FOUNDATION WIND ENERGY

LIMITED

Captive Solar Power Project

05 March 2019
FWEL- SOLAR PROJECT
BACKGROUND
 In FY 2017, FWEL decided to develop a solar power
project each at FWEL I & II site, similar to FFCEL,
under the following pretense:-
 FWEL to develop solar power project in combined
arrangement with FWEL-I &II
 Solar project to generate electricity during the time of
the day, when wind project is not generating, and feed
in the national grid through FWEL-I&II interconnection
 In to combined arrangement, the overall dispatch will
not exceed 50MW, hence allocated grid capacity will
be fully utilized.
 Levelized Tariff allowed by NEPRA at that time was
US Cents 7.74/kwh

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FWEL- SOLAR PROJECT
BACKGROUND
 A feasibility study was conducted for installation of two solar power systems in
combined arrangement at FWEL Wind farms (similar to FFCEL Solar).
 Technical consultant, M/s OST conducted the interim feasibility report of the
proposed solar projects in Feb 2018 and E&M Committee along with FWEL teams
evaluated the submitted report and found subject solar project unviable due to
following reasons:-
 Uneconomical Solar Project Size in combined arrangement at FWEL-I&II i.e. 10-
20 MW vis-à-vis initially envisaged size of 40 MW.
 Shift in Regulatory Policy regime i.e. competitive bidding from upfront tariff
regime.
 Uncertainty in various cost estimates due to site specific challenges which might
further reduce the returns, subject to confirmation through further studies.
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FWEL- SOLAR PROJECT
BACKGROUND
 FWEL Solar LOI is based on “combined arrangement” and not for establishing a
project on “standalone basis”. Therefore the LOI will need to be changed.
 Keeping in view that the LOI expiry is 02 May 2019, all activities and feasibility study
as per the LOI indicated milestones have not been achieved (feasibility approval
from AEDB within 10 months of LOI issuance). It would be difficult to pursue AEDB to
extend the validity.
 One time extension is granted for 6-months provided feasibility study is close to
completion and there is a delay in completion but only after doubling the original LOI
bank guarantee (Original Bank guarantee is USD 20,000 each for FWEL-I &II hence
LOI extension’s financial impact will cause USD 80,000 (PKR 11.2 Mn) to be blocked
and subject to encashment if LOI is cancelled in future due to non-completion of LOI
milestones).

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FWEL- SOLAR PROJECT
CURRENT SCENARIO/POLICY MATTERS
 In light of the current policy scenario, NTDC is not giving confirmed grid allocation
to wind and solar power projects which are in pre-development stage and is
hesitant to approve grid study and award Power Evacuation Certificate (PEC) to
the projects.
 Based on the decision of CCOE dated 12 Dec 2017, the Ministry of Energy (MOE)
informed that all Renewable Energy projects shall be awarded tariff through
competitive bidding.
 MOE informed NEPRA vide letter dated Dec 17, 2018 that only those projects
shall be developed where either IA or EPA has already been signed.
 In the CCOE meeting of 20 February 2019, GOP has decided that all those
Renewable Energy projects that have the LOI (but not yet awarded tariff) shall be
awarded tariff through competitive bidding.
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FWEL- SOLAR PROJECT
Tariff Evaluation
 Based on the FWEL site conditions and resultant expected high civil cost and
small project size, it would be difficult for the project to compete in competitive
bidding (even at a high 21% capacity factor).

FWEL Solar
FWEL Solar NEPRA current
ROE to match
Mode of Financing Levelized Tariff benchmark ROE
NEPRA
calculated Levelized tariff
Benchmark
Foreign Financing US Cents 5.4/Kwh US Cents 4.4/Kwh 14% 2.50%
Local Financing US Cents 6.5/Kwh US Cents 4.4/Kwh 14% 1.00%

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FWEL- SOLAR PROJECT
RECOMMENDATIONS
 Based on the above the following is recommended;
 Closure of the proposed solar project at FWEL wind farm site.
 Proceed for cancellation of LOI and release of Bank Guarantee
from AEDB (and try to save the 2x USD 20,000 BGs from
encashment).

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FWEL- Solar Project
LOI Milestones
Sr. No. Milestones Time Frame (in Months)
1. Issuance of Letter of Intent (LOI) T0

Submission of complete Feasibility Study to AEDB, comprising of;

(i) Technical study including resource assessment, plant & equipment details,
2. layout and energy production analysis. No later than ten (10) months after issuance of LOI
(ii) Grid Interconnection Study (approved by NTDC)
(iii) EIA / IEE study (approved by provincial Environmental Protection Agency)

Within two (2) months after submission to AEDB. (provided

Vetting and approval of Feasibility Study by AEDB (including verification of any requisite modifications are timely made by the
3. production estimates through third party consultant, if required, cost of which Sponsor(s) and the modified feasibility study is
shall be borne by the Sponsor(s)) resubmitted within 15 days of a letter by AEDB requiring
the modifications)

Tariff and Generation from NEPRA Within four (4) months of approval of Feasibility Study by
4.
AEDB
Within fifteen (15) days of determination of tariff by
5. Acceptance of Tariff by IPP NEPRA

Within fifteen (15) day of acceptance of Tariff by IPP

6. Posting of Performance Guarantee for Issuance of Letter of Support (LOS)

Within fifteen (15) days of posting of Performance

7. Issuance of Letter of Support (LOS) by AEDB Guarantee (PG)

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