Night_Hawk
Siasat.pk - Blogger
Solar tariff cut by 27pc for new plants
The Newspaper's Staff Reporter
ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Wednesday cut upfront tariff for new solar power plants by more than 27 per cent, mainly due to declining solar photovoltaic (PV) prices in the global market.
Under the new regime, the regulator set two different upfront rates for solar plants in the country’s South and North regions with generation capacity ranging between 1 and 100MW.
It said the new tariff would be 11.35 cents to 11.53 cents per kWh for North region and 10.72 to 10.89 per kWh for South region.
Through the new rates, an attempt has been made “not only to create a balance between the interest of the consumers and the investors but also to encourage investment at the same time”.
The first upfront tariff for solar PV power plants was determined in January 2014 for a total capacity of 50MW with project size of 1 to 10MW. At that time the regulator had determined levelised rates of 16.30 cents per kWh for South and 17 cents per kWh for North with a validity period of six months. The said tariff expired on July 20, 2014.
After the expiry of the first tariff, proceedings were initiated for development of second upfront tariff for solar PV power plants.
On Jan 22, 2015, the regulator revised the rates under the second upfront tariff without limiting to any capacity induction for project size of 1 to 100MW, levelised rate was set in the range of 14.15 cents per kWh to 15.02 cents for three sizes of the projects i.e. 1-20MW, 20-50MW and 50-100MW for South and North. This will expire on Dec 31, 2015. Mega projects like 900MW Quaid-i-Azam Solar Park would be based on that tariff.
The fresh rates announced on Wednesday would remain applicable until end-June 2016.
The new regime has built-in degradation impact in tariff, revised capacity utilisation factor and the sharing mechanism on generation of excess energy.
In the previous upfront solar tariffs annual degradation of 0.7pc from year two to 25 was allowed. Now better quality solar modules with 0.5pc annual degradation are available in the market but the cost is relatively higher. This extra cost not only caters for lower degradation but also ensures better power output over the life of the project.
Therefore, the regulator app*roved 0.5pc annual degradation from year two to 25. In order to increase the number of modules, other equipment e.g. mounting structure, cables, civil works will also be required, therefore, application of degradation only to module price is not justified, the regulator said, adding that it accordingly decided to apply 3.62pc levelised degradation to Engineering Pro*curement and construction (EPC) cost.
The system capacity utilisation factor (CUF) is also a key driver to the solar project’s economics. A good quality solar PV system will be capable of achieving higher CUF. In its previous upfront rates, the Nepra had used CUF of 17.5pc for South region and 16.78pc for North region and the PV rate was based on these capacity utilisation factors.
It has now decided to enhance the CUF to 18pc for South region and 17pc for North region for calculation of the upfront tariff.
Also, in the previous rates, excess energy beyond the benchmark capacity factors was shared between the power producer and the purchaser in the ratio of 75:25 for first one per cent and then 80:20 for the second one per cent. This rate has now been revised to 80:20 and 90:10. This step is expected to promote investment in better technologies.
Nepra said the new upfront rate was aimed to provide certainty to the investors willing to install solar plants in the form of certain tariff structure, returns and short processing time. The choice to opt for upfront tariff will be applicable from January 1, 2016 and will remain valid for a period of six months.
Published in Dawn, December 17th, 2015
http://www.dawn.com/news/1226822/solar-tariff-cut-by-27pc-for-new-plants
The Newspaper's Staff Reporter
ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Wednesday cut upfront tariff for new solar power plants by more than 27 per cent, mainly due to declining solar photovoltaic (PV) prices in the global market.
Under the new regime, the regulator set two different upfront rates for solar plants in the country’s South and North regions with generation capacity ranging between 1 and 100MW.
It said the new tariff would be 11.35 cents to 11.53 cents per kWh for North region and 10.72 to 10.89 per kWh for South region.
Through the new rates, an attempt has been made “not only to create a balance between the interest of the consumers and the investors but also to encourage investment at the same time”.
The first upfront tariff for solar PV power plants was determined in January 2014 for a total capacity of 50MW with project size of 1 to 10MW. At that time the regulator had determined levelised rates of 16.30 cents per kWh for South and 17 cents per kWh for North with a validity period of six months. The said tariff expired on July 20, 2014.
After the expiry of the first tariff, proceedings were initiated for development of second upfront tariff for solar PV power plants.
On Jan 22, 2015, the regulator revised the rates under the second upfront tariff without limiting to any capacity induction for project size of 1 to 100MW, levelised rate was set in the range of 14.15 cents per kWh to 15.02 cents for three sizes of the projects i.e. 1-20MW, 20-50MW and 50-100MW for South and North. This will expire on Dec 31, 2015. Mega projects like 900MW Quaid-i-Azam Solar Park would be based on that tariff.
The fresh rates announced on Wednesday would remain applicable until end-June 2016.
The new regime has built-in degradation impact in tariff, revised capacity utilisation factor and the sharing mechanism on generation of excess energy.
In the previous upfront solar tariffs annual degradation of 0.7pc from year two to 25 was allowed. Now better quality solar modules with 0.5pc annual degradation are available in the market but the cost is relatively higher. This extra cost not only caters for lower degradation but also ensures better power output over the life of the project.
Therefore, the regulator app*roved 0.5pc annual degradation from year two to 25. In order to increase the number of modules, other equipment e.g. mounting structure, cables, civil works will also be required, therefore, application of degradation only to module price is not justified, the regulator said, adding that it accordingly decided to apply 3.62pc levelised degradation to Engineering Pro*curement and construction (EPC) cost.
The system capacity utilisation factor (CUF) is also a key driver to the solar project’s economics. A good quality solar PV system will be capable of achieving higher CUF. In its previous upfront rates, the Nepra had used CUF of 17.5pc for South region and 16.78pc for North region and the PV rate was based on these capacity utilisation factors.
It has now decided to enhance the CUF to 18pc for South region and 17pc for North region for calculation of the upfront tariff.
Also, in the previous rates, excess energy beyond the benchmark capacity factors was shared between the power producer and the purchaser in the ratio of 75:25 for first one per cent and then 80:20 for the second one per cent. This rate has now been revised to 80:20 and 90:10. This step is expected to promote investment in better technologies.
Nepra said the new upfront rate was aimed to provide certainty to the investors willing to install solar plants in the form of certain tariff structure, returns and short processing time. The choice to opt for upfront tariff will be applicable from January 1, 2016 and will remain valid for a period of six months.
Published in Dawn, December 17th, 2015
http://www.dawn.com/news/1226822/solar-tariff-cut-by-27pc-for-new-plants
