by Abdul Waheed Bhutto 4 July 2023
Pakistan can tap into its abundant solar, wind, and hydro resources to establish a sustainable energy supply. Challenges such as fossil fuel reliance, limited grid infrastructure, and financial viability of renewable energy schemes must be addressed. To overcome these, Pakistan can promote local production, invest in grid infrastructure and storage, and develop favorable policies. By doing so, Pakistan can unlock its renewable energy potential, improve energy access, and contribute to economic and environmental goals.
In fiscal year (FY) 2022-23, Pakistan’s electricity consumption reached 84,034 GWh, with the household sector as the largest consumer (46.6%), followed by the industrial sector (28.2%), agriculture sector (8.2%), and commercial sector (7.8%), while other sectors accounted for 9.1% of the total consumption.
To meet its energy demands, Pakistan heavily relies on imports of petroleum products and crude oil. In the July-March period of FY2022-23, petroleum product imports amounted to approximately 6.1 million tonnes, valued at over US$ 5.7 billion. Additionally, the import of crude oil increased by 4.69 percent to $3.86 billion, while the import of natural gas (liquefied) decreased by 14.11 percent to $2.85 billion from $3.32 billion. However, there is positive news as the country’s oil import bill decreased by 11.66 percent to $13.08 billion compared to the previous year. These developments highlight the need for Pakistan to explore alternative energy sources that can reduce its dependence on costly imports.
In recent times, country has made some progress in renewable sector and as a result the share of alternative and renewable energy sources (AREs) has also increased from zero percent in FY2014 to 6.8 percent to in FY 2022. According to economic survey of Pakistan 2022-23, currently, 36 wind power projects of 1,835 MW, 7 solar projects of 530 MW, and 8 sugar mill-based bagasse co-generation plants of 259.1 MW are operating ARE-based projects.
Fortunately, Pakistan possesses a significant advantage in terms of solar energy potential. The country experiences an average solar radiation intensity ranging from 1500 watts per square meter to 2750 watts per square meter for nearly 10 hours each day. This potential is particularly prominent in the southern regions of Punjab, Sindh, and Baluchistan throughout the year. To date, Pakistan has made significant progress in solar energy with an estimated installed capacity of around 400 MW, equivalent to approximately 1.5 million solar panels. China’s exports of photovoltaic modules, reaching USD 870 million in 2022, have played a crucial role in Pakistan’s solar energy expansion.
The government encourages consumers to utilize renewable energy technologies in household, commercial, and industrial sectors in addition to large-scale renewable energy projects. The size of a solar system for individual residential consumers in Pakistan is determined based on their monthly electricity consumption.
According to Umair Aftab Sayyal, the CEO of Ulint Power, it is advisable to install different solar system sizes based on monthly electricity usage. For consumption ranging between 300-350 kWh, a 3kW solar system is recommended. For usage between 500-550 kWh, a 5kW system is suggested, while a 10kW system is suitable for monthly consumption of 1,000-1,100 kWh. The estimated costs for these systems are approximately Rs 600,000 for a 3kW system, around one million for a 5kW system, and about Rs 1.5 million for a 10kW system. These rates specifically apply to on-grid solar systems, considering an average solar energy production duration of 6-8 hours. These prices also include the cost of batteries.
Umair Aftab Sayyal suggests that the market offers a variety of batteries for different sizes of solar systems. Traditional flooded batteries, also known as liquid desktop batteries, are widely used but have a shorter lifespan. Tubular batteries, a more advanced type of lead-acid battery, provide better performance and durability. For solar systems, AGM and Gel batteries are suitable options, with the choice depending on specific needs and preferences. For large-scale installations, high-capacity Two Volt OPZee cells are recommended. Alternatively, Lithium-ion batteries are known for their high energy density, lightweight design, and long lifespan.
According to Umair Aftab Sayyal, for a 5kWh solar system, the estimated cost of liquid desktop batteries and tubular batteries is approximately Rs 50,000. AGM and Gel batteries are priced at around Rs 120,000. Two Volt OPZee cells, suitable for high-capacity systems, are available for approximately Rs 0.5 million. In the market, Lithium-ion batteries, including lithium phosphate variants, are available at a cost of approximately Rs 0.2 million.
In the solar sector, the reliance on imported components, such as inverters, solar panels, and backup batteries from China, is prevalent. However, the industry faces obstacles due to the fluctuating exchange rates between the dollar and the rupee, making it challenging to provide fixed packages or estimates due to the varying costs of imported components.
To address this issue, one solution is for the government to introduce incentives that promote the local production of crucial components like solar panels, batteries, and inverters. Encouraging domestic manufacturing would lead to greater price stability and reduce dependence on imported products in the solar industry. These incentives would not only foster the growth of the local solar sector but also have the potential to enhance affordability for consumers of solar systems.
The revised decentralized announced by the government allows the integration of solar PV projects of capacity up to a maximum of 4 MW at an 11 kV feeder level. The integration of renewable energy into the existing grid infrastructure poses complexities for Pakistan. The country’s infrastructure is less extensive and faces challenges related to outdated transmission and distribution networks in certain areas. In comparison, the grid infrastructure in the United States and the European Union has a higher capacity to integrate renewable energy due to its robustness and advanced grid management systems.
Pakistan’s grid system needs to enhance flexibility and adopt advanced technologies to accommodate the intermittent nature of renewable energy sources. Currently, the country faces challenges such as grid stability, limited interconnection capacity, and technical constraints. To address these issues, efforts are underway to improve grid infrastructure, introduce modifications to the grid code, and implement advanced grid management technologies that facilitate the integration of renewable energy.
The government has introduced supportive policies like feed-in tariffs (FiTs) and net metering to incentivize the adoption of renewable energy. However, upgrading and strengthening the grid infrastructure to accommodate intermittent renewable energy generation require substantial investments. Additionally, the limited energy storage infrastructure poses challenges in managing the variable nature of renewable energy sources.
The variability in renewable energy generation can have an impact on the stability of the power grid, causing issues like voltage fluctuations and frequency imbalances. To address these challenges, it is important to invest in advanced grid management technologies, such as smart grid solutions and energy storage systems.
Currently, small-scale solar or wind power generation facilities with capacities up to 25 kilowatts can be connected to the grid through net metering without requiring a generation license. However, the total capacity of distributed generation is limited to 15% of the capacity of the distribution transformer. In Pakistan, there are currently around 28,000 net metering consumers. As per the economic survey of Pakistan 2022-23, from July to March FY2023, various consumer segments installed net metering-based systems with a total capacity of 355.3 MW. This brings the total installations to 50,656 with an installed capacity of 863.4 MW by March 2023.
Addressing these challenges and investing in grid infrastructure improvements, advanced grid management technologies, and energy storage systems will be crucial for Pakistan to effectively integrate renewable energy into its grid and ensure a stable and reliable electricity supply.
Ensuring the financial viability of feed-in tariffs (FiTs) and net metering schemes is a key challenge in Pakistan. Striking a balance between tariff rates that provide a fair return on investment for renewable energy projects and keeping electricity prices affordable for consumers requires careful consideration of factors like project costs, generation potential, and market dynamics. It is crucial to have adequate financial and institutional capacity to successfully implement FiTs and net metering, including ensuring sufficient funds for tariff payments and incentivizing utilities to comply with the policies. The present approach involves buying solar energy at a lower rate during off-peak times, such as Rs 19.32, and selling it back at a higher rate, such as Rs 35, during peak hours in the evening.
Commercial banks in Pakistan offer specialized green financing schemes, providing loans, lease financing, and credit lines for renewable energy projects. These schemes cover a significant portion of the project cost, including equipment and installation expenses.
In the United States, federal tax credits like the Investment Tax Credit (ITC) reduce the upfront cost of residential and commercial renewable energy systems. States also offer additional incentives such as rebates, grants, and low-interest loans to encourage renewable energy installations.
Efficient grid management and energy storage solutions are crucial for stable power supply from intermittent renewables. A favorable policy and regulatory framework, with clear and consistent policies, supportive regulations, and attractive incentives, help attract investments and foster renewable energy development.
Pakistan’s abundant solar, wind, and hydro resources provide an ideal foundation for the development of renewable energy. Embracing these resources can establish a sustainable and clean energy supply, reducing dependence on fossil fuels and contributing to global climate objectives. Diversifying the energy mix through investments in renewables will enhance energy security and mitigate the risks associated with volatile fuel prices.
Moreover, transitioning to renewable energy sources presents an opportunity to improve electricity access in remote and off-grid areas. By implementing solar panels, mini-grids, and decentralized renewable energy systems, underserved communities can gain access to electricity, fostering social development and improving overall quality of life.
To capitalize on these opportunities and address challenges, Pakistan must focus on creating supportive policies, attracting investments, advancing research and development, strengthening technical capabilities, and forming partnerships with international organizations and investors. With a strategic and well-planned approach, Pakistan can unleash its vast renewable energy potential, achieve sustainable and inclusive energy access, and contribute to its economic and environmental objectives.
Despite the growing capacity, Pakistan’s per capita annual electricity consumption remains among the lowest globally, indicating untapped potential in the solar energy sector. To fully harness this potential, Pakistan needs to tackle obstacles such as the upfront investment required for renewable energy infrastructure. Through strategic planning and targeted investments, these challenges can be overcome, paving the way for a more sustainable energy future in the country.
Pakistan has vast potential for renewable energy, with abundant solar, wind, and hydro resources. Overcoming challenges like fossil fuel dependence, limited grid infrastructure, and financial viability requires supportive policies, local production incentives, and investments in grid infrastructure and energy storage. By taking these measures and fostering partnerships, Pakistan can unlock its renewable energy potential. This will contribute to global climate goals, improve energy access and security, and drive economic and social development in the country.