Renewable energy: German firm to set up first solar panel plant in Pakistan

Published: January 8, 2013

Several global experts believe that 2013 will be the year that solar energy becomes economically viable even without any government subsidies. PHOTO: FILE

FAISALABAD: 

German renewable energy company CAE plans to invest more than €100 million (Rs12.9 billion) in setting up the first solar panel manufacturing facility in Pakistan, and the second of its kind in Asia.

In an exclusive interview with The Express Tribune, Shahzada Khurram, the only Pakistani director of the company, shared its plans of becoming a leading supplier of renewable energy equipment in the country. “Pakistan is going through one of the worst energy crises, and it is time to think about renewable energy as a way to make good money in the sector,” said Khurram.

CAE, based in Germany, is owned by four partners, one of whom is Khurram. The other three are Renier Kertess (German), Anton Josef Hotz (Swiss), and Luigi Tassell (Italian). Khurram met them during his time as a student in Germany and Mexico. Khurram himself is from a family that has a background in textile manufacturing.

CAE plans to introduce a type of solar panel that has not been used in Pakistan before and is not manufactured anywhere else in Asia except one place in China. It will build a factory in Faisalabad on land that has been given to it by the University of Agriculture Faisalabad. In exchange, the university gets a 10% share in the company’s Pakistani subsidiary. Manufacturing is expected to start by the end of the year.

Solar energy prices are rapidly becoming more competitive with thermal energy sources. Several global experts believe that 2013 will be the year that solar energy becomes economically viable even without any government subsidies.

The problem with solar panels in Pakistan has hitherto been the fact that the upfront set-up cost is beyond the reach of most customers, even though the costs thereafter are miniscule. To smooth out that the cost curve, CAE has partnered with Faysal Bank and Meezan Bank to offer consumer financing options for people looking to install solar panels in their homes and offices. CAE claims it will offer a 25-year warranty for its products, allowing its customers to get extended time periods on their loans, which will reduce monthly payments.

“We are aiming to make sure that any person who installs the house solar system will have monthly instalments equal to their current monthly electricity bill,” said Khurram. Given the fact that grid electricity in Pakistan is cheap, but unreliable, it is likely that many will find that proposition highly tempting.

The collaboration with UAF has more to it than just the land: the company plans to help set up a new masters programme in Alternative Energy, the first of its kind in Pakistan, to help train enough professionals to serve the growing renewable energy field in the country. The new department at UAF will be called the Punjab Energy Centre for Technology and will have faculty members from Europe teaching courses, arranged for by CAE.

The company is confident that the venture will prove to be financially viable. Adeel Anwar, the finance director of the company, said that he expects its revenues to touch €150 million (Rs19.2 billion) within the first year. CAE officials feel they can then double that number within three years.

The first customer appears to be UAF itself, which is seeking to cut its average monthly electricity bill of approximately Rs10 million down to a Rs5 million instalment for CAE’s solar panels.

And the company appears to have products that are ready even for industrial use. CAE has already sold such a system to three textile manufacturers in Faisalabad: in Sandal Bar Fabrics, Tayyab Group of Industries, and Faisal Fabrics.

Other prospective customers include the city of Lahore for its street lights, and the Punjab government, which wants to convert 5,000-acre in the Cholistan desert into a 1,550-megawatt solar power station to supply electricity to the national grid. And the firm’s experiments in installing solar-panels for tube-wells for farmers also appear to have been largely successful.

Published in The Express Tribune, January 9th, 2013.

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Reader Comments (31)

  • AJ
    Jan 9, 2013 - 12:31AM

    godspeed.

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  • Azeem Iqbal
    Jan 9, 2013 - 12:53AM

    Salaam,

    I am very happy to hear this news but at the same time a bit sad because this was my dream of establishing the first solar manufacturing plant in Pakistan. I got enrolled in Industrial Engineering for the sole purpose of working for this cause. But as now Shahzada Khurram is taking the initiative I wish him best of luck.

    It would be great if someone can connect me to him if I can have opportunity to work with him in anyway in this project.

    Regards,
    Azeem Iqbal
    https://www.facebook.com/azeemi1

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  • Z.Khan
    Jan 9, 2013 - 1:02AM

    Western companies do boast their claims and Pakistanis are trapped to such boasting claims very easily. If it was that viable option why Germany is more inclined towards wind mills to produce the electricity. Before getting fascinated with the project one should know following advertised and well known facts about solar energy.

    A sunny location receives an average of 5.5 hours of sunlight per day each year. A cloudy location receives 2.5 hours per day of sunlight each year. One kilowatt peak solar system generates around 1,600 kilowatt hours per year in a sunny climate and about 750 kilowatt hours per year in a cloudy climate. Solar energy system can provide electricity 24 hours a day when the solar electric modules are combined with batteries in one integrated energy system.Solar modules produce electricity even on cloudy days, usually around 10-20% of the amount produced on sunny days.The typical components of a solar home system include the solar module, an inverter, a battery, a charge controller (sometimes known as a regulator), wiring, and support structure. Typical silicon cell solar module will have a life in excess of 20 years. Monthly average residential consumption of electricity in any country is 1100 kilowatt hours.

    It is true like Africa, Pakistan also enjoys lot of sunshine but relative to cost factor it may not be a viable option for private customers. Compared to solar energy, wind mills have more attractions. Why not to try this method also. What happened to production of electricity from coal? Probably every thing got buried in departmental files. Hopefully Solar energy plan will not face the same fate.

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  • Uzair
    Jan 9, 2013 - 1:14AM

    Yes !! thats the way. The industrialists have potential to buy renewable energy products which can bring them out of the electricity turmoil. The industrialists of Faisalabad and Sialkot both can afford to setup power plants based on solar power harnessed through solar modules

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  • sanwal
    Jan 9, 2013 - 1:23AM

    That’s great news. Welcome to Faisalabad, from a faisalabadi.

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  • Ali
    Jan 9, 2013 - 1:59AM

    Good news and well done! Wish them all the best!

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  • Cosmix
    Jan 9, 2013 - 2:19AM

    Nice…..

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  • Mubashir
    Jan 9, 2013 - 3:43AM

    Renewable energy is the need of the hour. Solar panels. Lose their efficacy because of dust. There are ne cleaning ability. wer panels with self cleaning ability. Beware the excitement. Invest wisely Pakistan.

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  • Maria
    Jan 9, 2013 - 4:55AM

    It doesn’t surprise me that this new venture will be set up in Punjab which is the only stable developing province in the country. With the advent of reliable and low cost solar panels, Pakistan can work itself out of its current energy crisis and improve the environment.

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  • MK
    Jan 9, 2013 - 5:35AM

    @Z.Khan:
    Wind power at small scale is not cost effective. Large scale projects are feasible near Karachi and Peshawar according to a study. So yes, that option should be explored as well.

    Germany does not get even half as much sunshine as most parts of Pakistan, for them wind makes more sense. Since most of Pakistan gets plenty of sunshine, small scale as well as large scale solar projects are a better choice. .

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  • KH
    Jan 9, 2013 - 8:54AM

    Please guys cut this Faisalabadi and Punjab things….good to hear a Pakistani brother taking this intiative for the country.

    Where ever their is oppurtunity we should proceed dont think about Punjab, Sindh, Balochistan and KPK. All are our places since the whole country is ours.

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  • zubair
    Jan 9, 2013 - 10:24AM

    I dont have a detailed knowledge about the solar power thing. But what i have experianced is that to run entire house on a solar energy including airconditiners, you need alot of panels and space besides handsome amount of money…I am an advocate of energy efficiency! Investment should also be in producing low watt equipments, like LED bulbs etc.

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  • Jan 9, 2013 - 10:35AM

    It will build a factor in Faisalabad

    It should read build a factory.

    it will offer a 25-year warrantee

    Warranty not warrantee

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  • Clear Black Bag
    Jan 9, 2013 - 6:59AM

    Solar energy system is too expensive and not easily affordable for every one.If government provides solar energy system on cheap,reasonable and easily affordable rates to every person according to the electricity usage load of house then energy crises can be easily overcome….Recommend

  • Sajid
    Jan 9, 2013 - 3:16PM
  • Pakistani
    Jan 9, 2013 - 4:20PM

    @KH…….no doubt in your comment.Pakistan is ours….build it and take it to the heights of prosperity no matter in which area we live……we are not like indians who have divided their country into north india and south india…we love each and every part of our country

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  • Suheil Siddiqi
    Jan 9, 2013 - 4:36PM

    They will be selling loans like Singer re its Sewing machines. Solar panels are the vehicle for debt.

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  • ahmed
    Jan 9, 2013 - 5:57PM

    @Zkhan for a domestic user putting up a windmill is foolish idea. Plus wind is not favorable in all parts of pakistan compared to sunlight which is more abundantly available, better research before criticizing just for the sake of criticism.

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  • Raj - USA
    Jan 9, 2013 - 10:17PM

    @ahmed:
    @Z.Khan:
    Both of you have some points. Khan is correct is saying that solar energy is not viable for individual homes. What is never said by advocates of solar energy is that the electronics like batteries, charge controllers, etc. have to be replaced as they last for approximately 5 years. The cost of solar panels is roughly 40% of the cost of the entire system and the other electronics, installation etc. works to roughly 60% of the total costs. For powering individual homes you may do away with inverters and can switch to complete DC system (DC fans, DC lights, DC fridge, etc). If you need power in the night you need a battery bank. To charge the battery and also provide power during the day time, you need more solar panels and this increases cost. If you need power for days when there is no sunshine, you need a bigger battery bank and more solar panels. In short, stand alone solar energy for individual homes will not work. It would cost as much as the cost of the home itself, or even more in the rural areas. One good use of solar panels is for irrigation pumps as water can be pumped all day.

    Windmills, though available in smaller sizes cannot be used in urban areas.

    Both solar and wind energy can be useful only in a grid connected system. The system feeds the energy produced directly to grid thereby augmenting the supply to the grid and the consumer draws from the grid. In essence, you are using the grid as your battery. Economically it is not viable to be totally independent of the grid for homes. Even grid connected systems will be economically viable only if the power company buys the power from the solar system at the same rate it sells its own power to its consumer.

    Germany has invested billions of dollars to commercialize solar energy. They were providing billions of dollars in subsidies to commercialize solar energy. These subsidy programs have now come to an end. China brought down the manufacturing costs of solar panels. USA invested billions in developing the technology.

    Rather than looking at solar panels as a solution to solve the energy problem totally, it should be realized that solar power can be used effectively in many places, such as cell phone towers in remote areas, water pumps, etc. Also this should be seen as an entry in the hi-tech manufacturing (though manufacture of solar panels is not that hi-tech these days).

    Interestingly, in the 60′s and 70′s it was the oil companies like BP, Chevron, Exon, Arco, etc. that invested in manufacture of solar cells. At that time, many were saying that the oil companies are investing knowing well that the costs are prohibitive. Their purpose is just to prove solar power will not work and the world will be dependent on oil for ever.

    Today the cost of solar panels has come down significantly. If the costs of the other components could be brought down and made more durable and efficient, solar energy can one day replace the grid.

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  • antanu g
    Jan 9, 2013 - 11:29PM

    @Z.Khan:
    you are way off the mark.no body says that solar energy will totally replace conventional sources.and mind you…Germany does not have solar energy system because it does not get sun light essential to generate electricity… dear please don’t criticize everything just for the sake of it.

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  • Jan 10, 2013 - 3:16PM

    It is good news to the Pakistan market.

    We would like to add to this that Tesla has recently installed its first solar panels assembly unit in Islamabad which is expected to roll out its first panel by 23rd March Insha Allah and the installed capacity at present is around 3 MW per year.

    Solar Electric solution includes domestic ( 2KW to 11 KW ) and commercial / Industrial ( 10 KW to 250 KW 3 phase ) systems. The payback time at current power tariffs is around 3 to 4 years.

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  • Shakeel Tariq
    Jan 10, 2013 - 5:59PM

    Good to know.. Pakistan can be a hub for technology manufacturing because of STILL cheap manufacturing costs.. given the political stability. I remember elders saying that there used to be a transistor/siliconchip manufacturing unit in KotLakhpat area in Lahore back in 60s.

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  • Jan 11, 2013 - 5:05PM

    Using solar energy to generate electricity is one of the greatest achievements by mankind, and is set for even greater things in the future.
    solar lights

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  • Jan 15, 2013 - 2:48AM

    Excellent thinking. Bank can loan to the businesses who can save money by producing their own electricity and pay their installments. Even if they have to put 50% of the investment Businesses will be able start saving after few years once paid the loan.

    The manufacturers give 25 years warranty of 80% efficiency of these solar panels so these solar panel will last for long time. So the return on the investment is huge and it also give the business the opportunity to run their businesses continuously rather waiting most of the time for electricity to turn up after load shedding.

    Saeed Anjum UK

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  • Hassan
    Jan 16, 2013 - 12:16PM

    The only potentially viable market in Pakistan would be if govt. promote Grid-Tied systems. These are less expensive as there is no battery bank, charge controller etc.
    Actually these are the systems which are becoming popular and being employed by all those European consumers.

    But the Grid-Tied system can only reduce your electricity bill, or in bigger perspective, reduce the load on the main grid. It cannot help with loadshedding.

    Honestly speaking, currently, normal UPS with a big battery bank is a better solution for load shedding than the Solar Panels because grid electricity is still way cheaper (Go compare our per unit rate with that in Europe).

    In Europe the main issue that consumer face is not load-shedding, rather the costs/bills so they employ solar panels to reduce costs which is viable for them.

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  • Tariq Naz
    Feb 2, 2013 - 4:55PM

    @Hassan:
    I don,t agree. My brother is living in Germany. They use electricity for domestic use, even they cook their meal on electric appliances. but their bill remains about Rs.8000 only
    So please don,t confuse.
    Lets hope for better future.

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  • Hass
    Feb 2, 2013 - 9:52PM

    @Tariq:
    You can simply look at the oil-prices that EU countries have which is directly proportional to the power costs. They have almost double the oil price right now than what we have in Pakistan.

    May be their Govt. is subsidising this but still the problem remains for the Govt. so it also encourages Solar energy.

    And then a person living and earning in Europe can invest few K’s for his home which we definitely cannot equate in Pakistan.

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  • Feb 13, 2013 - 12:06AM

    Some genuinely nice stuff on this site, I love it.Recommend

  • Feb 26, 2013 - 5:12PM

    I don’t have a enough idea about the solar panels but what i have experienced is that to run entire house on a solar energy including conditioners, you need a lot of panels and space besides good amount of money. There are a few one in Lahore two who provides Solar Panels in Pakistan but they are very very expensive.

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  • Aamir
    Feb 26, 2013 - 7:11PM

    @Usman:
    These days , you can buy A quality panels with expected life of over 20 years for around 90 to 100 Rs / watt.
    The price for off grid is in the range of 200-250 Rs depending on the quality
    and ON Grid ones range from 140 to 160 Rs.

    space required approximately 150 watt / sq meter , so far one KW you need around 6 sq meter

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  • Kingsley Ampah
    Mar 7, 2013 - 5:14PM

    Dear Sir/Madam,

    I understand that you are a manufacturer/exporter of Solar Energy found on your website below: http://tribune.com.pk
    The Projects Development Planning Institute Ghana (PDPI) is urgently in need of your products.

    If you are interested in supplying your products to Projects Development Planning Institute Ghana (PDPI) at good prices, get back to me with your FOB price list which will be tendered to the PDPI Contract project Committee Board for immediate review/approval.

    The PDPI Contract Projects Committee Board will only approve/award this contract to your Company based on your FOB price list.

    Upon the receipt of your FOB price list, I shall tender it to the PDPI Contract Project Committee Board and if they find you capable of executing this contract, I shall furnish you with the total quantity units to supply, contract and payment terms.

    Your urgent response will be highly appreciated.

    Faithfully,
    Mr.Kingsley Ampah
    ampah.kingsley@yahoo.com
    Tel:+233264966331

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