ISLAMABAD : While approving Integrated System Plan (ISP) 2025-35 of the Independent System and Market Operator (ISMO), National Electric Power Regulatory Authority (NEPRA) has directed the authorities that continuity of the planning process be ensured, as there was a wide gap after the approval of IGCEP 2022-31. The critical investments in the power sector and the confidence of investors need to be safeguarded
The Authority has excluded the proposed $900 million Battery Energy Storage System (BESS) investment and the K-Electric transmission line targeted for commissioning in 2028 from the approved base/recommended case.
The Authority has recognized that integrated system planning is a continuous statutory process. intended to evolve through successive planning cycles. It is also important that continuity of the planning process be ensured, as there was a wide gap after the approval of IGCEP 2022-31. The critical investments in the power sector and the confidence of investors need to be safeguarded.
According to the determination, the revised Base/Reference Case envisages a total present value cost of $47.08 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 $47.13 billion to $47.08 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.
The representatives of ISMO gave a detailed presentation on the salient features of the submitted ISP-2025 and subsequent addendum. Further, PPMC explained the impact on the consumer-end tariff stating that due to the proposed capacity addition in the base case scenario, the consumer-end tariff will increase to Rs. 37.28/kWh by 2035 from Rs. 34.00/kWh in 2024-25. On the issue of existing surplus capacity and declining demand, it was submitted that the proposed capacity addition in IGCEP-2025 is based on retirement and decommissioning of inefficient plants, expensive imported fuel replacement by RE projects reducing the overall cost of the plan, Committed Projects already at advanced stage development and the system’s reserve requirement. The demand in FY-2026 shows a notable increase which aligns with the forecasted demand. About unrealistic demand projections, ISMO remarked that the demand forecast of DISCOs was used as the starting input. Forecasts were discussed with Special Investment Facilitation Council (SlFC), the Planning Commission and the Task Force. The growth assumptions include captive load migration (-1.000 MW). EV penetration, marginal pricing package, macroeconomic stability, and electrification of heating/cooling loads.
Regarding the non-consideration of projects of the Provincial Govt. and KEL. it was submitted that only those projects were excluded based on the assumption set which were not showing satisfactory progress against the milestones. Retaining such projects would have increased consumer tariffs by approximately Rs. 4.92/kWh. On the low plant factor of low BTU gas projects, it was stated that a minimum annual dispatch level of 50% has been assumed for Uch-Il, Foundation and Engro Power, the dispatch of which remains constrained due to depletion of gas reserves. Regarding the discrepancy in installed capacity of bagasse-based power projects, ISMO acknowledged the same and remarked that it does not affect the optimization results and has been corrected for future iterations. On the observations of project developers/executing agencies regarding CoDs of the power projects, it was submitted that the data was provided by the respective executing agencies which was subsequently revalidated. Any further revision, if required, will be incorporated in the next IGCEP iteration.
ISMO maintained that IGCEP-2025 and TSEP-2025 are fully aligned with each other and IGCEP-2025 served as a primary input for TSEP-2025 preparation. About inclusion of the technology-neutral 40 MW Gwadar project, it was submitted that the project is proposed as a localized backup supply source to improve reliability in Gwadar.
Regarding KOEN’s projects, ISMO submitted that a technical working group constituted by the Secretary, MoE(PD), had decided that projects earlier optimized under the approved IGCEP 2022-31 should be treated again as candidate projects in the current cycle, and that all candidate projects are assessed using the same standard data. It stated that questions about legal rights, contracts, or investor protections should be handled through the proper regulatory and legal channels, not through the IGCEP planning process. It also suggested that IGCEP be prepared every two to three years instead of every year, to reduce the disruption caused to long-term hydropower projects. Lastly, on the request to declare major public-sector projects (such as Diamer Bhasha, Dasu, and Mohmand) as “Strategic” under the National Electricity Policy 2021 and fund them through the PSDP or federal budget instead of consumer bills, ISMO submitted that this is a policy decision that falls in the domain of the MoE(PD) and the Federal Government, and not something ISMO could decide on its own.
NEPRA is of the view that In terms of relevant provisions of the approved Grid Code 2023, the ISMO is required to prepare and submit at least a Ten Year (10) rolling ISP comprising of IGCEP and TSEP every year for consideration and approval of the Authority, not later than the 30th of April each year. Accordingly, ISMO submitted the ISP-2025 comprising of IGCEP-2025 and TSEP-2025, on August 08, 2025, instead of the prescribed deadline of April 30. 2025. resulting in a considerable delay.
In initially submitted IGCEP-2025, under the Reference/Recommended (Low Growth BAU) scenario, a Compound Annual Growth Rate (CAGR) of 2.6% (1.8% with net-metering) has been considered, corresponding to the GDP growth of 3.52%. In the said scenario, the peak demand reaches 35,521 MW (180,605 GWh without net-metering and 167,293 GWh with net-metering) by 2035, from the current peak of 26,950 MW (137.025 GWh) in 2025. In order to meet the said demand, a capacity addition of 26,045 MW (17.485 MW committed + 8,560 MW optimized), along with the retirement of 2,577 MW of the existing capacity. has been considered, resulting in total installed capacity of 62,657 MW. In this regard, it is worth mentioning that the committed capacity also includes 8,120 MW of net-metering. The total projected cost of the additional capacity is $47.13 billion.
Meanwhile, the geopolitical conflict between Iran and the USA severely disrupted electricity imports from Iran, leading to frequent interruptions and deterioration in power supply across the Makran region. This situation created an urgent and compelling need for an alternative source of electricity to meet the demands of the area. However, under the prevailing policy and regulatory framework, all new generation capacity additions are required to be planned through the IGCEP and procured through the subsequent Power Acquisition Programme (PAP). Accordingly, the ISMO, vide Addendum-I, proposed the inclusion of a 40 MW (Net at Site Conditions) stand-alone generation facility for the Makran region, particularly Gwadar, to be procured through competitive bidding. ISMO submitted that extension of the National Grid to the area is presently neither technically nor economically feasible due to the long transmission distance and associated operational challenges. It was further submitted that the existing dependence on imported electricity from Iran has proven unreliable owing to frequent and prolonged outages, adversely affecting the reliability of power supply and hindering the socio-economic development of the region, particularly Gwadar Port.
The Authority has observed the disclaimer contained in IGCEP-2025 whereby ISMO has sought to disclaim responsibility for the integrity, accuracy, correctness, authenticity or completeness of the data, projections and information used therein, as well as for any consequences arising from the same. Such a practice is unheard of and uncalled for. The Authority considers that such disclaimer cannot absolve ISMO of its responsibility to exercise due diligence and ensure that the data, assumptions, projections and analyses used in the IGCEP are reasonably accurate. duly validated and fit for planning purposes. In terms of Regulation 3(7) of the Procurement Regulations, it is the responsibility of the ISMO as system operator to ensure that the project data and costs used for the optimization of any project in the IGOEP are firm, verified and validated. ISMO, being a licensee, is required to comply with the provisions of applicable documents and cannot simply disassociate itself from the responsibilities/functions assigned to it under the same applicable documents. ISMO is hereby directed to ensure that for future iterations of ISP it complies with the provisions of the Procurement Regulations regarding verification! validation of data included in the ISP-2025. For lSP-2025. the Authority assumes that information and data submitted is duly verified and validated. In case any inconsistency or discrepancy is subsequently identified, ISMO shall be held accountable and the Authority reserves the right to initiate appropriate legal proceedings.
The Authority has noted that the submission of ISMO that the transmission expansion requirements and associated costs are yet to be allocated to optimized generation projects and that the proposed transmission cost-allocation methodology is under consideration before the competent forum, which may affect the optimization!ranking of generation projects. Accordingly, the Authority directs ISMO to clearly identify such limitations and their potential impact and ensure appropriate validation and transparency in future iterations of the IGCEP.
The Authority is of the view that the list of committed projects should not be modified through ad hoc additions or deletions. If continued progress is to be made a condition for retaining committed status, the relevant milestones and consequences of non-compliance should be defined and communicated in advance, rather than applying subjective exclusions during a planning iteration.
The Authority has also examined the projected Commercial Operation Dates (CODs) of committed projects and observed repeated slippages in scheduled CODs, which may materially affect generation adequacy and the quantum and timing of further capacity additions. Accordingly. ISMO shall rationalize and realistically assess the CODs of committed projects on the basis of current implementation status, contractual milestones, financing arrangements, construction progress and other relevant factors, in consultation with the concerned executing agencies/project sponsors. soas to minimize the risk of further slippages. The resulting CODs shall be reconciled to the extent required for consistency of the approved plan and shall be kept updated in subsequent iterations.
The Authority considers that the treatment of net metering/net billing in the demand and supply modelling requires consistency, as the same has been modelled on the demand side in the KEL system and on the supply side in the NGC system. The Authority considers that a uniform and clearly defined methodology should be adopted across the planning models to ensure consistency and comparability of the results. The Authority further considers that, given the significance, complexity and its implications for generation, transmission and consumers, the ISP should, in future iterations, be subjected to independent thirdparty technical review/vetting prior to its submission to the Authority. Moreover, the impact of the proposed plan on consumer-end tariff should be appropriately quantified and incorporated in the main report of the ISP in future iterations, rather than being explained or supplemented during the hearing process. In consideration of the said, the Authority directs that these aspects be addressed appropriately in the subsequent iterations of the ISP.
The Authority has observed that TSEP-2025, instead of being a fullfledged iterative document, is merely an addendum to TSEP-2024. It is also pertinent to mention that, following submission of ISP-2025 and subsequent professional-level meetings with NGC and ISMO, it was noted that approximately ten (10) grid stations/schemes have been dropped from the earlier plan, while at least six (06) transmission projects have been reassessed/revised in terms of their scope and/or requirements. In this regard, NGC shared the revised scope of TSEP-2025, which has been duly considered by the Authority.
The Authority has further observed that TSEP-2025 requires alignment and reconciliation with IGCEP-2025. particularly with regard to the quantum and timing of generation additions and the corresponding transmission infrastructure. Generation and transmission expansion are interdependent components of the ISP and shall be planned in a coordinated manner to avoid stranded or underutilized generation capacity, system constraints and unnecessary burden on consumers. TSEP-2025 shall also be aligned and reconciled with the approved DIPs of the DISCOs and the Transmission Investment Plan (TIP) of NGC. Accordingly, the Authority directs ISMO to ensure that, in future iterations, the TSEP is fully aligned with the approved DIPs of DISCOs and the TIP of NGC. based on consistent demand and system requirements. In this regard, the Authority considers that there shall be no exception to such alignment, and any deviation, where unavoidable, shall be specifically identified, technically justified and brought before the Authority for consideration.
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 $900 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 $900 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 $10.64 billion, but following review and updated demand information, the estimated requirement was reduced to approximately $9.18 billion.
The revised plan comprises about $4.30 billion of ongoing/already planned transmission projects and $4.88 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. Ends
