ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) has approved amendments to the electricity wheeling auction process, making battery energy storage systems (BESS) mandatory for solar and wind projects participating in the first auction.
Under the approved framework, solar and/or wind projects will be eligible to participate only if the firm capacity of their co-located BESS is at least 10% of the firm capacity of the associated renewable energy generation facility.
The firm capacity of both the BESS and renewable generation facility will be determined and verified in accordance with the Market Commercial Code and the relevant Commercial Code Operating Procedure.
Nepra has also approved an increase in the quantum of the first electricity wheeling auction from 200 MW to 400 MW, following approval from the Ministry of Energy (Power Division). According to the Independent Electric Market Operator (ISMO), the 10% BESS requirement for the 400 MW auction would translate into approximately 40 MW of BESS firm capacity and around 160 MWh of storage capacity, subject to the applicable discharge-duration requirement.
ISMO’s simulations indicate that mandatory BESS could reduce system-level renewable energy curtailment by approximately 0.3 percentage points for wind and 1.1 percentage points for solar. Its impact on marginal electricity prices is expected to be negligible, while reliability benefits are projected to be positive, although these have not yet been quantified.
Nepra noted that the more significant quantified benefits of BESS emerged at the individual project level. Storage can improve project returns and reduce exposure to renewable energy curtailment risks.
According to ISMO’s modelling, adding BESS equivalent to 10% of firm renewable capacity improved the equity internal rate of return (IRR) for both solar and wind projects supplying B-3 and B-4 consumers.
Although several stakeholders supported a higher 20% BESS requirement during the consultation process, Nepra opted for the lower 10% threshold for the first auction. The regulator said a higher mandatory requirement could increase upfront costs and implementation risks and potentially discourage participation, particularly from smaller market players.
Nepra has directed ISMO to publish the supporting financial model before issuing the first request for proposals (RFP).
The authority further decided that the 10% requirement would serve as an initial-phase measure, rather than becoming an escalating or permanent threshold. ISMO has been directed to evaluate market participation and competition, BESS capital and operating costs, technical performance, availability, utilisation, charging and discharging patterns, and the contribution of storage to renewable energy integration before submitting a detailed proposal to Nepra.
The regulator justified limiting the mandatory storage requirement to solar and wind projects, noting that these technologies are major contributors to the duck curve, ramping and curtailment challenges. It observed that BESS can be readily co-located with renewable generation, whereas pumped-hydro storage is location-specific and other storage technologies have yet to achieve commercial deployment at the required scale in Pakistan.
Auction timeline revised
Nepra also rejected ISMO’s proposal to retain discretion to extend the proposal submission deadline. Instead, it fixed the submission period for the first auction at two months from publication of the RFP, with no extension permitted.
For subsequent auctions, bidders will have one month to submit their proposals. Electronic and hard-copy proposals will remain unopened until the submission deadline expires.
Three-member grievance committee approved
Nepra also approved the establishment of a three-member Grievance Redressal Committee (GRC), while modifying ISMO’s proposed composition.
The committee will be chaired by the Managing Director of the Private Power & Infrastructure Board (PPIB) and include two independent directors of ISMO’s Board.
The PPIB representative serving on the Auction Committee must be someone other than the PPIB managing director. In addition, no GRC member will be allowed to participate in proposal evaluation or Auction Committee decision-making.
Participants will have five business days from publication of the provisional list of eligible bidders to submit grievances. The GRC will have four weeks to decide the complaints, with its decisions communicated to the Auction Committee and published. The committee’s decisions will be binding for the purposes of the auction.
Nepra’s determination followed a public consultation in which 10 stakeholders, including FESCO, GEPCO, MEPCO, the Rawalpindi Chamber of Commerce and Industry, the Punjab Energy Department and the Khyber Pakhtunkhwa energy development organisation, submitted comments on ISMO’s proposed amendments.
Nepra has directed ISMO to incorporate the approved amendments into the RFP and other auction documents and make all consequential changes necessary to implement the regulator’s determination.
Story by Mushtaq Ghumman
