Solar energy in Pakistan at a pivotal node

BEIJING, Apr. 12 (China Economic Net)– In Ishaq Jokio, a small settlement just off the highway in Sindh, unlike many other parts in the province where people suffer from darkness and heat when power cuts last for hours during the peak power consumption in summer, residents here are not waiting wistfully for the electricity to arrive.

The Indus Earth Trust (IET) has been involved in programmes to improve livelihoods by promoting green energy here. Villages were selected according to a needs assessment survey, while the villagers provided the land where the 19kilowatt mini-grids were installed. In this hamlet caressed by the sea breeze from the Arabian Sea, panels bred prosperity.

Seeking a turn: import burden & booming demand

Currently, more villages have not had such good fortune. It is shown that Pakistan’s energy problems are not new but have been exacerbated manifold by the Russia-Ukraine conflict and the global supply crisis. Pakistan’s fuel import bill surged to USD 23 billion in the FY 2021-22, a 105 percent increase from the previous financial year, which is nothing more than worse for Pakistan's foreign exchange gap.

Power generation project in Pakistan [Photo provided to CEN]

“Solar power generation has made a huge contribution to the global fight against climate change, which is an excellent choice for a climate-vulnerable country like Pakistan,” Liu Yiyang, Deputy Secretary-General and Press Spokesperson of China Photovoltaic Industry Association (CPIA), told CEN. Data in the State of Industry reports from the National Electric Power Regulatory Authority (NEPRA) shows that homes consume 50 percent of the total electricity delivered. This demand is largely driven by cooling and lighting, which is estimated to increase from 106 terawatt-hour (TWh) in 2020 to 234 TWh in 2030-a 121 percent increase. To a great extent, it would deteriorate by average temperature rise due to climate change.

Multiple factors reflect an imperious need for transformation of Pakistan’s energy structure. Last August, the government planned to add 9,000 MW of solar energy to the national grid under Solar Energy Initiatives. Not long ago, Prime Minister Shehbaz Sharif announced that solar panels must be installed on the roofs of all government buildings across Pakistan,  which can save 300-500MW of electricity per month. More generally, solar power is the sole electrification source in off-grid areas, and it is helping light homes and streets across Pakistan. A point of no return is impending.

PV expansion: still a drop in the bucket?

Pakistan is embracing photovoltaics at all levels. The country imported about USD 1.2 billion in photovoltaic modules in the last fiscal year. “In 2022, China’s photovoltaic module exports to Pakistan has reached approximately USD 870 million, with a total installed capacity of 3.2GW, a year-on-year increase of 54 percent and 37 percent, respectively,” emphasized LiuYiyang. The Pakistan Solar Association (PSA) forecasted that the country’s import demand for photovoltaic products this year will be around USD 1.8 billion.

Growing number of companies and organizations are catching the tide, showing an increase by leaps and bounds of Pakistan’s solar consumption. “Pakistan’s Solar Energy Market is expected to record a CAGR of 2.5 percent during the period from 2022 to 2027, with Net Metering Based Solar Installations and Power Generation grew by 102 percent and 108 percent respectively,” a KTrade Securities analyst told CEN.

Net Metering Based Solar Installations. Source: Pakistan Economic Survey 2021-22

It bodes well for Pakistan. However, such a skyrocket does not mean that the market is saturated and the demand is being met. NEPRA data showed that Pakistan’s per capita annual electricity consumption of 644 kilowatt-hour (kWh) is among the lowest in the world, which is only 18 percent of the world average, 7 percent of the developed countries' average, and yet, as of December 2022, Pakistan’s total domestic installed power capacity is 43,775 MW, of which photovoltaic installed capacity is 630 MW, accounting for about 1.4 percent only, representing huge opportunities to be tapped.

Source: State of industry report 2022-Nepra

The world has noticed the expandable market with huge potential. A World Bank study in 2020 urged Pakistan to urgently expand solar and wind “to at least 30% of electricity generation capacity by 2030, equivalent to around 24,000 MW”.

The future on the panel: greening CPEC

Lately, PSA sent an official letter, adjuring the federal government to ask SBP and other commercial banks to help in the solar imports through an annual limit of USD 800 million at a time when Pakistan is facing renewable energy sector posting sluggish growth. As Pakistan’s main import source of PV products, it is imperative for Chinese enterprises to play a greater role under the CPEC framework.

At present, out of the USD 144 mln foreign investment in PV plants of Pakistan, USD 125 mln is from China, accounting for nearly 87 percent of the total.

Pakistan and China are a perfect match for collaboration on renewable energy (solar PV) as China is a globally known giant when it comes to renewable energy technology, while Pakistan is in need of moving away from thermal to renewable for power generation, KTrade Securities solar PV industry report indicated.

Apart from behemoth such as Zonergy 9×100 MW solar power project that located at Quaid-e-Azam Solar Park in Bahawalpur, China’s efforts are also reaching millions of households in remote areas in the form of micro-power plants. The Pakhtunkhwa Energy Development Organisation (PEDO) is constructing solar PV mini grid stations to provide electricity to some districts. One of the initial projects is in Jandola, with components for the setup are mainly being imported from China. The mini-grid here would supply electricity to hundreds of shops in Jandola Bazaar, where unannounced load shedding has been a longstanding issue for local traders. Uninterrupted, cheap, green and clean energy will no longer be out of reach for the business community here.

“In 2022, China’s export of PV products exceeded USD 50 billion for the first time, a year-on-year increase of more than 80 percent. Pakistan, as a key emerging market in South Asia, is expected to reach a new level in PV development this year," Liu told the reporter. “Last but not least, supporting systems used to improve power stability should also be developed in parallel. The “source-network-load-storage” integrated model has been started in China’s Qinghai, Xinjiang and other areas with similar climate and terrain to Pakistan. It is entirely feasible to share relevant experience with Pakistani counterparts.”