There is statistical proof available that Pakistan is not facing an energy crisis or struggling to supply adequate power for the people. Rather it is a more complicated issue with a simple explanation. According to the National Power Regulatory Authority’s (NEPRA) report(2023), Pakistan generates 43,775 MW of energy:
- 59% from fossil fuels
- 25% from means of water/hydro
- 7% from renewable resources
- 9% from nuclear power
As we can see from the stats above, Pakistan’s main source of energy is fossil fuels. The 52% gap between fossil fuels and renewable resources is the cause of the fall in the country’s economy.
In the fiscal year 2023/2024, Pakistan generated 92,091 GWh of energy. Pakistan also imported 184.6 million kWh of electricity from Iran which is worth a staggering $ 13.7 million. This figure may overwhelm some people but it is only a small portion of Pakistan’s actual utility. It mainly relies on its production of energy to provide for the citizens.
Pakistan has 13 GW of solar panels imported from China, which brings the total up to 15. China established supply chains and created government subsidies making their solar panels cost-effective. The Chinese have us to thank as we are their 3rd largest importer of solar panels, which moves us up 6th in the world. Pakistan has the potential to strive in the solar department but fails to do so on account of a few issues the government is not focusing on.
- LACK OF INFRASTRUCTURE:
The absence of efficient facilities can affect the production scale and quality. Countries like Pakistan which rely on imports can never have the infrastructure needed to manufacture solar panels on a competitive scale. Setting up manufacturing plants requires a significant amount of investment in machinery and tools. The government of a nation should be willing to pay high costs for acquiring land, buildings and the assets needed to accommodate the production of a very valuable item.
- LIMITED RAW MATERIAL:
To produce solar panels, silicon is a necessity. But unfortunately, Pakistan does not produce them in significant amounts. This is mainly the reason Pakistan is dependent on imported raw materials which increases production costs.
- LACK OF SKILLED WORKFORCE:
The lack of a skilled workforce is a critical barrier to solar panel manufacturing. Even though the world is switching to renewable energy sources, especially solar energy, Pakistan struggles to develop a proper industry due to this fundamental limitation. The country severely lacks a sufficient number of skilled and properly trained workers necessary for the manufacturing of solar panels as well as their components. The production of such a product demands precision and technical expertise in this field. However, due to limited training programs and inadequate access to modern education, the workforce in Pakistan is not able to meet these demands and hence, Pakistan turns to nations such as China, Iran and even India for raw materials, power and panels.
By addressing the issues stated above, Pakistan can undoubtedly unlock its full potential and become a major competitor in the global solar energy market, boosting its economy and reaching a brighter future.
Luckily, the government of Pakistan has recognized the importance of solar energy and why is it better than fossil fuels. They launched a series of policies:
- RENEWABLE ENERGY POLICY:
The aims of this policy is to increase the percentage of renewable energy, especially solar, to 30% by 2030.
- NET METERING POLICY:
This policy was launched by NEPRA which allows residential and commercial solar panel owners to sell electricity back to the grid.
- TAXES EXEMPTION:
Taxes on solar panels, inverters and related equipment have been either reduced or eliminated to make solar energy more affordable. This may also help many in understanding the crucial difference between renewable energy and fossil fuels.
Pakistan is also working on a couple of solar related projects which may prove to be beneficial for us.
- QUAID-E-AZAM SOLAR PARK:
This prestigious park is located in Bahawalpur. It is one of the largest solar parks in Pakistan. It has the capacity to store up to 1000 MW.
- OFF-GRID SOLAR SOLUTIONS:
Their have been steps taken to provide solar energy to rural and more remote areas of Pakistan.
- CPEC:
The China Pakistan Economic Corridor has developed many projects in Pakistan among which is the Quaid-e-Azam Solar Park. This agreement between Pakistan and China has been a stepping stone for Pakistan in various industries especially the solar industry.
Many households and businesses in Pakistan have switched to solar energy and installed solar panels. The major reason for bringing such change is the continuous load shedding and the increase in electricity cost. Solar companies have started to provide primitive solutions including installation and maintainance as well as financial options.
POWER PURCHASE AGREEMENT:
The Power Puchase Agreement, known as PPA is a contract between an electricity generator, often a renewable energy develepor and a buyer, typically a large corporation or a government entity. Under the terms of such an agreement, the production and selling of electricity over a specific time period (10-25 years) is discussed.
PPA is of 2 types:
- PHYSICAL PPA:
In this, the buyer physically receives the energy produced. Usually the buyer and the generator are in the same region or grid.
- VIRTUAL PPA:
In this, there is a financial agreement where no physical energy is transferred over to the buyer. The buyer pays the renewable energy’s financial value and in return, receives Renewable Energy Credits (RECs).
Renewable energy credits proide additional revenue streams for renewable energy developers and also guides investments into new projects. Attaining RECs allows businesses to claim that they are utilizing renewable energy and that they are reducing their environmental impact.