event details - Power wheeling reforms for offtake of renewable energy: Options and challenges for Pakistan’s corporate sector

Concept Note:

Since 2019, Pakistan has observed a renewed interest towards renewable energy in its policy and regulatory landscape. With Alternate and Renewable Energy (ARE) Policy targeting 30% share from renewables by 2030, NDCs targeting a share of 60% from clean energy (including Hydro) by 2030, Indicative Generation Capacity Expansion Plan (IGCEP) targeting a 31% share of capacity from solar and wind by 2031; and government’s initiative of fast tracking 10,000 MW of solar; Pakistan is expecting a rapid uptake of renewable energy in its power generation mix. Further, the corporate sector of Pakistan is also looking to adopt green alternatives to incorporate sustainability into their production cycles for better availability and affordability. Even at the informal sector, solar is being extensively used to provide off-grid energy access to the marginalized communities. To support the policy targets identified above, especially for RE uptake in the corporate sector, stakeholders have identified the need for efficient Power Transmission and Distribution through reforms especially the power wheeling regulations. Propelled by the Competitive Trading Bilateral Contract Market (CTBCM) model

recently implemented and power wheeling policy to be soon introduced by National Electric Power and Regulatory Authority (NEPRA), the exploration of options for competitive bidding and auctions can provide the path for attaining the Government of Pakistan’s (GoP) renewable energy targets and efficient T&D mechanism. The development of energy wheeling framework is a multi-phase method, where each layer has a complete design and address a particular issue1.Wheeling is a process through which efficiency is achieved by shifting least-cost power to where it is required, and it is the first step in attaining competitive markets. An indigenous, competitive framework for wheeling, transforming from the monopolistic single buyer model to CTBCM model could support renewable energy development reach its full potential. PEDO has asserted that auction and wheeling of power model Pehur Hydropower Station having 18 MW is a success story for Pakistan’s power sector. This step will solve the locational obstacles faced by the industrial sector of Khyber Pakhtunkhwa and has opened new prospects for improving the socio-economic development of the province. Furthermore, in order to inaugurate indigenous resources, the development of the wheeling structure is a crucial aspect for the success of projects like Uzghor Hydel project. The draft open access 2022 (Interconnection and Wheeling of Electric Power) Regulations have already been disseminated to stakeholders and is presently under review stage, which once permitted, will retract the existing wheeling Regulations 2016, and will cover all regulatory aspects of a wheeling arrangement2. Although power wheeling is a successful initiative and includes various public and private sector and academia, there is still a need for improvement through broadening of involvement of corporate sector investors and practical lessons from international case studies. The power sector is in a state of evolution and there is a need to implement the reforms to bring low-cost and affordable electricity to consumers. Moreover, it is imperative for the regulators and the policymakers to stabilize the requirements of the consumers with the needs of the investors and to ensure that their objectives are cautiously measured by considering the realities of the prevailing power sector renewable energy infrastructure.

Scope and Objectives

To discuss the opportunities and challenges highlighted above, this consultative discussion intends to bring together relevant stakeholders from Public Sector Policymakers, regulators, and Private Sector stakeholders to discuss the following key objectives:

· To analyze the opportunities and challenges for effective implementation of power wheeling regulations in Pakistan

· To identify the policy and implementation bottlenecks in context of power system agents and role of different stakeholders in power wheeling and provincial government in Pakistan.

· To identify the regulatory support required for rapid offtake of renewable energy in Pakistan’s corporate sector, particularly through wheeling reforms.