The future of introducing solar energy with the Power Purchase Agreement (AAE) could be a game change deal for Pakistan`s solar industry in the early years and for consumers in the long term, the company said. The meeting discussed several policy areas, including cogeneration by the sugar industry and renewable energy policy in 2006. Various energy development projects were also reviewed to diversify the existing energy mix in the country, including wind, solar and hydel energy projects. He said the revised national electricity policy and national electricity plan would soon be submitted to the Council of Common Interests (CCI) for consideration. As part of the plan, it was decided that electricity capacity should be increased every year on the basis of demand and supply and taking into account the needs of different sources – hydropower, solar, gas, LNG, coal, nuclear energy, etc. – in order to ensure that public procurement is not forced as emergencies. He said the additional electricity capacity would be purchased through tender and their contract term would also be set at 15 years instead of the existing agreements for 25-30 years. Inamur Rahman, CEO of Reon Energy Limited, said: “The ECA`s financing model is a third-party ownership model that has been successfully used in developed markets. Such models represent a huge opportunity to develop new businesses and reduce energy costs for existing ones. Pakistan has a lot of sunshine that can be used more effectively thanks to such funding.¬†ISLAMABAD: Faced with the threat of a capacity trap, the government decided on Tuesday to significantly change its energy policy and refuse electricity purchases guaranteed by future private producers. Conversely, the government will only guarantee electricity purchases from projects executed by public bodies on a “Take or Pay” basis. This means that the state would be responsible for paying for the capacity and energy of an available facility, even without actually drawing electricity, as is currently the case.

This will protect energy projects currently being implemented and those to come under the China-Pakistan Economic Corridor (CPEC). The meeting decided that the agreements reached by the government with private sector investors would be based on “take and pay”. This means that the government would only pay for units from private projects and would not be required to pay for capacity availability. This would primarily affect small renewable energy projects, such as small hydro and luggage projects and other projects that are not considered “base load projects”. “Why would the government guarantee electricity purchases, it should be based on demand and supply,” Leghari briefly told the Senate. He said the government was working with the Securities and Exchange Commission of Pakistan (SECP) to ensure that electricity would be traded like any other commodity within six months. This concept is widely hailed in the U.S. and most users avoid investing in the project to use AAA models, Rahman added.