The National Electric Power Regulatory Authority (Nepra) has approved changes that will allow the government to make Battery Energy Storage Systems (BESS) mandatory for companies bidding in an upcoming auction for 800 megawatts of wind and solar power.
The decision is aimed at improving grid stability as Pakistan expands renewable energy generation and faces increasing challenges from fluctuating electricity demand.
The government had announced plans for the 800MW auction as part of its gradual transition toward a competitive electricity market. It is currently working with private-sector stakeholders to finalise the bidding schedule.
First 400MW Auction to Move Forward
Nepra approved amendments to the existing wheeling auction process, allowing the Independent System and Market Operator (ISMO) to formally issue a request for proposals for the first 400MW block.
The regulator’s amendments introduce a minimum battery-storage requirement for renewable energy bidders.
Companies seeking to participate through solar or wind generation will have to install BESS with firm capacity equivalent to at least 10% of the firm capacity of their proposed renewable energy facility.
The requirement will apply to the battery system located at the same site as the solar or wind generation facility.
For example, a project with 100MW of qualifying firm renewable capacity would need at least 10MW of BESS firm capacity under the new requirement.
However, bidders will be allowed to install storage capacity above the mandatory minimum if they consider it financially beneficial.
Why Pakistan Needs Battery Storage
The BESS requirement is closely linked to Pakistan’s growing duck curve problem.
The duck curve refers to a pattern created when large amounts of solar power reduce demand from the conventional grid during daylight hours.
As solar generation declines in the evening, consumers increasingly return to the grid. This can create a sharp increase in electricity demand over a relatively short period.
Battery storage can help manage this imbalance by storing electricity when renewable generation is high and supplying power when demand rises.
According to ISMO’s modelling, adding BESS can improve the financial returns of renewable energy projects up to a certain level of storage capacity.
Following consultations with potential participants and other stakeholders, a minimum BESS requirement of 10% was selected.
ISMO also found that participants could potentially improve project financial viability by installing storage capacity above the minimum requirement.
Bidding Timeline and New Complaint Mechanism
Nepra has also introduced changes to the bidding timeline.
For the first ISMO auction, participants will have two months to submit their proposals after the request for proposals is published.
The two-month period will be fixed and cannot be extended.
For subsequent auctions, bidders will have one month from the publication of the RFP to submit their proposals.
Nepra said the longer period for the first auction is intended to provide flexibility because many potential participants may require additional preparation for the new process.
The amendments also establish a three-member grievance redressal committee.
The committee will be headed by the managing director of the Private Power and Infrastructure Board (PPIB) and will include two independent directors from the ISMO board.
The committee will deal with complaints and grievances related to the auction process.
Private Sector Seeks Greater Transparency
The private sector had raised concerns about the existing mechanism for handling auction-related complaints.
Under the previous system, the auction committee was responsible for evaluating bidder eligibility and dealing with grievances concerning those evaluations.
Private-sector stakeholders argued that an independent forum should handle complaints separately from the auction committee.
They said this would help avoid a potential conflict of interest and strengthen transparency and credibility in the bidding process.
ISMO also noted that international electricity markets have adopted different approaches to integrating battery storage.
Mature markets generally provide detailed information and allow market participants to determine the appropriate storage solutions themselves.
Developing markets, however, have increasingly introduced mandatory BESS requirements.
ISMO cited India, the Philippines, China and the Dominican Republic as examples of markets that have adopted mandatory battery-storage requirements.
The regulator’s latest decision therefore marks a significant step in Pakistan’s renewable-energy auction framework, placing battery storage at the centre of efforts to manage the country’s growing solar and wind generation capacity.
