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

Residential net metered solarization, Considering that the domestic net-metered solar systems are contributing only 1.55 TWh (calculated using a 16% capacity factor), while the total reduction in energy demand in domestic sector over the last year was two years is approximately 6.8TWh, shows that there is still a huge delta of energy reduction which has to be covered from other sources of energy.

This discrepancy suggests that additional contributors, such as non-net-metered solarization and economic factors, are at work.

The major factor contributing to this unseen decline in energy demand is non-net-metered solarization, primarily from single-phase consumers (the third category), who make up more than 90% of domestic consumers.

This decentralized solarization plays a key role in decreasing energy demand, especially as many of these systems operate without the ability to feed excess energy into the grid.**

Residential non-net metered solarization

Given the substantial 4 TWh gap between the overall reduction in demand of the domestic sector and the energy contribution from domestic net-metered systems, conservative estimation suggest that 1.5 TWh of this reduction can be attributed to the non-net-metered domestic sector (Second Category).

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

This equates to an estimated solar capacity of 1.5 GW, calculated using a lower capacity factor since a portion of the generated energy is wasted due to the lack of grid feedback. The leftover 3TWH reduction in energy demand could be potentially linked to other economic factors and energy conservation measures.

To better manage and plan for this growing trend of domestic solarization, the government and regulators should require that all domestic consumers- whether net-metered or non-net-metered—notify their respective power distribution utility when connecting a Solar PV system for self-consumption.

Commercial and industrial scale solarization

One of the most striking observations is the rapid decline in energy consumption within the commercial and industrial (C&I) sectors (Third Category). Do note that 45% of Net metered consumers are the C&I sectors which makes up around 1400MW.

Since FY 2022, the industrial sector saw a decrease in energy demand of 6.2 TWh, which is continuously decreasing. Notably, 90% of industrial solarization is non-net-metered and used solely for self-consumption.

As discussed in the article, approximately 1.1 GW of Net metered quantum is installed in industrial sector which contributes around 1.5TWh.

The remaining 4.7TWh is due to captive solar installed in industrial premises. Conservative estimates suggest that 3,000 MW of industrial-scale solarization has occurred, i.e., all non-net-metered. With a lower 14% capacity factor (due to non-feedback of energy), this corresponds to a reduction of 3.5 TWh in energy demand from the grid.

The commercial sector contributes around 9% in the net metered quantum as per trends. This shows that 250MW of net meter is in the commercial sector.

The commercial sector comprises of tall plazas or shops, which do not have ample roof top spaces and therefore contribute less towards solarization. This can also be observed to the YoY energy consumption trends which show a positive during the FY 2024 while negative in FY 2023.

A moderate estimate of 5,000 MW Solar PV for the combined commercial and industrial (C&I) sector is reasonable contributing to the energy demand deficit of 5TWh, considering other factors, such as deindustrialization, also contributing to the overall decline in energy consumption.

Off-grid solar

The complete off grid sector (fourth Category) comprises of those installations which are connected completely in off grid areas. These involve solar panels for defense purposes, micro grids for village areas, solar home system solutions and other types.

Though this is important for quantification purposes, such type of solar installations generally do not harm the grid as they are not grid connected. Punjab, Sindh and KP have carried out micro grids and SHS programs.

However, these micro grids have been in ranges of few hundreds of kW while SHS consists of only a few Watt panels. Therefore, a conservative estimation of this category is 0.5GW.

Agricultural solarization

In the agricultural sector (fifth category) the main consumption is due to energy used for running the tube-wells. As per Government Survey in FY 22, diesel tube-wells (off-grid) account for the majority, making up approximately 79.4% of the total with 1.2 million units, while electric tube-wells represent around 20.6% with approximately 0.31m units. Punjab dominates, holding 86.4% of the country’s diesel tube-wells and 59.4% of the electric tube-wells.

Sindh follows with 12.2% of diesel and 26.7% of electric tube-wells, while KPK and Balochistan have smaller shares. Diesel tube-wells, particularly in the 16-20 hp range, dominate the agricultural landscape, which requires around 10-15kW of Solar Panels.

One of the solar tube-well installer who has installed numerous tube-wells has said that the ratio of non-net metered to net metered tube-wells is 30:1 as the net metering cost is high due to demand notice charge and meter costs. This means that most of the electric tube-wells are non-net metered. The same is also reflected in the consumer category-wise share of net metering quantum, which shows only 1% in the agri sector.

With a 50% conversion ratio to solar, diesel-run off-grid tube-wells would make up approximately 0.5 million solar-powered tube-wells.

Given that an average of 10 kW Solar PV systems is typically required for each tube-well, this would translate to a total of 5 GW of Solar PV capacity in the agricultural sector. However, since these systems are predominantly off-grid, they do not directly contribute to the reduction of grid electricity demand.

The number is also backed up by the 2,722 TOE demand decrease from 2022 to 2023 in the agri sector. Similarly, since some off grid tube-wells are also operated on tractors, a 2.372m TOE show that there is a reduced reliance on High Speed Diesel in agriculture sector due to conversion to solar.

Similarly for grid connected electric tube-wells, 50% of 0.3m tube-wells are estimated to be solarized constituting around 150,000 grid-connected tube-wells.

A key point to note is that a portion of these tube-wells will be net-metered. The total solar capacity for these systems is estimated at 1,500 MW, with less than 5% being net metered.

The decrease in agricultural grid connected energy demand of 2.45TWh (over the last two years) reinforces the above-mentioned claims and shows that around 1.5GW of grid connected tube-wells contribute towards approximately 1.8TWh energy generation. Therefore, a total of 6500MW solar capacity is a reasonable estimation of solar capacity connected to tube-wells with majority in the off-grid sector.

It is also worth mentioning that there are other provincial solarization programs being implemented by various energy departments, such as the solarization of primary schools, basic health units, rural health centers, public buildings, and other public institutions.

The majority of these programs are non-net-metered, meaning they do not feed excess energy back into the grid. In addition, residential societies with bulk connections have also adopted solarization independently, further reducing their reliance on the national grid. The reasonable estimation for the provincial solarization programmes is approximately 300MW, since the overall capacities of these distributed solar projects is in few kWs.

Summarizing the above in tabular form shows:

The nationwide energy consumption reduction of 12.2 TWh (FY2024), with 80% (9.76 TWh) attributed to solar energy, reflects a significant shift towards solar power. This transition is primarily driven by the high cost of electricity from the national grid, pushing consumers to seek more affordable energy alternatives.

The remaining 20% of the demand reduction can be linked to broader economic factors. As energy is an essential commodity, consumers are compelled to find cost-effective solutions to meet their needs finding solar at the top of the list.

Since 2020, a total of 27 GW of solar panels (and cells) has been imported into Pakistan, yet this figure falls short by approximately 12 GW, a substantial gap. Part of this shortfall may be attributed to the over-invoicing scandal uncovered a few years ago, which involved a quantum of USD 252 million—equivalent to 1 GW.

Another portion of this gap can be explained by the unauthorized expansion of solar PV modules in existing net-metered systems, which could account for 10-15% of the current installed net-metered capacity. Similarly, there is a delay in provisioning of net metering licenses to the consumers in DISCOs and KE.

This is in the range of 300MW in DISCOs and 500MW in KE region. Additionally, an estimated 3-4 GW of solar panels are likely stored in importers’ warehouses to maintain stock for future orders. This can also account for other products consisting of solar cells imported under the same HS code.

Despite the impressive growth in solar installations, Pakistan remains a hotbed for solar energy opportunities. However, it’s a misconception to pin the entire reduction in energy demand on residential net-metered systems, as they only account for about 13% of the total decrease.

The real powerhouse driving the energy drop is the commercial and industrial (C&I) sector, contributing nearly three times more than residential systems. Policymakers need to reconsider cutting incentives for residential net-metering without fully understanding the broader picture.

Meanwhile, the ongoing mystery behind the sharp decline in industrial energy demand is unraveled in the article, shedding light on the true forces at play in this solar-powered revolution.

(Concluded)

Copyright Business Recorder, 2024

The article, originally published October 31, 2024, was updated on November 1, 2024 to carry an updated version of the ‘City Wise Solar Panels’ map.