ISLAMABAD: National Electric Power Regulatory Authority (Nepra) has approved, with modifications, amendments to the electricity wheeling auction process proposed by the Independent System and Market Operator of Pakistan (ISMO), making battery energy storage systems (BESS) mandatory for solar and wind projects participating in the first auction. Under the approved amendment, solar and/or wind projects will only be eligible to participate if the firm capacity of their co-located BESS is at least 10 percent of the firm capacity of the associated renewable generation facility. The BESS and renewable generation firm capacity will be determined and verified under the Market Commercial Code and relevant Commercial Code Operating Procedure. Nepra said the first wheeling auction quantum has been increased from 200 MW to 400 MW with the approval of the Ministry of Energy (Power Division). For the 400 MW auction, ISMO estimates that the 10 percent BESS requirement would represent around 40 MW of BESS firm capacity and approximately 160 MWh of storage energy capacity, subject to the applicable discharge-duration requirement. READ MORE: ISMO seeks amendments to power auction process framework According to ISMO’s simulations, the mandatory BESS requirement could reduce system-level renewable energy curtailment by around 0. 3 percentage points for wind and 1. 1 percentage points for solar. Its impact on marginal electricity prices is expected to be negligible, while reliability benefits are positive but have not been quantified. Nepra noted that the stronger quantified benefit of BESS emerged at the project level, where storage improves equity returns and helps mitigate curtailment risks. ISMO’s modelling showed that the addition of 10 percent BESS increased the equity internal rate of return (IRR) for both solar and wind projects supplying B-3 and B-4 consumers. The regulator approved the 10 percent threshold for the first auction, despite broader stakeholder support during consultation for a 20 percent requirement. It said a higher mandatory threshold could increase upfront costs and implementation risks and potentially discourage participation, particularly by smaller participants. Nepra directed ISMO to publish its supporting financial model before issuance of the first request for proposals (RFP). Nepra also decided that the 10 percent requirement would be treated as an initial-phase measure, rather than an escalating or permanent threshold. ISMO has been directed to assess market participation and competition, BESS capital and operating costs, technical performance, availability, utilisation, charging and discharging behaviour and the contribution of storage to renewable energy integration before submitting a detailed proposal to the authority. The regulator justified limiting the mandatory storage requirement to solar and wind projects on the grounds that these technologies are contributing to the duck curve, ramping and curtailment challenges. It observed that BESS can readily be co-located with renewable generation, while pumped-hydro storage is location-specific and other storage technologies are not yet commercially established in Pakistan at the required scale. On the auction timetable, Nepra rejected ISMO’s proposal to retain discretion to extend the proposal submission deadline. It instead fixed the submission period for the first auction at two months from publication of the RFP, with the period being non-extendable. For subsequent auctions, participants will have one month to submit proposals. Proposals submitted electronically or in hard copy will remain unopened until the submission deadline expires. Nepra also approved the creation of a three-member Grievance Redressal Committee (GRC) but modified its proposed composition. The committee will be chaired by the Managing Director of the Private Power & Infrastructure Board (PPIB) and include two independent directors of ISMO’s Board. The PPIB representative on the Auction Committee must be a person other than the MD, PPIB, while no GRC member will participate in proposal evaluation or Auction Committee decision-making. Auction participants will have five business days from publication of the provisional list of eligible participants to file grievances, while the GRC will have four weeks to decide them. Its decision will be communicated to the Auction Committee and published, and will be binding for purposes of the auction. Nepra’s determination followed public consultation in which 10 stakeholders, including FESCO, GEPCO, MEPCO, the Rawalpindi Chamber of Commerce and Industry, the Punjab Energy Department and the Khyber Pakhtunkhwa energy development organisation, submitted comments on ISMO’s proposed amendments. The regulator has directed ISMO to incorporate the approved changes into the RFP and other auction documents and make all consequential amendments necessary to implement the determination. Copyright Business Recorder, 2026
BESS made mandatory: Nepra approves amendments to electricity wheeling auction process
RELATED ARTICLES
