Solar policy concerns

Prime Minister Shehbaz Sharif tweeted that the coalition government would unveil a comprehensive solar policy soon. These columns have argued for it since the start of this newspaper.

Due to a poor track record and the reliance on donors, policy announcements in Pakistan are taken with a pinch of salt. Let’s hope it is different this time. The taskforce that deliberated on the subject is indigenous. To make it national rather than a federal policy, the approval of the Council of Common Interests (CCI) will be sought. A definite date of announcement has been given — August 1. Hopefully by then, most stakeholders will have been consulted. Finally, there is Shehbaz speed. However, there are a number of concerns, hidden in the very objectives stated by the Prime Minister — cut fuel imports drastically, bring down cost of electricity and provide clean energy.

Take the case of fuel imports. The federal government, the spearheading stakeholder, is committed to make capacity payments for thermal power plants. There are well-entrenched vested interests in oil, gas and coal business and power production that use bureaucracy to continue the import of dirty fuels to feed the plants to make the payments. A PML-N initiative in the past to promote solarisation did not make much headway. Assuming these imports are now cut down and the largest source of power is made to allow greater space to the smallest source of power, the dependence on imports will remain as nearly all solar equipment has to be imported. Promotion of clean solar energy will require cutting cost by elimination of import duties and GST not only on panels, but also on invertors and other accessories. It will also require concessional credit. State Bank’s solar financing facility has been extended, but the rising policy rate has increased the cost. Simultaneously, an R&D unit on the lines of Kahuta project should be set up for the low-cost and competitive manufacture of the entire range of equipment locally. This is essential as technological change in this field is extremely rapid. The work done at Lahore’s engineering university may guide this process. This learning by doing should be supplemented by imitation through joint ventures with firms from China and other countries.

What happens when there is no sunshine? Storage is a problem and batteries are costly. Complete dependence on solar energy is not possible. Net metering has been allowed to consumers on the main grid, but corruption and unregulated quality of panels need to be addressed. The policy also needs to encourage sub-grids. Off the main grid, agriculture and the rural and remote areas have the greatest to gain. Rural Support Programmes have already demonstrated the success of micro credit based solar tubewells for irrigation and drinking water. Scaling it up should be a key element of the policy. A research question for the proposed R&D unit will be to minimise the use of agricultural land for the panels, besides developing solar-powered tractors and other implements. Many households and shops in rural and remote areas are already using low quality panels produced in this emerging informal activity for 1-2 lights and a fan. Punjab’s scheme of free electricity for 100 units needs to be solarised. At the proposed CCI meeting, all provinces should commit to provide free solar panels producing the equivalent of 100 units. A similar scheme should be implemented through rural support programmes for the off-grid consumers. For all else, concessional and micro credit is the route.

Finally, solarising offices is a good gesture, but banning new fossil fuel plants will demonstrate commitment.

Published in The Express Tribune, July 15^th, 2022.

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