Solar showdown: the untold power play behind Pakistan’s energy revolution—I

In Pakistan, significant emphasis is placed on net-metered solarization, with the reduction in energy demand often attributed to rooftop net-metered systems. Whether it is Government, Ministry of Energy or Power distribution companies (DISCOs), all raise a hue and cry about the reduction in demand and point fingers towards net metering consumers. However, solarization is not limited to just net metered rooftop installations.

There are various categories of solarization beyond net-metering, each contributing differently to the energy landscape. This article aims to study the impact of net metered and non net metered solar consumers in overall demand reduction and also to compare the deployment of net-metered systems against total reported solar panel imports and examine the impact of solarization on overall energy demand reduction.

Before going into details, it is very important to categorize different types of solar consumers connected to the power distribution system.

The first category is net-metered solarization (which is also allowed to feedback excess unutilized energy back to the grid), which is currently capped at 1 MW per connection based on the allowed sanctioned load limit.

Another category which goes unnoticed is single-phase non net metered solar consumers (second category), who utilize solar energy strictly for daytime consumption.

These consumers are not permitted to feed surplus energy back into the utility grid as per the distributed generation regulations of NEPRA. Instead of feedback of energy to the utility’s grid, some rely on battery energy storage systems to store excess energy during the day for use during non-sunlight hours.

It is important to note that due to technological advancements, single-phase inverters are now available in the market that can operate without the need for a battery energy storage system. These inverters allow single-phase consumers to reduce their daytime energy consumption to nearly zero.

As a result, these consumers - often referred to as “poor consumers”- benefit from falling into a lower tariff slab, which increases their eligibility for government subsidies.

These consumers place an additional burden on other consumers through higher cross-subsidization rates. As they take advantage of lower tariff slabs and increased subsidies, the cost differential is often passed on to other consumers, leading to higher rates for those not benefiting from the same subsidies.

This creates an uneven financial load across the consumer base, impacting those who do not qualify for such benefits.

For installations above 1 MW, solarization is allowed but falls under the non-net-metered category (barring the Solar IPPs). This primarily applies to industrial solarization (third category), where larger industrial consumers install solar systems exceeding 1 MW for self-consumption without feeding excess energy back to the grid.

Additionally, industrial and commercial consumers with system sizes between few hundreds of kW uptil 1 MW often choose solarization with or without opting for net-metering, preferring to use solar power for internal consumption during day time only and shift back to the grid during night time. A few major industrial consumers with above 1MW solar plant capacity are provided in table:

Off-grid solarization (Fourth category) represents another significant segment, where systems are installed independently of the national grid. These installations are typically found in remote areas where grid access is unavailable or unreliable. Microgrids, standalone solar home system solutions are typical examples of off grid solar systems.

Lastly (for the sake of this article), there is the category of agricultural solarization (Fifth category), where farmers have transitioned to solar-powered tubewells, helping to reduce their dependency on grid electricity and costly diesel for irrigation.

This article aims to compare the import data of solar panels from China to Pakistan with the installed capacity of net-metered solar systems, which is considered the primary contributor (first category) to demand reduction. However, the period which this article covers starts from FY 2020 till FY 2024. According to Sinoimex, approximately 27 GW worth of solar cells and modules have been imported into Pakistan from 2020 to June 2024.

The data is in financial form and therefore has a tolerance of 5-10% due to conversion from valuation to wattage. However, when comparing this figure to the annual net-metered solar capacity, it becomes clear that the installed net-metered capacity is significantly lower than the total solar panels imported, highlighting a substantial gap between imports and net-metered installations.

By the end of FY 2023-24, approximately 2,400 MW of net-metered solar capacity had been installed within the Discos’ system, along with an estimated 600 MW in the K-Electric network, bringing the total to around 3,000 MW.

When compared to the 27 GW of solar panels imported, this leaves a staggering 24 GW unaccounted for, likely installed in other categories of consumers (with some possibly still in warehouses). The real question is—where has this massive 24 GW vanished? The mystery deepens!

Another important aspect to consider is the overall annual reduction in energy demand compared to the contribution from net-metered systems.

Although this capacity has been installed gradually, we can calculate the annual energy generation and assume it offsets demand from the grid.

When we compare this with the overall reduction in energy demand, it becomes evident that the energy generated by net-metered systems is still significantly lower than the total reduction in energy demand year-on-year. It’s worth noting that the growth in net-metered systems has only recently accelerated.

Even so, in the past two years, the contribution of net-metered systems to the overall demand reduction has been modest, accounting for only about 7.5% to 12% of the total reduction. The plot thickens—net-metered systems aren’t the main villains behind the energy demand drop. There’s a new suspect in town and it’s time to uncover the truth!

The Net metered quantum is taken as flat for calculation purposes while the actual installation is incremental over time period and will generate lesser energy

A large part of the energy demand drop is usually linked to the deteriorating economic conditions in the country. Factors such as currency devaluation, rising taxation, and soaring inflation have hit both businesses and consumers hard. Additionally, the high cost of fuel and increased energy tariffs (due to capacity costs) have made electricity increasingly unaffordable.

As a result, many consumers, particularly in the industrial and commercial sectors, have been forced to scale down or limit their business operations, leading to a further decline in energy consumption.

However, as the saying goes, “The devil is in the details.” A closer look at the energy demand data over the last three years, broken down by sector, reveals an interesting narrative.

Prior to 2022, the cost of solar energy was relatively high, which limited the impact of solarization—even for net-metered systems. However, by carefully analyzing year-on-year energy demand declines, a clearer picture emerges.

In the domestic sector, the decline in energy consumption has remained relatively stable with slight improvement as compared to the FY 2023 level. Interestingly, in 2024, the rate of decline slowed compared to the previous year.

The details show that the 5 DISCOs in Punjab despite aggressive solarization, showed slight increase in residential consumption while others including KE showed decline. DISCOs relate this to increase in domestic connections, however, the impact has been negated by solarization.

It is worth mentioning that not all Net metering is installed in the residential sector. The ratio of Net metering system (capacity wise) is This shows that a major portion of the capacity of Net Metered is in the Industrial sector and only half of it is domestic.

Therefore, approximately 1500MW of Net Metered is in the domestic, while 1100 MW is in the Industrial sector and 250MW in the Commercial sector. Similarly for energy, out of 3.10TWh, 1.55TWh energy is supplied by domestic consumers while the 1.4TWh is supplied from the C&I sector.

(To be continued)

Copyright Business Recorder, 2024