Latest news with #IPPs
IOL News
a day ago
- Business
- IOL News
How Western Cape is leading the charge in renewable energy
The Western Cape is positioning itself as a significant player in South Africa's renewable energy sector, as Premier Winde acknowledged the contributions of independent power producers (IPPs) such as Red Rocket to the province's energy resilience efforts. Premier Winde hosted Matteo Brambilla, CEO of Cape Town-based energy firm Red Rocket, during a special 'on-the-road' edition of the province's weekly energy digicon. The event was held at the company's head office, where Winde toured its state-of-the-art 'Command Centre', a digital hub that tracks real-time energy generation across Red Rocket's renewable projects stretching from the Western Cape to Uganda. Winde said the Western Cape Energy Resilience Programme aims to support the private sector and municipalities in generating a reliable and affordable supply of energy.
Business Recorder
3 days ago
- Business
- Business Recorder
Pakistan's solar ‘revolution'
Pakistan, home to 240 million people, faces an energy paradox: surplus generation capacity alongside persistent electricity shortages. Despite an installed capacity of 44,000 megawatts (MW), nearly 40% of households endure over six hours of daily outages, costing the economy $18 billion annually in lost GDP. At the core of this crisis is a dysfunctional system dominated by Independent Power Producers (IPPs), which claim Rs. 900 billion annually in capacity payments, 64% of total costs for underutilized fossil fuel plants. These contracts, which guarantee payments regardless of actual electricity usage, have driven tariffs up by 75% since 2020, making Pakistani industries 35% less competitive than regional peers. Meanwhile, transmission losses of 17–20%, twice the global average prevent surplus power from reaching consumers. Yet, a promising solution lies in plain sight: solar energy. Pakistan's solar potential exceeds 2,900 gigawatt-hours annually enough to power the country 100 times over. However, solar contributes only 4% to the energy mix, despite its potential to deliver 40,000 MW by 2035. The path forward lies in decentralized rooftop systems rather than mega solar parks. Already, over 1,500 MW of rooftop solar has been installed, spurred by a 300% surge in net metering adoption in 2022. Scaling this to 12,000 MW by 2030 could reduce oil imports by $4 billion annually and create 500,000 jobs, according to the International Renewable Energy Agency (IRENA). A 2022 pilot in Punjab showcased the potential: rooftop solar redirected to industrial zones via wheeling agreements cut energy costs by 30% and boosted exports by $500 million. For every 1 MW of installed solar, 25–30 jobs are generated. If export zones adopt decentralized energy, GDP growth could rise by 2–3% annually, drawing foreign investment and expanding value-added exports. Replacing just 10% of fossil energy with solar would cut CO? emissions by 28 million tons annually, the equivalent of planting 650 million trees. Realizing this vision requires a decisive policy action. Redirecting capacity payments toward grid upgrades and rooftop subsidies is vital. Bangladesh's solar home system, which reached 20 million people, and India's 30% rooftop subsidy model provide successful blueprints. Bureaucratic delays remain a hurdle, net metering approvals can take up to six months, while grid modernization will require $3–5 billion. But with 80% of rooftop installations already driven by households and businesses, policy support, not public funding, is the missing piece. The numbers are compelling. A 20% shift to solar could reduce circular debt by Rs. 500 billion annually by 2027, according to IMF estimates. Pakistan's Rs. 2.6 trillion circular debt could instead finance 10 Mangla-sized hydropower projects decentralized solar presents a faster, more cost-effective alternative. As global markets shift toward sustainability, Pakistan stands at a crossroads. Continuing with the broken IPP model risks a deeper economic decline. Embracing decentralized solar could transform rooftops into revenue-generating assets, stabilize the grid, and reignite exports. With over 300 sunny days annually, Pakistan's energy future could be not just stable, but radiant. The current tiered tariff system penalizes higher consumption, hindering industrial growth. Moving to inverted slabs where per-unit costs decline with increased use could save a textile unit, consuming 25,000 kWh/month up to Rs. 375,000. This aligns with global best practices like Japan's 'Negawatt Trading,' where energy efficiency improves without compromising output. Such reforms could cut energy intensity by 12% and boost production by 8%. Smart integration of rooftop solar (targeting 12,000 MW by 2030), hydropower (25% baseload), and IPPs (used for peak loads) through advanced grids is essential. Brazil's smart grid model reduced transmission losses from 17% to 8%, saving $200 million annually, a strategy Pakistan could replicate. Pakistan must also reassess costly, loan-heavy projects like the ADB-funded Kanjhar Lake Floating Solar Park, which risk locking the country into debt and dependency on imported tech. Instead, policies should encourage domestic private investment in rooftop solar and land-based solar parks. Tax holidays for local solar manufacturing, streamlined land acquisition, and deregulated energy pricing can mobilize local capital for scalable, self-reliant projects. Rooftop solar requires no land and offers a 3-5-year payback period. Prioritizing it over flood-prone reservoirs could redirect $3 billion annually from oil imports into the domestic economy. With 80% of rooftop installations already privately financed, improving policy could rapidly accelerate deployment. Fast-tracking net metering approvals to 15 days and offering India-style 30% subsidies could attract $4.8 billion in private investment by 2030. Delaying action could result in $18 billion/year in GDP losses and missed climate targets. A phased rollout of smart meters by 2025, 8,000 MW of solar by 2028 could reduce CO? emissions by 28 million tons by 2030, while curbing circular debt and stabilizing electricity tariffs. Fixed monthly taxes of Rs. 5,000–10,000 on solar households would unfairly burden low-income families and deter adoption. Pakistan must prioritize green industrial zones powered by decentralized solar and equipped with digital grid technologies such as smart metering. Rather than relying on IMF or ADB loans, policies should promote domestic private investment. Tax incentives for renewable-powered industries, simplified project approvals, and ESG mandates for exporters can draw local capital. Emulating China's digital public infrastructure with real-time energy trading and AI-based demand forecasting would empower private players while reducing fossil fuel dependence. Banks should offer 2–3% low-interest loans with flexible repayment plans to enable households and SMEs to install solar systems. With extreme seasonal temperatures above 52°C in summer and below freezing in winter, the demand for energy-intensive appliances is rising. Household-level solar can reduce pressure on the national grid in summer and lower gas use in winter, enhancing energy resilience. To further mobilize capital, Pakistan could issue green bonds for industrial zones, supported by risk-sharing tools like partial credit guarantees. Deregulating energy pricing in solar zones would increase returns, following India's model that attracted $42 billion in private renewable investment since 2020. Globally, green zones in regions like Guangdong, China, have cut emissions by 28 million tons while boosting exports. With circular debt at Rs. 2.6 trillion, empowering private stakeholders through digital innovation and regulatory clarity is the most viable path to energy security, economic revival, and job creation—without adding to fiscal stress. As the fifth most populous country, with over 60% of its population under 40, Pakistan has a demographic edge. This digitally savvy youth is already driving IT exports, which surged in 2023–24. With the right policies, Pakistan could become a hub not only for IT and digital services but also for blockchain development and cryptocurrency mining. By tapping its abundant renewable energy—solar, hydro, and wind - Pakistan can attract global blockchain investments and emerge as a player in the decentralized digital economy. Copyright Business Recorder, 2025
IOL News
7 days ago
- Business
- IOL News
How South Africa is leading the charge in hybrid solar energy development
Explore how South Africa is transforming its energy landscape through hybrid solar solutions, enhancing grid stability and meeting net-zero commitments in the face of climate challenges. Image: File. As the global energy sector races to meet net-zero commitments, utility-scale solar is undergoing a fundamental transformation. No longer defined by megawatt capacity alone, solar projects are now being evaluated on their ability to deliver dispatchable power, enhance grid stability, and provide critical ancillary services. Nowhere is this evolution more pronounced than in Africa, particularly South Africa, where the Just Energy Transition is accelerating the shift towards resilient, grid-integrated renewable energy. 'Across the continent, and especially in South Africa, we're seeing a strategic move away from variable-only generation,'Jaco Uys, SVP Projects Sub-Sahara Africa at Scatec said. 'What matters now is whether a project can deliver clean energy consistently on demand day or night. This means thinking beyond solar panels, to fully integrated energy systems,' Uys said. South Africa's Eskom-constrained grid has spotlighted the urgent need for firm, responsive power. As Independent Power Producers (IPPs) are increasingly permitted to co-develop transmission infrastructure under the country's new Independent Transmission Projects (ITP) framework, the focus is shifting to hybrid models that combine generation with advanced control technologies. At the forefront of this movement is Scatec's Kenhardt project, a hybrid solar-battery development in the Northern Cape. Boasting 540 MW of solar PV paired with 225 MW/1,140 MWh of battery storage, Kenhardt delivers consistent dispatchable energy under a 20-year Power Purchase Agreement with Eskom. It was recently recognised at the 2025 Solar Energy Conference in Norway for its trailblazing approach in combining renewables with storage to strengthen energy reliability. 'Kenhardt isn't just a solar project,' Nic Bailey, SVP Operational Excellence and Digitalisation at Scatec said. Bailey, alongside Uys, is representing the company at Intersolar Europe in Munich this week. 'It's a demonstration of what's possible when you pair clean generation with flexible output. We're not just injecting power into the grid—we're actively supporting it,' Bailey added. Speaking from Munich both Bailey and Uys shared further reflections on the state of the industry: 'We're not witnessing seismic shifts in solar technology,' Bailey further said. 'Instead, we're seeing incremental improvements in efficiency, equipment size, and LCOE year on year. That's a positive for IPPs like us—it allows for predictability in planning and stability in execution.' 'Amid challenges in the solar module market, the booming battery energy storage (BESS) sector is emerging as a vital growth area. It's reshaping the value chain and fuelling supplier diversification,' said Uys. 'It's clear that Scatec continues to stand out as a reliable partner,' Bailey said. 'Suppliers consistently point to our ability to move challenging projects forward in complex markets—something few others are managing as consistently.' As South Africa continues to unlock private sector participation and modernise its energy infrastructure, the lessons from Kenhardt and other grid-resilient projects are resonating far beyond its borders. Hybrid solutions represent the next chapter in the solar story—offering not just power, but progress. BUSINESS REPORT
Business Recorder
23-05-2025
- Business
- Business Recorder
Power generation rises — but at what cost?
Finally, there is some surge in power generation (read: consumption). It increased by 22 percent year-on-year in April 2024 to reach 10,513 GWh, almost matching the reference generation level. Multiple factors are contributing to this increase. One reason is the reduction in the power tariff for the April–June period, which is encouraging higher consumption from the grid. Another factor is the shift of captive power consumers to the grid, as gas has become prohibitively expensive for them. The third contributor is higher-than-usual temperatures in April, which drove up air-conditioning demand. However, the increase in generation is primarily from expensive imported sources. RLNG-based generation rose by 10 percent year-on-year and was 42 percent higher than the reference generation. Imported coal-based generation jumped to 1,054 GWh from almost zero in April last year—115 percent higher than the reference. In contrast, cheaper indigenous sources saw a decline. Nuclear power generation fell by 8 percent year-on-year and was 22 percent below the reference, while hydropower increased by 11 percent year-on-year but still lagged 29 percent behind the reference level. As a result, the Fuel Cost Adjustment (FCA) turned positive in April 2025 for the first time in nine months, rising by Rs1.27 per unit to Rs8.95 per unit. The key questions now are: How sustainable is this increase in power generation? And why is the generation mix skewed toward more expensive sources? The power tariff reduction includes components that are expected to continue into the next fiscal year. One such component is the Tariff Differential Subsidy (TDS), which may persist due to higher petroleum levies. Another is the Quarterly Tariff Adjustments (QTA), including concessions from IPPs, which are likely to be incorporated into the next year's base tariff. Overall, the reduction in tariffs is expected to persist and should continue to incentivize higher grid-based consumption. This trend is also prompting captive power users to transition to the grid. Captive plants used 110,000 bbtu of gas annually; at 40 percent efficiency, that equates to 12,907 GWh. If 50 percent of that demand shifts to the grid, it could increase monthly consumption by around 500 GWh. This appears to be happening and may continue. Household consumption is closely tied to weather patterns. The national average temperature in April 2025 was 27.9°C—significantly higher than the long-term average of 24.5°C—ranking as the second highest April temperature in 65 years. There may be fluctuations in air-conditioning demand in the coming months depending on weather variations, though temperatures in May 2025 have continued to rise. Industrial demand, on the other hand, is expected to remain elevated through FY26. As for the second question—why the merit order was distorted and why increased generation came from costlier fuels—sources indicate that nuclear generation in the south was constrained due to technical issues and was replaced by imported coal. In the north, lower hydel generation—caused by reduced water availability—was partially offset by increased reliance on RLNG. Furthermore, excessive RLNG usage may be linked to surplus volumes of must-import RLNG, as captive consumers have begun shifting away from it. Hydel generation is likely to remain weak this season, while RLNG consumption may stay elevated. This will continue to exert upward pressure on FCA, potentially offsetting the benefit from lower QTA and TDS. Copyright Business Recorder, 2025
Business Recorder
21-05-2025
- Business
- Business Recorder
FBATI lauds govt's decision to give power relief for industries
KARACHI: Industrialists in Karachi termed the government's decision to fix the electricity tariff at Rs 38 per unit as a business-friendly step for industries of different sizes and sectors in the commercial capital of the country. President Federal B Area Association of Trade and Industries (FBATI) Sheikh Muhammad Tehseen lauded the government's decision to give relief to industries, urging the government to continue its efforts to reduce the cost of production in a phased manner to make exports of different products competitive in the global markets. Industries urged the government to contain the electricity tariff through its policy measures by 8 cents mainly for the export-oriented sectors to enhance the likelihood of earning increasing foreign exchange for the country, he added. He said the government should continue to negotiate with IPPs to reduce the cost of electricity to industries and residential consumers while encouraging them to produce low-cost green energy through solar power plants on a long-term basis. Also, the government should pass on the benefits of lowering petroleum product prices to industries and masses to control inflation and cost of production in the country, he further said. It is pertinent to mention here that the government reduced the electricity unit prices for April by Rs 7 per unit after bringing in reforms in the power sector. Chairman Sub-Committee on Power and Former President FBATI Syed Raza Hussain said the relief to industries of Karachi would translate into the growth in exports of various products and services, hence, the government should continue to support for large-scale to medium, and small industries with every positive step. He mentioned that industries of Karachi deserve equal albeit preferential treatment because of its contribution to export growth, however, the pledged subsidy on account of incremental benefit is yet to be paid by the government. He expressed his optimism that decreasing tariffs for electricity coupled with a single digit policy rate will not only attract foreign and local investment in industries but it will also encourage industries to consume enhanced electricity, ultimately, which will benefit to all stakeholders equally, including power- producing companies and the government as a win-win situation. Copyright Business Recorder, 2025
