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Is Rental Power Plant The Solution? Presented By Engr. Sibte Ahmed Jafri President Jafri & Associates Consulting Engineers IEEP 22 nd Multi-Topic International Symposium 2007
Power Scenario <ul><li>Entire country is faced with serious shortage of Electrical Power. Load shedding and breakdowns are rules rather then exception. </li></ul><ul><li>In a city like Karachi where power outage lasts several hours at a stretch the need for Power is NOW! Rental Power stations are available in the world which can be brought on line in few months time. So why is it not done? And if it is done, what would be the negative side? </li></ul>
History of Electric Regulatory Authorities <ul><li>In 1958 the Water and Power Development Authority (WAPDA) was created to coordinate the development of water and electric power resources of Pakistan. This included all of Pakistan except for the area which was served by Karachi Electric Supply Corp. (KESC) a company based out of Karachi KESC </li></ul><ul><li>WAPDA has the responsibility for planning, constructing, operating and maintaining power generation, transmission and distribution facilities in Pakistan. KESC generation capacity is about one-fifth that of WAPDA. However, KESC does get supplementary power gets WAPDA whenever possible. </li></ul>
<ul><li>Due to increase in demand for more generating capacity in Pakistan and its financial constraints, WAPDA has been unable to keep up with demand. This resulted in the central government’s decision to invite the private sector to develop new power generation projects thus Power Policy 1994 was establish and several projects came in existence under the 1994 Policy. </li></ul>
Estimated Shortage in Installed Capacity by 2010
<ul><li>To remedy the situation the planners invited investors to setup IPP based reciprocating engine technology and RFO as prime fuel, the contract period is 25 years and tariff offered is approximately 12 cents levelized. </li></ul>
Is It the Real Remedy? <ul><li>Let us examine a case of a 165 MW power plant which is essentially required to bridge the gap until a 165 MW Hydel Power comes online. Power purchaser is forced to choose from one of the following two options: </li></ul><ul><ul><li>Option I: To invite an IPP based on Furnace Oil for 25 years contract period. </li></ul></ul><ul><ul><li>Option II To invite Rental Power Plant for 5 years terms based on Natural Gas (Diesel being the standby fuel). </li></ul></ul><ul><li>The criteria for evaluation would be Lead-time; COD and per Unit Cost. </li></ul>
RFO Based Plant <ul><li>Time to COD: 22 Months </li></ul><ul><li>Cost to WAPDA: Let us look at an approved project based on RFO which has gone through NEPRA and the Tariff is approved and the project is in the implementation phase. GOP has agreed to pay a levelized per unit cost of 11.0542 cents, over 25 years </li></ul><ul><li>Let us compare this with the Rental option where the term of contract is normally 5 years or less. It would be found that for the first 5 years, IPP based on RFO would cost WAPDA a total of 510,278,143 USD. The per year amount stays the same for next five year and after the tenth (10) year the yearly cost comes down to 80,864,245 USD. Thereafter it stays the same for the life of the contract. (Subject to fuel cost adjustment). </li></ul>
Rental Plant <ul><li>Time to COD: </li></ul><ul><ul><li>6 Months (simple cycle) </li></ul></ul><ul><ul><li>12 to 16 Months (combined cycle) </li></ul></ul><ul><li>Cost to WAPDA: Project approved by WAPDA for 3 years rental period at average cost of 3.13 cents per unit where WAPDA supplies the gas, water, land and security, etc. For comparison purposes let us assume the contract to last 5 years and the cost of natural gas to be at the level of captive power. The cost of gas to be PKR 238.38 per MMBTU, this adds to per unit cost of fuel with other component to be at 5.5 cents per kW/hr a total of 8.83. (including the rental cost). </li></ul>
<ul><li>To keep the comparison simple following is assumed </li></ul><ul><ul><li>The dispatch from both plants to be at 60%. </li></ul></ul><ul><ul><li>Combined cost per unit is assumed (i.e. energy and capacity price) in one figure. </li></ul></ul><ul><ul><li>Escalation in fuel cost is added every five years. </li></ul></ul><ul><ul><li>For Hydel Power Plant, plant factor is assumed at 50%. </li></ul></ul>
Approximate Tariff for Various Alternative Solutions <ul><li>Gas Fired Plant 4.6 cents </li></ul><ul><li>Hydel 5.8 cents </li></ul><ul><li>Coal 5.8 cents </li></ul><ul><li>Furnace Oil 14.5 cents </li></ul><ul><li>Rental Composite 8.83 cents </li></ul>
The Gap <ul><li>Time to get Economical Power from Hydel Sources- Solution that will require 5 years </li></ul><ul><li>To fill this Gap we have 2 options </li></ul><ul><ul><li>Furnace oil based IPP for 25 years (COD 24 months) </li></ul></ul><ul><ul><li>Rental Plants for 5 years (COD 6 months) </li></ul></ul>
Conclusion <ul><li>The saving over 25 years for just one 165 MW Unit is shown to be $ 157 million. Projected over 1500 MW fast track projects on RFO would mean an additional burden of 1,962.5 million in 25 years, say $78.5 million per year. </li></ul><ul><li>Not a large amount on the face of it but if one considers the savings of fuel import bill; and immediate availability of relief, Rental based option seems to be an option worth considering. </li></ul>