Pakistanis Take Matters In Their Own Hands With Rooftop Solar Boom

Pakistan has been facing the dual challenge of rising electricity prices and an unreliable grid power supply for some time now. With electricity prices in key cities like Lahore nudging Rs 70/kW, and that too with unreliable supply, it has become only too apparent for many middle class and richer residents that they will need to find their own solutions. Even with a net metering tariff that is ‘just’ Rs 22 per unit versus the much higher electricity cost, owners who can afford it have gone for rooftop solar with storage even to take full advantage of dropping solar prices. That is one reason the rooftop solar market has added over a GW of capacity in 2023, a growth of 49 percent over 2022, by some estimates.

A dealer SaurEnergy got in touch with in its leading commercial city, Karachi informs us that with imports from China flowing relatively freely again after the foreign exchange crisis till November-December last year, the sector is bound to see a huge boom in the coming year.  Between the stability of Pakistani rupee vis a vis the dollar and dropping solar costs, solar dealers are hoping for a bumper few months going ahead.

The biggest challenge he sees is not demand, but financing for rooftop solar, as many households go for plants over 5 kw in size  that can cost upwards of PKR Rs 500,000 and more, and upto 750,000 with storage. Those rates incidentally are lower than those in India, after conversion to INR, thanks to a more benign duty structure towards Chinese imports. However, there are no significant cash subsidies in Pakistan for solar rooftop, unlike the rooftop scheme in India, which provides a subsidy equivalent to PKR 240,000 for systems upto 3 kW.

Ideal Weather, Poor Policy 

Pakistani households strong interest and adoption of rooftop solar has many serious implications beyond household budgets. Pakistan has over 95% of its territory suitable for generating 1400–2000 kWh/kWp/year of solar electricity, one of the highest in the world, making most of the country fertile ground for solar rooftop. Surprisingly, household share of electrical energy consumption accounts for close to 50% (49.1%) of the total electricity demand in Pakistan, an anomaly when most countries would expect industrial demand to outstrip household demand. Thus,  autonomous energy production at the household level can  contribute to reducing energy-poverty significantly, and even cut the energy import bill, provided government policies adapt to this reality. However, even here it is the same country that is supplying most of the equipment today, China, that is also preventing a wholesale rejig of the power sector in Pakistan, that is locked into a vicious cycle of rising prices, poor collections, and higher losses. Termed circular debt, this power sector debt caused by payment commitments linked to the USD rate versus billings in Pakistani rupees, has led to a total power sector debt of Rs 2.6 trillion by end 2023.

Problems Loom For Rooftop Solar 

The government, strangely enough, has the most to worry about, despite this unexpected influx of green energy. At the top of their list is the stability of a grid, already struggling to handle existing load, and tied in with long term contracts with multiple fossil fuel generators, A higher share of prosumers will lead to more and more of the existing generation capacity becoming idle due to no demand from the industry, enhance the capacity charge on consumers. That will mean the burden falling further on poorer consumers who cannot afford solar even, further impacting collections, leading to higher losses, or the vicious circle in repeat mode we spoke of earlier. Thus, some in policy circles even argue to relook existing net metering rates downwards to avoid such a situation.

It is clear that what is actually needed is some sort of ‘big bang’ reforms to unravel the gridlock of the power sector, which is actually holding back reforms and the spread of clean energy. Pakistan’s utility scale solar tenders have fared poorly despite many incentives, for precisely this reason. As a country on the frontlines of climate change, the country has regularly made the case to use fossil fuels to meet energy needs, considering its limited share of the impact on global climate. But the argument will probably wear very thin if it cannot even provide dependable power at a reasonable cost to its citizens.

For now, officially, provincial governments like those in Sind have gone with solar for areas that are off the grid, with distributed solar solutions backed by the World Bank, besides other such initiatives.