ISMO plan okayed by power regulator

ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) has approved the Integrated System Plan (ISP) 2025-35 of the Independent System and Market Operator (ISMO), but excluded the proposed USD900 million Battery Energy Storage System (BESS) investment and the K-Electric transmission line scheduled for 2028 from the approved plan. The Authority approved the ISP-2025 to the extent of the revised Base/Recommended Case of the Indicative Generation Capacity Expansion Plan (IGCEP)-2025, together with the revised scope of the Transmission System Expansion Plan (TSEP)-2025, subject to redressal of a number of observations and directions issued by NEPRA. The decision represents a significant regulatory intervention in the country’s long-term generation and transmission planning, as NEPRA has raised concerns over demand forecasting, project categorisation, data validation, transmission planning, renewable integration and the treatment of battery storage. READ MORE: ISMO starts data collection for IGCEP 2027 According to the determination, the revised Base/Reference Case envisages a total present value cost of USD47. 08 billion over the planning horizon. The plan covers FY2025-35 and envisages substantial generation additions, with the revised optimisation incorporating the 269 MW JCM Wind-Solar Hybrid Project at Dhabeji. The JCM project, comprising 95 MW solar and 174 MW wind, was optimised for induction in FY2027 after revised technical and financial parameters were provided. Its inclusion reduced the overall optimised wind capacity and brought down the Base/Reference Case cost from USD47. 13 billion to USD47. 08 billion. The original IGCEP Reference Case had projected peak demand of 35, 521 MW by 2035, compared with 26, 950 MW in 2025. It envisaged capacity additions of 26, 045 MW, including 17, 485 MW of committed capacity and 8, 560 MW of optimised capacity, while 2, 577 MW of existing capacity was scheduled for retirement. Total installed capacity was projected at 62, 657 MW. However, NEPRA expressed serious reservations over the demand assumptions underpinning the expansion plan. The Authority observed that demand forecasts are a central planning input because they determine the quantity and timing of generation and transmission capacity and, consequently, the costs ultimately borne by consumers. It noted that recent declines in grid demand, increasing penetration of rooftop and distributed solar, captive generation and consumer-level storage require forecasts to be based on realistic and verifiable consumption trends. NEPRA directed ISMO to strengthen future demand forecasts through consultation with DISCOs and relevant stakeholders, incorporating actual and spatial demand data, behind-the-meter solar installations, captive and distributed generation, net-metering/prosumer capacity, consumer-level BESS and appropriate sensitivity analysis. The regulator also rejected ISMO’s attempt to disclaim responsibility for the integrity and accuracy of data used in the IGCEP. NEPRA said such a disclaimer was “unheard of and uncalled for” and held that ISMO, as the licensed System Operator, remains responsible for ensuring that project data, costs, assumptions and analyses are properly verified and validated. The Authority warned that if inconsistencies or discrepancies are subsequently identified in the data submitted for ISP-2025, ISMO could be held accountable and NEPRA reserves the right to initiate appropriate legal proceedings. NEPRA observed that ISMO had treated USD900 million of BESS investment as a committed infrastructure requirement across planning scenarios, while the cost had not been incorporated into the generation optimisation exercise. The Authority said the proposed BESS requirement required further technical and economic substantiation, including optimal sizing, duration, technology, geographical location, reliability requirements, congestion management, costs and benefits, as well as the potential impact of consumer-level BESS deployment. NEPRA therefore did not approve the proposed USD900 million BESS investment at this stage and directed ISMO to undertake a comprehensive technical and economic study to establish the actual requirement, optimal capacity, operational application and cost-effectiveness of BESS. NEPRA also directed ISMO to treat the Riali-II Hydropower Project as a committed project, noting that the project had achieved approximately 90 percent physical progress. The Authority observed that the earlier deadline for achieving financial close and commercial operation was not practically achievable and that the project had made substantial physical progress. It therefore considered it appropriate to include Riali-II as a committed project in IGCEP-2025. The Authority separately examined the status of projects that had previously been declared committed but were subsequently dropped from the current IGCEP. It held that projects included as committed under the CCI-approved assumptions could not simply be removed through a later change in planning assumptions. NEPRA said such projects should remain in abeyance in the current ISP, neither treated as committed nor excluded, until the next iteration. ISMO has been directed to place any proposed changes to the committed-project assumption set before the appropriate competent forum. NEPRA also approved a revised scope of TSEP-2025 after lower-than-previously-projected demand resulted in several transmission schemes being dropped. The determination notes that the original TSEP had estimated transmission investment at about USD10. 64 billion, but following review and updated demand information, the estimated requirement was reduced to approximately USD9. 18 billion. The revised plan comprises about USD4. 30 billion of ongoing/already planned transmission projects and USD4. 88 billion of newly proposed projects. NEPRA directed ISMO to ensure that future TSEP iterations are fully aligned with the approved Distribution Investment Plans of DISCOs and the Transmission Investment Plan of NGC. Any deviation is required to be specifically identified, technically justified and brought before the Authority. The line had been projected for commissioning in 2028, whereas NGC and ISMO indicated that approximately five years could be required for its implementation. NEPRA directed ISMO, in coordination with K-Electric and NGC, to expedite implementation and commission the transmission facility at the earliest possible date in view of K-Electric’s supply requirements. The 2028 K-Electric transmission line has, however, been excluded from the approved revised Base/Recommended Case. NEPRA directed ISMO to make future planning exercises substantially more transparent by including all material input parameters, assumptions, source data and modelling criteria in the ISP. It also directed ISMO to reconcile differences between its assessment of the impact of the ISP on consumer-end tariffs and the assessment provided by PPMC, and to clearly quantify the resulting tariff impact. Differences between tariff assumptions used in the IGCEP and tariffs determined by NEPRA must also be reconciled or clearly justified. The regulator further directed that future ISPs should undergo independent third-party technical review/vetting before submission to NEPRA. It also ordered a uniform methodology for treatment of net metering/net billing across the NGC and K-Electric planning models. NEPRA has also ordered ISMO to rationalise the commercial operation dates of committed projects in light of their actual implementation status, contractual milestones, financing arrangements and construction progress, in order to minimise the risk of further delays. The Authority emphasised that generation and transmission expansion must be planned together to avoid stranded or underutilised generation capacity, system constraints and unnecessary costs for consumers. It further directed ISMO to ensure that future iterations contain a clear compliance matrix showing action taken against every NEPRA direction and the resulting changes in planning assumptions, methodology, modelling and results. NEPRA ultimately approved ISP-2025, comprising the revised Base/Recommended Case of IGCEP-2025—excluding BESS and the K-Electric transmission line in 2028—along with the revised scope of TSEP-2025, subject to compliance with the Authority’s observations and directions. Copyright Business Recorder, 2026

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