The CPEC Energy Project will provide Pakistan with low-cost electricity.
NEPRA report

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The CPEC Energy Project will provide Pakistan with low-cost electricity.
NEPRA report

“The CPEC energy project has improved Pakistan’s electricity economy and contributed to economic growth by improving low-cost, high-efficiency electricity supply,” said Tauseef H., Chairman of the National Electric Power Regulatory Authority (NEPRA). says Farooqi.

According to the chairman, the total installed capacity of his CPEC energy projects, including coal, wind, solar and hydropower, is 6570 MW. In fiscal year 2020-21 and fiscal year 2021-22, he generated electricity of 28549.94 GWh and 25772.48 GWh, accounting for 22.03% and 18.37% of Pakistan’s total electricity generation respectively.

An average annual addition of 20% to the national grid has mitigated widespread load shedding cases in the country, boosting Pakistan’s export-oriented industries in particular.

Improved power generation efficiency

Pakistan’s energy sector is largely dependent on imported fuels (oil and LNG), which puts pressure on foreign exchange reserves and limits the country’s industrial development.

“Over the past five years, CPEC energy projects have replaced more costly fuel oil and diesel power generation with coal and renewable energy sources, meeting Pakistan’s energy needs at lower prices and facilitating the growth of an export-oriented industry. has been done,” the chairman said.

In terms of power generation costs, CPEC project based on imported coal generated at his Rs 8.0/kWh in October 2021. The costs for domestic projects based on FO and RLNG are Rs.21.5/kWh and Rs.20.0/kWh respectively, double that of CPEC projects, but the data was provided by his KASB trade show.

Costs have increased over the past year due to sharp increases in fuel prices on international markets. Nevertheless, CPEC projects still offer competitive prices. In October this year, power generation cost of CPEC projects based on imported coal was Rs.18.5/kWh, and that of domestic projects based on FO and RLNG was Rs.34.0/kWh, Rs.31.0/kWh.

When it comes to electricity rate, the chairman told CEN, CPEC projects (EPP) based on coal is Rs.22.13/kWh on average, and that of non-CPEC projects based on oil is Rs.36.61/kWh. This shows the CPEC energy projects, utilizing fuel with higher efficiency, are providing affordable electricity to millions of Pakistani households.

Utilization of Thar CoalRising fuel prices and a new energy landscape after the Ukrain war necessitates Pakistan to avail of its indigenous resources, and at the time being, the most efficient solution is Thar coal.

Data provided by NEPRA shows that proven coal reserves in Thar are approximately 175 billion tons. After the commissioning of phase II of Block II, the daily coal production is approximately 24,000 tons, sufficient to fire 1320 MWs. Based on current coal prices of South African Coal, the fuel saving is approximately Rs. 13.46/kWh and the annual fuel savings for 1320 MW will be approximately Rs. 121 billion from Thar coal.

CPEC projects have enabled Pakistan to utilize the Thar coal and produce electricity at around Rs.7-7.5/kWh, the report says. Currently, the 660 MW Engro Power Thar Limited, Lucky Electric, Engro Powergen Thar and Thar Energy are completely or partialy running on Thar coal.

On top of that, another 1,320 MW Shanghai Electric coal power plant, together with an open-pit coal mine of 7.8m tons capacity in Thar Coal Block-1, has been completed recently and is in the process of synchronizing with the national grid. Once put into commercial operation, it will help double electricity generation based on Thar coal to 2640 MW and lower average electricity costs in Pakistan.Transit to Renewable energies
In December 2020, Pakistan announced that it would not build any new power projects that depend on imported coal, and pledged that by 2030, 60pc of its energy will come from clean and renewable sources. This coincided with China’s commitment of building a green CPEC, which entails not building new coal-fired power plants overseas, and increasing support for low-carbon energy.

In this connection, four hydro power projects have been completed or in development under the CPEC Framework, including the biggest run of the river hydro power project 720 MW Karot HPP commissioned on 29th June 2022, 840 MW Suki Kinari HPP under construction, and a 640 MW project recently approved in Mahl.

According to the State of Industry Report 2022 published by NEPRA, HPP has a relatively long service life and a wide range of costs over the lifetime of the project, which can be used as an advantage for lower rates.

The CPEC project has also revitalized the once barren land of Zympir, transforming the region into a veritable ‘Corridor of the Winds’. Four wind farms with a total installed capacity of 300 MW built here will supply economical and clean energy to Pakistan’s national grid.

In Bahawalpur, the first solar power plant is located at the Quaid Azam Solar Park in Pakistan. The plant initially operated with a capacity of 100 MW. Since 2015, 300MW of capacity has been added, with a number of planned projects for the Quaid-e-Azam solar park with a total capacity of 1,050MW reported by the AEDB.

NEPRA’s 2022 State of the Industry Report shows that the price of electricity from wind and solar farms is less than half the price of electricity currently purchased from heat sources.

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