Pakistan to vote on solar PV FIT program22. February 2013 | Top News, Global PV markets, Industry & Suppliers, Investor news, Markets & Trends | By: Becky Beetz
Pakistan is gearing up to introduce a photovoltaic feed-in tariff (FIT) program, which will see US$0.2329 paid per kWh to plants between one and 100 MW in size. A meeting is scheduled to be held on February 27 to finalize the plans.
Working together with the GIZ Renewable Energy & Energy Efficiency (REEE) project – initiated by Germany’s DeutscheGesellschaft für International Zusammenarbeit (GIZ) GmbH – Pakistan’s Alternative Energy Development Board (AEDB) has devised a photovoltaic FIT program for Pakistan.
Overall, a FIT – based on a 25% equity and 75% debt financing model – of US$0.2329/kWh (around €01763) has been suggested for a period of 25 years. This, says GIZ in its "Working Paper for Solar PV Upfront Tariff Development" will provide investors with an internal rate of return of 17%.
Favoring large-scale development, GIZ suggests the FIT should be paid to projects between one and 100 MW in size. A market cap of 500 MW should be imposed for a period of three years, however, and the tariff revised either after this limit has been reached, or after 2.5 years following the introduction of the FIT.
In order for the FIT to be eligible, GIZ laid out a number of guidelines, including: project construction periods totaling no longer than nine months; letters of commitment for debt and equity financing; and acquisition of land.
Regarding project sites, GIZ said that the Pakistani Government should be obliged to allocate land to all independent power producers (IPPs) which opt for a FIT. Meanwhile, provincial governments and Azad Kashmir should be required to allocate land in identified "solar potential" areas "as and when" IPPs submit requests.
Meanwhile, distribution companies and/or the national grid company should, among others, be obliged to provide guaranteed grid connection to eligible projects, and purchase all generated electricity from them.
A meeting will be held on February 27, where it is expected that the FIT program will be finalized and passed into law.
Of the 500 MW of installed photovoltaics being targeted by the Pakistani Government, 250 MW worth of projects are said to currently be under development, and AEDB has reportedly signed letters of intent with seven national and international private investors. Meanwhile, the government is said to have already allocated 5,000 5, acres land for solar power development in carea.
According to the GIZ report, "Private companies are being allocated required chunks of land in this area. Some companies also have acquired their own land and are developing their feasibility studies."
It continued, "At present, around 250 MW solar PV power projects are under development. Most of the project sponsors executing these projects are conducting feasibility studies and collecting site specific data and making a headway towards getting tariff from NEPRA. M/s TechAccess, M/s DACC Power Generation, M/s Buksh Energy, M/s Roshan Pakistan are the front runner companies and are at advanced stages."
Last year, Conergy and Ensunt announced their plans to install a 50 MW photovoltaic project in Pakistan for the DACC Power Generation Company Limited (DPGCL). The plant will be built in Bahawalpur, in the Cholistan region, and will be owned by DPGCL and the Pakistani Government. A spokesperson for Conergy told pv magazine at the time that between $170 million to $190 million (between €137 million and €153 million) would be invested by DPGCL in the project.
Suntech, meanwhile, unveiled plans to install 100 MW worth of photovoltaics in the country. Chairman and founder of the Chinese photovoltaic module manufacturer, Zhengrong Shi met with Pakistan’s Prime Minister, Yousaf Raza Gilani on Wednesday, June 6. Under the plans, Suntech is expected to install five plants worth 20 MW each, over a number of phases.
Solar PV potential vs. barriers
Overall, the Pakistani Government has identified the need to expand its renewable energy industry in order to create a diverse portfolio of energy sources, and to reduce its reliance on imported oil. The AEDB, which was established by the Government to promote and develop renewable energy technologies, aims to install 9.7 GW in Pakistan by 2030, which would account for around 5% of the country’s total power generation.
According to U.S.-based NREL’s Annual Global Horizontal Solar Radiation Map, much of Pakistan is ripe for photovoltaic development. NREL has found that the "theoretical solar energy potential for power generation in Pakistan is approximately 2.9 million megawatt," according to GIZ’s paper.
GIZ has identified a number of challenges to the deployment of photovoltaics in the country, however. These include: high capital costs compared to conventional power generation; market, financial and institutional barriers; poor grid infrastructure; and a lack of training.
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