.  Chairman of the Committee Asad Umar said that the policy and the plan will provide the basis for a sustainable competitive electricity market in the country. 

The meeting was attended by minister for Energy, Minister for Maritime Affairs, Advisor on Commerce, SAPM on Power, Petroleum & Revenue. Representatives of regulatory authorities and high officials of provincial governments also participated in the meeting.

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