Alternative energy: Despite prices plummeting, solar power sees little growth

Industry experts see good long term prospects, but products remain too expensive for most.

KARACHI:

Despite a 50% decrease in the price of solar panels over the course of the past year, companies selling solar energy solutions claim they have not seen a commensurate increase in sales, with most average Pakistani consumers still wary of the technology.

While prices are still too high for most consumers, one of the biggest problems the industry struggles with is the lack of quality control, with many companies selling substandard products, which in turn creates suspicion of the technology and limits the growth prospects of other companies that are more quality-conscious, says Umair Anwar Khan, head of the solar power division at Adaptive Technologies.

“There are companies that make substandard solar systems. People are attracted to these companies for their cheap price,” he said. “When the equipment fails to deliver they lose trust in solar-power industry as a whole. Customers, therefore, are hesitant to buy our products which are relatively expensive.”

Prices seem to be another major concern, despite the fact that the average price of photovoltaic cells have plummeted over the last year as subsidies by several European governments have spurred demand. A solar-power system for a home that would have cost $900 last year may cost as little as $500 this year. Yet even these prices may be too high for most.

“We receive many phone calls every day but after hearing the prices, many just don’t buy them,” said Umair, who says that his company has not seen dramatic increases in sales.

Others, however, report a difference scenario, particularly in specialised products.

“We have seen an increase in our sales, especially in the air-conditioner units,” said Zafar Iqbal, a manager at the Crest International Trading Company, which deals in solar equipment.

The solar powered AC unit, Iqbal said, costs $612 (Rs53,250). He added their sales are increasing in both industrial and residential areas, though he was unwilling to provide precise figures.

Regardless of whether their sales are increasing or decreasing, however, most industry players believe that the long term prospects for solar power in Pakistan are good – and they put that down to the continuing power crisis.

“We might see some changes in a year or so. People are sick of Wapda and they want to get rid of dependence on it,” said Shehzad Naveed, a business development manager at Akhtar Solar Ltd, an Islamabad based solar-power company. “Certainly, there is a huge scope for solar power business and people will turn to it.”

Solar power currently costs an average of approximately Rs21.75 per kilowatt-hour, which is more expensive than even the oil-fuelled power plants in the country, which produce power for about Rs18 per unit. Yet it is far cheaper than the diesel generators that many industrial units use as backups for their electricity generation during power outages. Those cost most factories an average of about Rs32 per unit.

Despite the high price differential, however, solar power companies feel their product still has potential: the grid may provide cheaper electricity, but it also fails to provide it for several hours a day, averaging more than eight hours of outages in most parts of the country.

Some industrial units use much cheaper gas-fired generators, which cost about Rs5.5 per unit, but in Punjab and Khyber-Pakhtunkhwa, cannot run for about four days a week due to gas rationing. That may eventually prompt many to just give up on the grid altogether and go for a solution they can control themselves.

“If we want dramatic changes in our lifestyle, we need to change ourselves,” said Naveed.

Published in The Express Tribune, November 7^th,  2011.