Battery storage made mandatory for power auctions

Pakistan's power sector is set to implement a mandatory Battery Energy Storage System (BESS) requirement for future auctions of surplus power capacity. This decision aims to tackle the persistent "duck curve" challenge and enhance grid stability.

The government plans to auction 800MW of surplus power capacity, and the Independent System and Market Operator (ISMO) has proposed that all auction participants must include a BESS. This BESS must constitute a minimum of 10% of the firm capacity for any solar or wind generation technologies included in their bids. The goal is to mitigate grid issues such as power curtailment and the significant drop in electricity demand during specific periods, often referred to as the duck curve.

ISMO's proposal, submitted to the National Electric Power Regulatory Authority (Nepra) for approval, emphasizes that this mandatory BESS inclusion will not only address grid challenges but also improve financial returns for auction participants. Extensive modeling by ISMO suggests that integrating BESS can lead to increasing returns, with higher BESS capacity potentially yielding greater financial benefits.

Stakeholder consultations and modeling indicated support for a minimum mandatory BESS requirement to ensure financial viability. The ISMO noted that while mature energy markets allow market players to make their own decisions regarding BESS integration, developing countries like India, the Philippines, China, and the Dominican Republic have successfully implemented mandatory BESS requirements. This approach is seen as crucial for enhancing grid flexibility in Pakistan's developing market.

“

This proposal is being made in order to not only address grid challenges including curtailment and duck curve but also beneficial for the auction participants as it improves their returns.