A silent revolution at a very micro scale is happening in renewable energy (mainly solar) in Pakistan and despite its efforts to discourage the adoption to cover the national grid stranded cost, the government may not be able to stop these building blocks of micro solar installments to have a macro impact in years to come. It is better to embrace it.
The math is simple. Inflating electricity bills and falling solar prices have made the decision of households easier -irrespective of economic class, to utilize solar in the energy mix. The payback on solar investment has gone down from around 10 years to 1.5-2 years with net metering. The government is contemplating discouraging it by reducing the incentive of net metering. However, that may not be able to stop the conversion.
The real game changer is going to be improvement in battery and chip technology along with their falling prices. The industry experts claim that the prices (and technology of higher battery life cycle) are going to fall faster than the solar panels. Already the price of Lithium-ion batteries is down by 90 percent in USD/KWh in the last decade and may reduce to half from current levels in 3-5 years.
This along with the lack of clarity on the future of net metering means households and other consumers may go for a hybrid (battery dependent solution). Upper-class consumers to opt for Lithium-ion batteries may shave off the peak load expense on the grid and may at some point in the future potentially go completely off the grid. Middle and lower-middle-class consumers are moving fast towards energy storage for lesser loads using solar panel plates and Lead-Acid batteries (which are almost at one-fourth of the price of Lithium-ion batteries).
The battery storage doesn’t have to cover 24 hours to be feasible for consumers. The government has installed expensive base-load power plants (IPPs) to match the peak load in summer. That is why the rate of peak hours is higher. And that gives more incentive to install batteries to shave off that load by storing power produced in the daytime to be consumed in peak hours. The peak-shaving is increasing the incentive for battery storage solutions.
The other element is that despite having a surplus in generation capacity, there are areas (both urban and rural) where load-shedding is high due to grid transmission constraints or load management owing to higher theft. Here small-scale solar adaption could be at an even faster pace.
This segment is highly value-conscious and one of the key drivers for their purchase decision (other than price) is the length of warranty offered by the companies. Here companies like Daewoo Batteries (Treet Battery Ltd) which offers a 1-year warranty, versus the industry norm of 6 months) can extract the juice. Then BYD Lithium-Ion batteries have been launched in Pakistan by Diwan International recently which relatively affluent class people to benefit from.
Research shows that the quality of the battery is a major factor in selecting which storage solution to go for at the time of installation of solar. Lithium-ion batteries have a longer life, but their high up-front costs and minimum base capacity would result in having a smaller market. The bigger share is of middle and lower-middle class where millions of households may opt for Lead-acid batteries, as they may not have enough space on the roof (in houses less than 10 Marlas, the solar panel space would be less than for 5-7 KV and available Lithium-ion batteries to support a minimum of 5KV load).
Here good companies making Lead-acid batteries are to grab the market share.
In the past, UPS and other solutions largely relied on conventional vehicle batteries which are not designed to be used with UPS and Solar and are likely to malfunction much earlier. With growing knowledge on battery storage, consumers may opt for ‘deep cycle’ batteries as those are specially designed to be used in energy storage applications –players in the deep cycle battery manufacturing (such as Treet Battery (Daewoo Batteries) and Atlas Battery (AGS)) to have first mover advantage.
With falling battery prices, the adaptation to EVs (especially) in 2-3 wheelers may accelerate. That is to reduce the price gap of EVs and ICE vehicles. Low-end consumers may have bikes on EVs and use solar-powered energy to charge them. That is to have the double benefit of reducing electricity and fuel bills. The macro benefit is to have fewer imports of fuel and low emissions in an already polluted environment. It’s a win-win for all.
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