Local solar power startups. A breeze of fresh air for the energy sector of Pakistan

Is it the best or worst of times for renewable energy resources in Pakistan?

Stakeholders say that the Renewable Energy sector is expected to end up with thousands of newly unemployed workers in coming months. In the first quarter of 2020, renewables were the only energy resources to post a growth in demand but now there is so much uncertainty. On the other side, several local entrepreneurs have jumped into the industry and making the case for solar home solution and private PPAs are looking covert it into a booming industry and increase its share in the power mix.

Renewable Energy outlook post-COVID 19

In the eyes of investors, oil companies see wind and solar assets as the harbor in the coronavirus outbreak, because of their steady returns as opposed to losing money by investing in oil right now.

Renewable energy in Pakistan like wind and solar are the cheapest form of electricity, and that’s only going to continue. The growth of renewable power cannot be stopped and many countries are already committing to 100% renewable energy targets.

Pakistan renewable energy policy

Biggest bottleneck for the renewable energy sector in Pakistan to grow exponentially is the RE policy 2019 which is yet to be approved by Council of Common Interests. Huge bureaucratic structures and political rifts between provinces and federal governments is one of the major bottlenecks in the growth of renewable sector. Once the government is able to overcome this hurdle, Pakistan RE sector can finally hope of having a bright future and unlike many other sectors of Pakistan, this one might actually flourish.

Need of Local and Foreign investment in Renewable Energy sector

In order to increase the share of Renewable Energy in our power mix we need to take the following steps.

1. Invest in long ignored Grid infrastructure and improve grid integration with renewable energy resources.

2. There is a lack of investors who are genuinely working in Renewable Energy sectors. The problem with the local  IPPs of Pakistan is that most of them are involved in multiple sectors including fossil fuels. Government must encourage Genuine foreign investors in the country.

Pakistan worst hit by climate change

Climate change is expected to cause wide reaching effects on Pakistan. In addition to increased heat and other extreme weather conditions and drought conditions in some parts of the country, the melting of glaciers in the Himalayas, threatens the volumetric flow rate of many of the most important rivers of Pakistan. As a result of ongoing climate change, the climate of Pakistan has become increasingly volatile over the past several decades; this trend is expected to continue. Pakistan makes a tiny contribution to total global greenhouse gas (GHG) emissions, less than 1% (among the lowest in the world), but it is among the countries most vulnerable to climate change, and it has very low technical and financial capacity to adapt to its adverse impacts. Food and water security, as well as large displacement of populations are already being threatened. Members of the public expect to have widespread impacts on their lives.

Renewable energy companies are investing?

But we have to keep in mind that the power industry does not operate based on pandemic timescales. Most of the organizations have already picked a path regarding how to orient their energy portfolios about the climate crisis. Renewables energy companies in Pakistan have started buying into the electricity sector because they see it as where the power need is going to come from in the future. Stakeholders are starting to see that moment of truth.

Way Forward

· Government has removed taxes for solar and wind power manufacturing. The implementation issues pertaining to the policy must be resolved.

·  The government of Pakistan has set 30% plus 30% Renewable Energy Target by 2030.

· While doing so, Pakistan should make renewable energy production a home-produced industry by setting up industrial zones to boost the economy.

·  More and more international players are recognizing both the solar and wind energy potential in Pakistan and have shown keen interest in investing in Pakistani RE sector. Government needs to make an enabling environment for the new local entrepreneurs as well as the international investors.

· Financing programs initiated by commercial banks are also going to be a game changer for solar energy especially in the commercial and residential sector.

Written by:
Mr. Usman Farooq, Program Manager WWEA
Mr. Ali Husnain, Research Associate, WWEA