Pakistan’s climatic conditions are ideal for the utilization of solar energy at its maximum level. Geographically, Pakistan lies in the sun-belt and receives massive amounts of sunlight all through the year. Therefore, it is important to exploit the existing solar energy resources. Solar energy can lessen the pressure on the federal government which is importing expensive fossil fuels, especially oil and RLNG thus can be helpful in reducing the circular debt. The use of solar energy is not only limited to solar PV but can also be used for solar water heaters, solar geysers, solar cookers and solar pumps.
Solar PV Rooftop market potential for Pakistan is assessed as over 10,000 MW by taking total area under the urban settlements. It seems that solarization of rooftop has emerged as an achievable target for residential, commercial and industrial sectors. Various incentives are available in Pakistan for the installation of solar PV system for example soft loans (concessional financing) and net metering are the two key concessions.
As we know, solar technology has emerged as a potential technology to address various issues related to fuel based power plants and can help reducing the reliance on imported fuel based energy. Besides reliance on imported fuel, climate change threats are also very much there where solar power can help reducing the greenhouse emissions. There is no doubt that solar PV energy is one of the cleanest sources of electricity and it will remain cleanest and cheapest.
The Rooftop solar systems are smaller PV systems in comparison to ground mounted ones, installed on rooftops of residential, commercial or industrial buildings. The electricity generated from such systems can either entirely be used for self-consumption with the net metering approach. Net metering policy was introduced to encourage self-consumption of electricity generated from the solar rooftop when there was a serious shortage of electricity in the country. The government has announced several initiatives to promote renewable energy. Direct and indirect tax benefits such as sales tax waiver, excise duty and and custom duty exceptions have also been given.
Solar energy technologies have made significant progress in recent years and are considered as an option for meeting energy needs in a sustainable manner. The main barriers faced by rooftop solar sector include lack of awareness among the consumers about the system, lack of manufacturing facilities and skilled workforce, high upfront cost and lack of business models and regulatory challenges. There are so many installers in the market these days and all of them are not giving quality work. Many who have installed solar system are facing challenges in getting the desired results.
Consumer’s awareness about the rooftop solar project and its market acceptance is the most significant development we see these days. The consumer has now greater affordability and awareness about their rights and they are also facilitated with dynamic policy instruments which are consumer friendly.
However, one aspect which is not fully understood and exploited is that being the cleanest source of energy, its climate change imperatives are not fully understood and utilization of carbon credits. Pakistan imports all the solar equipment (inverters and panels) mainly from China. The way solar has been installed, Pakistan has made yet another critical mistake by not pushing solar manufacturers to install manufacturing plants in Pakistan. Manufacturing companies in the solar sector should be given subsidies and incentives, which will have a long term benefit to the economy. In a solar PV, the emphasis is on improving the energy output of PV cells and efficiency of cell production. China, USA, Japan and Europe have been the largest centers for R&D in solar. Pakistan doesn’t need to have R&D in solar sector, just engage good equipment manufacturers and invite them to have manufacturing facilities in Pakistan. With the phenomenal growth taking place worldwide and dependence on imports is growing whereas corrective measures are also needed. Pakistan should take initiative in promoting manufacturing of solar equipment in the country. For this purposes, if government has to provide capital at very cheap rates for investment purposes that would be worth investment. Though this should have been done 5/6 years back but its never too late.
Rooftop solar installation technology in urban or rural areas requires intervention for (i) grid connected solar installation; (ii) solar system synchronized with diesel genset (iii) off-grid solar installations with battery back-up. Designing of a rooftop solar system according to the local conditions requires basic engineering skills. A good design would integrate the location specific parameters with rooftop solar system, therefore it has a great potential to become a job creation industry. Skill workforce requirement for installation, maintenance and repairs is expected to grow in future. In Pakistan these days, we see so many companies and individuals doing the solar installation work. Where most of them are not even properly trained or qualified and are just electricians. One of the reasons for having such unqualified but skilled people is that, installation of a solar system at a residential place is simple and straightforward work, which doesn’t require much specialized expertise.
Capital cost of rooftop solar system is presently estimated as PKR 100/watt (on the lower side), which is relatively affordable now. The payback period is 2 years these days because of high cost of electricity of a DISCO. On a commercial basis, the success of a solar system (rooftop or ground mounted) remains dependent on new business models evolved from time to time to overcome the cost barrier. At present three types of business models are envisaged;
(i) Self owned, the roof owner owns the PV system and electricity generated. It is called CAPEX model and the risk is of the owner who invests in the system.
(ii) Third party ownership, in which third party or a developer bears the cost of solar rooftop and sells to customer at a rate lower than grid tariff. This is called OPEX (operational expenditure) model because developer which is also renewable energy company pays for the system for specified number of years and also takes the risk. Third party investment model has only 5 percent share at present in Pakistan. It is yet to pick up because of high contract default risks arising from rapid declining cost of solar energy.
(iii) The third is Lease model in which equipment supplier leases the system to a customer and pays for it overtime.
To make solar sector an attractive proposition, State Bank of Pakistan has joined hands with the banks and financial institutions to provide soft loans. New business model for rural areas & villages are also proposed to increase the coverage of rooftop solar system in Pakistan. Generally losses due to longer transmission lines require to reach remote villages thus increases the cost of electricity in the rural areas.
Though high growth is expected in rooftop solar systems in coming months and cost will further reduce as well, it is to be noted that unlike thermal power plants, rooftop solar generation is consumer dominated and therefore peoples’ participation and acceptance are critical issues for its success. At the national level, manufacturing capacity, investment in R&D, investor friendly environment, skill development, low voltage grid connectivity of variable solar resource and regulatory decisions are major challenges to be resolved. As the penetration of rooftop solar is increasing therefore, manufacturing capabilities of solar modules within Pakistan should be initiated. Whereas in skill development, it can provide work environment for engineers, manufacturers, suppliers, repairs, maintenance, and testing facilitators.