nigeriapulse.com

Breaking news and insights at nigeriapulse.com

Navigating Pakistan’s Rooftop Solar Revolution Amid Utility Challenges

Pakistan’s solar market is uniquely characterized by rooftop PV installations, driven by rising electricity costs and currency depreciation. As solar adoption grows, traditional utilities face a revenue crisis, leading to a potential ‘death spiral.’ Waqas Moosa from the Pakistan Solar Association emphasizes the need for a shift in utility strategy to integrate distributed generation and develop adaptive regulatory frameworks for sustainability in the energy sector.

Pakistan’s solar photovoltaic (PV) sector is experiencing a unique trend, primarily driven by rooftop installations instead of the utility-scale systems seen globally in countries like China and the US. This shift impacts energy policy and the financial landscape, posing challenges for the utilities known as discos. Waqas Moosa, chairman of the Pakistan Solar Association (PSA), discusses the stagnation of large-scale solar projects and potential reforms for utilities.

Rooftop solar adoption accelerates due to rising electricity prices, a depreciating currency, and falling solar panel costs. As consumers increasingly invest in solar systems, traditional utilities face declining revenues, leading to a “death spiral” model where fewer customers shoulder greater grid maintenance costs. Moosa expresses that these market conditions are remarkably favorable for solar adoption.

Economic factors include the rupee’s drop, which raised grid electricity prices—making rooftop solar more appealing. Despite higher import costs for PV modules, declining prices from Chinese manufacturers buffered the impact. Meanwhile, limitations on IMF financing hinder government subsidies, transferring increased costs directly to consumers, amplifying the allure of solar.

Pakistan’s rooftop solar sector flourishes largely due to private investment rather than government initiatives. Though there have been some supportive measures, such as tax exemptions, comprehensive subsidies have been diminished. The demand for rooftop systems is predominantly driven by their economic viability, with payback periods attracting consumers toward solar adoption.

In contrast, the stagnation of utility-scale solar stems from overcapacity in the power sector due to previous aggressive commissioning of power plants. Moosa mentions that the lack of guaranteed power off-take for PV plants limits private and governmental investment in larger projects. Thus, regulatory frameworks and policy incentives must evolve to stimulate utility-scale development.

China plays a crucial role in the PV supply chain for Pakistan, with a notable increase in imports of solar panels. The early parts of 2024 saw imports reach 13GW, though oversupply later curtailed this growth. Moosa notes that even those outside the solar field began importing panels, signaling market overflow but expecting stabilization and steady demand by 2025.

Utilities today are “under a lot of stress,” with concerns arising over the risk of negative policies, like taxation on solar energy. Moosa warns that actions reminiscent of Spain’s past solar taxation would just exacerbate current problems, urging for more adaptive solutions. Transitioning to collaborative models and enhancing competitive markets could shield the utilities from further distress.

Moosa suggests that utilities adopt “Utilities 2.1” strategies focused on multi-buyer, multi-seller frameworks to improve market adaptability. Integrating distributed generation is essential, as demonstrated by successful models from countries with high solar penetration. The evolving landscape in Pakistan indicates that while solar’s prevalence is fixed, adaptation strategies are crucial for the energy ecosystem.

Pakistan’s energy landscape is seeing a shift towards prominent rooftop solar PV systems, distancing itself from global utility-scale solar trends. This shift not only informs energy policy and economic dynamics but also poses sustainability challenges for the distribution companies (discos). Rising electricity costs and currency depreciation are significant drivers of this rooftop revolution, indicating a need for pragmatic solutions in energy regulation and utility functionality to avoid a crisis in the sector.

The growth of rooftop solar in Pakistan presents both opportunities and challenges. As utilities face financial instability, they must pivot towards innovative strategies, adopting a model akin to successful global precedents. In focusing on integrating distributed generation and transitioning to multi-seller frameworks, the energy market in Pakistan can stabilize and thrive in the face of changing consumer energy needs. The nation’s energy future hinges on adapting to this solar revolution effectively.

Original Source: www.pv-tech.org

Clara Lopez

Clara Lopez is an esteemed journalist who has spent her career focusing on educational issues and policy reforms. With a degree in Education and nearly 11 years of journalistic experience, her work has highlighted the challenges and successes of education systems around the world. Her thoughtful analyses and empathetic approach to storytelling have garnered her numerous awards, allowing her to become a key voice in educational journalism.

Leave a Reply

Your email address will not be published. Required fields are marked *