Pakistan, with its vast sun-kissed lands, is an ideal market for harvesting solar energy. It enjoys some of the best sunshine in the world for 300-odd days and is energy hungry with pronounced supply shortages.
Despite the availability of this technically useful solar energy resource, Pakistan’s solar market remains relatively underdeveloped when compared to that in other countries in the region. A host of technical, economic and institutional barriers have constrained widespread deployment of solar technology in Pakistan.
Pakistan’s energy mix has come to be dominated by oil and gas as the government, thus far, has paid little attention to harnessing indigenous renewable energy resources. Apart from hydropower, which contributes just over 28 per cent to our overall energy mix, the share of other renewable sources of power has been negligible. This has imposed significant burden on our national accounts, exacerbating the economy’s structural account deficit.
Lack of local capacity has been a persistent barrier to exploiting solar energy in Pakistan. Pakistan does not have a local solar manufacturing industry, as we remain dependent on imports of critical raw materials and components from China and Europe. There are very few academic centres or innovation cells researching into materials, applications, business models or infrastructure financing.
In the last two years, a number of private companies have emerged as importers and distributors of solar equipment, catering largely to the urban market. They mostly operate on a small scale, with only few having the expertise to provide adequate maintenance services, resulting in dwindling customer confidence in the technology. This, coupled with high upfront costs and lack of availability of easy and consistent financing options, has further slowed the uptake of solar.
The present government has taken measures to increase solar diffusion in the country through commissioning of solar PV plants that will directly feed into the grid. However, these are peaking plants with large investment costs and long payback periods thereby rendering financing of such projects challenging. These conditions, along with rising power tariff and consumption needs, make off-grid solar applications in Pakistan comparatively more economically viable than large on-grid solar plants.
In Pakistan more than 50 per cent of the electricity demand comes from residential and commercial consumers. Using solar energy to power homes will abet demand reduction for grid electricity, which has been growing exponentially in the last few years. There has been a recent trend among urban residential consumers installing solar panels to augment grid electricity supply. However, this has been limited to less than two per cent of the population, partly because of the nature of investment. A solar home system compared to UPS and diesel generator is a long-term investment, deterring potential consumers. Thus, if solar were to truly take off in Pakistan, there would have to be a cultural change.
Despite the fact that the cost of solar cells has come down considerably in the last three years, the initial investment in solar technology remains relatively high for an average Pakistani consumer, necessitating business models that offer innovative financing options to lower the upfront payment.
Solar is a fast growing technology as countries, both developed and developing, are making investments to increase the share of solar in their electricity generation mix. Pakistan also has undoubtedly large potential for utilising solar energy. It is high time that the government started thinking long-term strategies to tackle the electricity crisis. This unprecedented crisis does not only require supply side options but also compels measures to address the growing demand for electricity. Off-grid applications of solar in Pakistan can certainly play a critical role in lowering electricity demand and lighting up homes in areas unconnected to the grid.
Published in The Express Tribune, August 9th, 2014.