The National Electric Power Regulatory Authority (Nepra) has allowed the government to make battery energy storage systems mandatory for wind and solar projects participating in an upcoming auction for 800 megawatts of renewable electricity.
The measure is intended to improve grid stability as Pakistan faces growing challenges from the so-called duck curve — a sharp change in electricity demand caused when large numbers of solar users rely less on the national grid during daylight hours but return to it in the evening.
The government is preparing the 800MW auction as part of its gradual transition towards a more competitive electricity market. The initiative comes after a delay of more than three decades, while consultations with private-sector participants are under way to finalise the bidding timetable.
The government had decided in July that battery storage should become a compulsory component of the auction. Nepra has now formally enabled the requirement by approving amendments to the wheeling auction framework.
Under the revised mechanism, the Independent System Operator (Ismo), a subsidiary of the Power Division, can issue a request for proposals for the first 400MW block of the auction during the current month.
Wind and solar developers seeking to participate will be required to install battery storage at their generation sites with firm capacity equivalent to at least 10 per cent of the firm capacity of their proposed renewable energy projects.
Nepra said a company using solar or wind generation would only qualify for the auction if it met this minimum storage requirement. Developers will, however, be free to install battery systems above the 10pc threshold.
For the first auction conducted by Ismo, interested companies will have two months from the publication of the request for proposals to submit their bids. The deadline will be fixed and cannot be extended. For subsequent auctions, bidders will be given one month to submit proposals.
The longer period for the inaugural auction is intended to provide additional flexibility during the introduction of the new framework, particularly because a significant number of prospective participants may otherwise seek extensions.
Another important amendment concerns the handling of disputes. A three-member grievance redressal committee will be established to consider complaints arising from the auction process. It will be headed by the managing director of the Private Power and Infrastructure Board and include two independent directors from Ismo’s board.
The independent mechanism responds to concerns raised by private-sector stakeholders over the existing arrangement, under which the auction committee both evaluates the eligibility of bidders and considers grievances relating to those evaluations. Industry participants argued that separating these responsibilities would reduce potential conflicts of interest and strengthen confidence and transparency in the auction process.
Ismo also conducted detailed modelling of battery storage systems and their financial implications. Its assessment indicated that returns from battery installations improve as storage capacity increases up to certain levels.
Following consultations with prospective participants, authorities settled on 10pc as the minimum mandatory storage requirement. Developers can choose a larger battery capacity if they believe doing so would improve the commercial viability of their projects.
According to Ismo, international electricity markets have generally adopted two approaches to battery storage. Mature markets tend to provide relevant market information and allow investors to determine the appropriate level of storage themselves. Developing electricity markets, by contrast, have often introduced compulsory storage requirements. India, China, the Philippines and the Dominican Republic were cited among countries that have adopted mandatory approaches.
Most prospective bidders and stakeholders also recognised battery storage as an important tool for improving grid flexibility and managing the duck curve.
The problem has become increasingly significant as distributed solar generation expands. During daylight hours, many solar consumers sharply reduce their reliance on the national grid. When solar production falls in the evening, demand can return rapidly, forcing the power system to accommodate a sudden increase in electricity requirements.
By linking new wind and solar capacity with battery storage, the government hopes to make renewable electricity easier to integrate into the national system while reducing the operational pressures created by rapidly changing patterns of electricity demand.
