Feed In Tariffs

Published on December 21st, 2015 | by Smiti Mittal

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Pakistan Cuts Solar Power Tariff By 25%

December 21st, 2015 by  

The fear of several investors looking to expand their footprint into Pakistan’s solar power sector seem to have come true as the national electricity regulator announced a sharp cut in feed-in tariffs.

Pakistan’s National Electric Power Regulatory Authority (NEPRA) has announced tariff reduction for solar power projects by around 25%. The new tariffs will be applicable for new projects starting 1 January 2016. At present, the tariff of US¢14.15-15.02/kWh is available to solar power projects based on their size, which can vary between 1 and 100 MW.

The applicable tariff has been reduced to US¢11.35-11.53/kWh for various sizes and projects located in the northern part of Pakistan. For projects located in the southern part of the country, the tariffs have been reduced to US¢10.72-10.89/kWh. The new tariffs are sharply lower than the very first tariffs announced by NEPRA, which were US¢16.30-17.00/kWh.

Foreign investors had voiced their concerns about NEPRA’s plans to significantly reduce the tariffs. Several Chinese companies are believed to be planning large-scale solar power projects in Pakistan. The current tariffs are significantly higher than the tariffs seen in the other countries. Neighboring India recently saw tariffs fall to US¢7.12/kWh in competitive auctions.

It will be interesting to see if foreign investors reduce their exposure in Pakistan’s renewable energy industry. According to the Alternative Energy Development Board, foreign investors poured $3 billion over the last year into the renewable energy sector in Pakistan.


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About the Author

works as a senior solar engineer at a reputed engineering and management consultancy. She has conducted due diligence of several solar PV projects in India and Southeast Asia. She has keen interest in renewable energy, green buildings, environmental sustainability, and biofuels. She currently resides in New Delhi, India.



  • harisA

    Just came back from Pakistan and noticed a lot of interest was being shown in ‘developing coal resources’. Pakistan has really large lignite coal deposits and very little coal electricity generation. It seems that cutting feed in tarrifs for solar will make the coal generated electricity more competitive.
    For a country like Pakistan, a strong net metering regime makes more sense, as people are paying upto $60c/kwh to generate/store electricity due to load shedding.

    • JamesWimberley

      Oh dear. I hope a lot of diplomatic effort, possibly involving cheap money, is going into steering Pakistan away from this seductive but horrible option.

      • harisA

        Pakistan’s per capita carbon emissions are around 1ton/yr, while US is 17tons/yr.
        Maybe we need some diplomacy close to home:-)

        • Frank

          I wish we would put a price on everything going up the smokestack, which wouldn’ affect me anyway, because I chose 100% wind power for hardly any more.

          • harisA

            I commend your decision to use 100% renewables.

        • JamesWimberley

          “It’s our turn to trash the playground”. This weak climate justice argument basically died in Paris, when the small island states deserted India and China to get the developed nations to sign up to a 1.5 degree target.

          American emissions are high but falling. Pakistan’s are low. Why should they rise? Account properly for the health costs of coal, and the cost advantage disappears at today’s prices, let alone tomorrow’s.

          • harisA

            I find the “It’s our turn to trash the playground” argument very ironic. At current rates of emissions, the Americans are already trashing the playground, not to mention all the carbon that is in the atmosphere that was spewed by us in the last century and half.
            America’s emission are falling because natural gas is substituting coal. Pakistan has pretty much run out of natural gas and due to geopolitical reasons it is not allowed to buy any gas from Iran. So, the country is facing an acute shortage of gas as well as electricity.
            Without equality we should not expect any justice. The western rich lifestyle is not sustainable and no amouting of summiting will change that fact.

          • Bob_Wallace

            Pay attention to the words you copied.

            The argument that some other country did the wrong thing in the past now gives your country the right to do the wrong thing is stupid.

            It’s the “But Little Johnny broke the first window” excuse.

            Someone else committed murder therefore you have the right to commit murder.
            Think it through.

            Pakistan and other developing countries are going to suffer far more from climate change than will developed countries. Developed countries have the infrastructure and capital that will allow them to add insulation, AC, water desalinization, import food, and do the other things to help them get by.

            Add some more heat to the Asian subcontinent and see how that works out for you.

          • harisA

            Agree to some of your facts, but you present polluting the environment as a evil (breaking windows, murder), wheras it is a price you pay for a good life and progress. The West has the infrastructure, that you mentioned, because it polluted.

            From a third world perspective, that they, as in rich countries, destroyed the environment to build a lavish infrastructure and now want to deny them basic necessities, while enjoying a very polluting and unsustainable lifestyle.

            So, million of American drive endlessly in their SUV’s and trucks, while frowning upon a prospective coal power plant whose electricity will be used to power commuter trains in Mumbai or Kolkata.

            I know that Pakistan and other poor countries will suffer disproportionately because of climate change. In fact, in Pakistan, it already happening. So, the result would be a social unrest/mass migration to rich nothern countries.
            As far as things working out for me, I drive a 50mpg hybrid, generate 100% of my electricity using rooftop photovoltaics and our city Carlsbad just last week brought online the largest desalination plant in the western hemisphere. Once the family minivan runs out, it will be replaced by a PHEV SUV/Minivan which will be charged by rooftop photovoltaics also.

            So I am thinking it through:-)

          • Bob_Wallace

            Pollution was a price that had to be accepted in order to generate large amounts of power back in the previous century.

            That is no longer the case.

            In no way do developed countries wish to stop or slow development of lesser developed countries. That is totally incorrect. What developed countries are saying is that there is no reason to take the dirty route we took. We’ve now developed a new path.

          • harisA

            What is the route to generate baseload and dispatchable renewable energy that is cheaper than coal or nuclear? Pakistan has a severe problem in both areas.

          • Bob_Wallace

            I can give you US prices. It would probably take a little time/effort for Pakistan to bring their costs that low. Pakistan would have the advantage of starting out with hardware prices as low as the US’s but it takes some effort to train installers and build up an efficient supply train.

            Onshore wind is now under 4 cents/kWh unsubsidized. PV solar is now under 7 cents/kWh unsubsidized. Actually solar may be under 6 cents now, 7 cents is a 2014 price and the cost of utility solar fell about 17% in the 12 months ending with September, 2015.

            Step one is to install enough of each to greatly minimize the amount of gas used. Even though gas is expensive CCNG plants are not. It may make sense to install CCNG plants as fill in for additional wind and solar or to build some pump-up hydro storage.

          • Frank

            Wind and solar combined and spread out over a large area especially with good forecasting can behave like baseload to some extent. Solar thermal is more expensive, but is dispatchable. And I really hope the price of batteries for grid storage drop a lot.

          • TatuSaloranta

            Polluting is present as an evil because it is. It is similar to defecating in the well you will need to drink from. There are ways to sugarcoat this, but fundamentally burning coal pollutes, and has negative effects from everyone. It is not just “cost of better lifestyle”; it can easily be preventing improved life all around. Check out how much chinese like their smog situation, caused by coal burning. They have no plans to keep on “improving” their lives by burning more of coal.

          • harisA

            My point is that not only the rich countries have polluted the environment in the past, but are still doing at a rate higher than poor countries, and that even applies to Europe. To use your analogy, American are defecating 17 times more that Pakistanis and ten times more than Indians. So, who needs to stop?

            I was under the impression that other than CO2 emissions the newer Chinese coal burning plants are pretty clean, just like the one in Europe and US. The smog is due to industrial and transportation emissions.

            Let poor countries decide when the ‘price of progress’ becomes too high. The rich countries should keep their peace until their per capita emissions are at par with the poor countries or take some compensatory measures to that effect. Like a coal tax that is used to build renewable plants in poor countries.

          • Bob_Wallace

            “So, who needs to stop?”

            Everyone. Period.

          • Bob_Wallace

            Let me take it further. Countries like Pakistan, India and Bangladesh are in danger of getting a serious buttkicking from climate change.

            It would be in their best interest to clean their grids at warp speed and then shove that in the face of those higher emitting countries which are not working fast enough.

            By taking an “It’s our turn to piss in the soup” approach they give reluctant to change countries an excuse to go slower.

            If you’ve got low per capita generation then you’ve got a smaller problem to fix. Build no more dirty generation and replace the dirty generation you have. You’ll be way ahead.

          • harisA

            Agree 100%. It does not really matters whether the first drop or the last drop of poison kills someone. The person is dead!

            For my part I am on track of taking my family’s carbon foot print to zero by year 2020.

          • TatuSaloranta

            No disagreement there, I agree with the sentiment. I just think it is good to keep in mind that avoiding others mistakes is a valuable lesson; not because you have to, but because that is the right thing to do. Rich countries obviously need to work very heard to close the gap by reductions, and poor countries need to be able to increase energy consumption.

      • Karn

        The reason Pakistan uses gas instead of coal to begin with was due to diplomatic pressure from the gulf states .. Now the country faces a hilarious amount of power shortage due to expensive gas .. I doubt they will bend to anyone on the coal issue,

        • Bob_Wallace

          With most of the rest of the world now starting to get serious about climate change I would think that Pakistan could get some excellent assistance installing renewable energy.

          Perhaps Pakistan and India are just making coal noises as a way to obtain more assistance installing clean generation.

          Is the air in Pakistani cities as bad as in most Indian cities? I haven’t been able to travel in Pakistan so far.

          • Karn

            India has 69 GW of coal under contruction as of now and Pakistan will build 12 660MW units of coal (as part of CPEC from china) .
            It’s more than just noise I assure you . And Pakistan will welcome all renewable energy assistance while it continues to build coal .. As will India,
            Only cities in the north in the NCR and part of the older Industrial belt has bad air in India.. Pakistan is about the same .

          • JamesWimberley

            Does your 69 GW of coal in India include the 14 unbuilt UMPPs (link)? According to Wikipedia, none are actually under construction. Chitrangi, not in the list, inches towards a start.

          • Karn

            My 69GW excludes them . Including them and other proposed projects adds up to more than 125 GW .
            Solar and wind as I have told you before are still significantly more expensive than coal in India… so please stop repeating that line.

          • TatuSaloranta

            Based on latest auction prices for solar, wind, is this really true? Cost of coal varies a lot, mostly depending on cost of transportation; but the capital cost for new modern coal plants are not trivial either. So it is not at all guaranteed that coal is truly much cheaper than utility-scale solar, much less wind power which has been cheap for a while.

          • Karn

            The lowest auction prices for solar still needed to be “bundled” with coal power to make it cheap enough for the discoms to buy it .. That really is all you need to know to make a comparison.

          • TatuSaloranta

            That is just a statement with no backing facts or references. I am not an expert in Indian electricity production statistics, but it is easy to find references like, say:

            http://about.bnef.com/landing-pages/sparklines-india-solar-bids-%E2%80%92-record-low-prices-next-round/

            which supports the notion that coal is indeed cheaper, but I would not call that difference “significant more expensive”. Further, wind has been cheaper and should match coal price even as is.

          • Karn

            http://cleantechnica.com/2015/12/15/softbank-led-joint-venture-secures-first-solar-power-project-india-record-low-tariff/
            Here is a fact and and a reference . A 25% difference is “significant ” no matter which way you spin it .

          • Bob_Wallace

            Yes, “most Indian cities” was an overreach. I’ve spent more time in northern cities. It’s been several years since I was in southern cities.

          • Karn

            It worries me , there was a time when Delhi was much cleaner … was actually impressed at how much green cover there was .. It was around the time when converting to CNGs was in full swing (2002 ish) . But later diesel cars became very popular there … and now it’s just too bad . To top everything they have an old coal plant within the built up area with no plans to decommision it . What is happening is that there is an effort to bring down the suspended particulate matter not CO2 .

          • Bob_Wallace

            Did you happen to experience Agra ‘before and after’?

            I remember being stuck in an auto rickshaw in the mid-’90s on one of the bridges crossing the Yumma and being able to see only about one vehicle away before the pollution turned everything into a brown haze.

            When the government realized that the air pollution was damaging the Taj (and tourist spending) they moved the dirtiest factories/plants away.

          • CU

            Lahore and Karachi are in the 10 ten worst cities in the world.

          • harisA

            If you mean worst pollution wise, then most pollution is due to diesel engines, motorcycles and motor rickshaws exhaust. Actions attributed to poverty (burning trash and leaves to generate heat) also adds to the mix.

  • JamesWimberley

    They have to do this. If you don’t cut FITs in line with costs, the superprofits lead to a backlash and at worst retroactive cuts, which destroy confidence. The developers should be getting a very good ROI at 10c/kWh, in a very sunny country.

  • CU

    But comparded with recent Inda prices, in my opinion, the cut-backs seems relevant.

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