KE expects Rs176b savings from hybrid project

Says solar-wind energy project will help save forex, fuel expenses

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ISLAMABAD:

The management of K-Electric on Tuesday informed the power-sector regulator that its 220-megawatt hybrid project in Dhabeji, Sindh will lead to aggregate savings of Rs176 billion.

At a public hearing conducted by the National Electric Power Regulatory Authority (Nepra) on KE's bid evaluation report for the hybrid project, KE officials noted that the project's energy displacement analysis demonstrated a significant reduction in fuel costs with annual savings of Rs7.05 billion and foreign exchange reduction of $39.45 million.

They elaborated that aggregate savings over the projected 25 years were extrapolated at Rs176.259 billion. This tariff has been achieved through collaboration with Chinese engineering, procurement and construction (EPC) providers, who assisted in optimising costs and offering a competitive price.

The project marks a significant milestone in the renewable energy journey. Combining both solar and wind power, it is the first-of-its-kind project in Pakistan and is expected to play a pivotal role in addressing the energy needs while reducing reliance on imported fuels.

At the hearing, which concluded on Tuesday, KE officials highlighted that the bidding process was transparent and conducted in compliance with all regulatory requirements. They explained that the process, which involved both physical and electronic bidding, reflected the commitment to fairness.

A key point of discussion was the tariff structure, where the final bid secured Pakistan's lowest tariff of Rs8.9 per unit, translating into 3.09 cents. The low bid came in the backdrop of earlier estimate of Rs10.863 to Rs11.993 per unit.

KE has conducted detailed simulations and modeling to ensure that the addition of this project will not only replace the expensive imported fuel sources but also improve the overall efficiency of energy supply.

A Nepra member asked whether the analysis took account of intermittency as well. Responding to that, KE officials explained that it was taken into account by incorporating the performance curves of each technology, including solar, wind and base load, along with their complete capacity factors.

They emphasised that the project's transmission line and infrastructure had already been planned and budgeted to ensure that the project could proceed smoothly without additional delays or costs.

They also acknowledged the complexities of the bidding process and the extension in submission timeline, assuring that the result had been highly successful, which paved the way for securing the lowest tariff and positioning the project as a critical part of KE's energy transition.

KE Chief Financial Officer Aamir Ghaziani highlighted that the project would enable the company to replace costly fuel-based generation, leading to substantial savings. He stressed that without advancing renewable projects, generation costs were likely to rise in future as the displacement factor played a key role in reducing the overall generation expenses.

Nayab Rishi from Master Textiles requested the authority for a swift decision on 150MW solar projects in Balochistan, the hearing for which was held in December 2024. She mentioned that Master Textiles had been declared the lowest bidder under the competitive bidding framework.