World Bank extends solar project’s closing date – Business

ISLAMBAD: The World Bank has extended the closing date of the Sindh Solar Energy Project (SSEP) from September 2023 to July 2025 since the implementation of the project approved in 2022 remained unsatisfactory.

The project has been significantly delayed for several reasons, including a two-year delay in appointing a full-time Project Management Unit (PMU), the impact of Covid-19, the 2022 floods and the weak capacity of the PMU.

The latest project implementation report says the extension to the project’s closing date is required to allow the project to meet its stated development objectives, in light of the delayed project implementation. The extension will allow the PMU to extend ongoing contracts promptly, mitigating further delays and complications.

The objective development of the project is to increase solar power generation and access to electricity in Sindh. The International Development Association, the soft-loan window of the World Bank had approved $100 million for the project, out of which $21.79m has already been spent.

The World Bank restructured the project in response to the request made by the Economic Affairs Division in March this year to extend the closing date of the project by 22 months. The implementing agency, Energy Department of the Sindh government, has prepared a revised PC-1, which reflects the requested extension of the project close and also proposes a reallocation of funds between components, project design changes, and the inclusion of incremental operational costs in the financing agreement.

The changes will require a Level 1 restructuring, which will be initiated once the implementing agency has the final version of the PC-1 duly approved and minuted. The revised PC-1 was cleared by Ecnec last week. The agreed changes are expected to be incorporated by the client and formally communicated to the World Bank.

The solar project aims to support the deployment of solar power in Sindh spanning three market segments: utility-scale, distributed generation, and at the household level. Public funding would be used to leverage private sector investment and expertise in the three segments, with an emphasis on long-term sustainability, developing domestic solar photovoltaic experience, and the emergence of self-sustaining markets.

Under the project, a series of solar parks is to leverage private sector development of up to 400MW of solar photo-voltaic through the use of competitive bidding, starting with an initial 50MW pilot project. The project involves the installation of 20MW of distributed photo-voltaic on the rooftops and other available space on and around public sector buildings in Karachi and Hyderabad.

The project will scale up the provision of solar home systems by commercial solar solution providers in areas with low access to electricity, reaching 200,000 households, equivalent to 1.2m people, and a range of capacity-building and technical assistance activities to support the design and implementation of the project.

The project will introduce and showcase international best practices with renewable energy auctions, reduce the headline cost of solar deployment, create sustainable business models for potential replication in other provinces, build institutional and private sector capacity, and identify opportunities for future renewable energy deployment that address issues of grid integration.

The project will introduce and showcase international best practices with renewable energy auctions, reduce the headline cost of solar deployment, create sustainable business models for potential replication in other provinces, build institutional and private sector capacity, and identify opportunities for future renewable energy deployment that address issues of grid integration.

The project is designed to help steer Pakistan towards a lower carbon path to development.

Progress on renewable energy in Sindh has been slow, with wind development primarily, and solar photovoltaic development primarily in Punjab. Until 2016, the National Electric Power Regulatory Authority (Nepra) provided an upfront tariff for solar and wind power, equivalent to a feed-in tariff, but in 2017 the regulator announced that future solar and wind projects would be awarded tariffs through competitive bidding. So far no solar or wind capacity auction has yet been launched.

Published in Dawn, July 24th, 2023

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