Pakistan announces long-awaited upfront solar FiT rates

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Upfront FiT rates for large scale photovoltaic (PV) projects in Pakistan have been announced by the country’s National Electric Power Regulatory Authority, set lower than rates recommended to agencies advising the regulator on the scheme.

The newly announced FiTs will apply to plants of between 1MW and 100MW capacity and are set at a different rate in the north and south of the country. The NEPRA publication detailing the upfront tariff rates refers to higher levels of solar irradiance in the south of Pakistan than the north. NEPRA referred to the division as a ‘Tiered Tariff Structure’ and described the system as “ideal” due to “the solar irradiance profile of Pakistan”. The tariffs are calculated as a payment to cover 25 years of operation.

Projects in the north region will receive PKR20.01 (US$0.189) per kWh for the first 10 years of operation and PKR9.13 (US$0.09) for the following 15 years. The northern region is defined to include Northern Punjab, federally administered tribal areas, Kyber Pakhtunkhwa, Islamabad Capital Territory, Azad Kashmir and Gilgit-Baltistan.

Meanwhile projects constructed in the southern region, comprised of the Balochistan, Sindh and Southern Punjab (including Cholistan), will receive PKR21.11 (US$0.20) for the first 10 years and PKR8.75 (US$0.08) for the following 15 years.

According to NEPRA the rates were set by a working group that included Pakistan’s Alternative Energy Development Board (AEDB), with German federal development institution Gesellschaft für Internationale Zusammenarbeit (GIZ) hired as consultants to AEDB.

During a December 2012 consultation, GIZ had recommended an upfront rate of around PKR29.8 (US$0.28), broken up into PKR28.4 (US$0.27) for the first 10 years of operation and PKR13.5 (US$0.128) for the following 15 years.

The NEPRA document refers to some level of disagreement between the various parties involved in the process. AEDB appears to have considered the rates recommended by GIZ to be too high.

NEPRA stated in the document: “Since AEDB did not provide any study or report in support of its stance regarding the GIZ's working, therefore the Authority was constrained to adopt the working submitted by GIZ for initiating consultative process in order to develop the Upfront Tariff for Solar Power Plants.”

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