In Karachi, Pakistan’s largest metropolis, residents are increasingly turning to solar as a solution to soaring electricity bills and persistent power shortages. What was once a niche market has now evolved into a significant trend in the southern port city.
Mahfooz Siddiqui, a retired banker, recently became part of this trend by installing a solar power system at his residence in Malir Town.
“We’re setting up a 5.2-kilowatt system on our rooftop, featuring 10 bifacial solar panels and a 6kV solar inverter,” Siddiqui explained.
For Siddiqui, as with many middle-income households, the escalating electricity costs prompted a substantial investment of approximately Rs900,000.
“Our monthly electricity bill had surged to Rs75,000-80,000, which was unsustainable,” he added.
The rise in solar energy adoption in Pakistan reflects a broader shift towards renewable energy solutions, driven by the dual pressures of frequent power outages and increasing electricity costs.
“There is no shortage of solar panels on the market,” noted Syed Fazli, who was involved in Siddiqui’s installation. “A wide range of products is available to meet various needs,” he added.
Fazli is confident that the investment will be recouped within two years. “After that, we’ll be generating electricity for free,” he projected.
Tahir, a BS Tech graduate and professional electrician, explained that while solar installations were initially more common among industrial users due to their large energy needs, there has been a significant shift towards residential consumers in recent years.
“The surge in the solar power industry in Pakistan has been largely driven by record-high electricity bills. Installing solar units can reduce these costs by at least 60 to 70%,” he said.
Rising electricity rates have become a significant challenge for the incumbent government.
Last month, the federal government announced an increase in electricity prices of up to Rs7.12 per unit for domestic consumers, raising the base tariff from Rs29.78/KWh in FY24 to Rs35.50/KWh in FY25 to comply with International Monetary Fund (IMF) requirements.
With taxation and other charges, consumers in Karachi are paying as high as Rs60 a unit in some cases.
Prime Minister Shehbaz Sharif recently introduced a Rs50-billion energy subsidy package for low-income households consuming up to 200 units from July to September 2024. However, experts warn that this may be insufficient, as mounting public discontent could lead to civil unrest.
Recently, traders called for an end to oppressive taxes and high power tariffs, suggesting they might refuse to pay electricity bills in protest.
In contrast, the situation has turned into a boon for the local solar sector, which is currently experiencing a surge in supply, owing to massive dumping from China.
Tariq, a dealer at Saddar’s Regal Chowk—the city’s largest solar panel market—has seen demand for his products nearly double over the past year.
“We’re importing everything from China, which has significantly ramped up its supply in recent months. The price of a 550-watt solar panel has plummetted from Rs72,000-75,000 last year to around Rs20,000,” he said.
Chinese solar panels production to begin in Punjab by year end
China is the world’s largest manufacturer of solar panels, producing over 70% of the global supply. Chinese companies like JinkoSolar, Trina Solar, and LONGi are industry leaders in producing photovoltaic (PV) panels, solar cells, and other related components.
However, Beijing has been accused of causing an oversupply of solar panels, which has driven prices down and made solar energy more affordable. While this benefits consumers, it also places financial pressure on manufacturers, especially those outside China who struggle to compete with the lower costs.
Despite the price drop, local financial constraints are impacting sales. Tariq observed that inflation has reduced the purchasing power of middle- and low-income groups.
“Many customers are interested but leave empty-handed due to budget limitations,” he said.
Additionally, while solar panel prices have decreased, the costs of other essential components, such as inverters and electrical cables, have risen. “The price of solar inverters has increased by 20 to 25 percent over the past year,” Tahir added.
On the other hand, local importers are also feeling the pinch from the price drop.
“Currently, an importer is facing a loss of Rs1,500 to 2,000 per panel due to the low rates,” said Bilal, a solar panel importer.
He noted that the number of players in the local industry has surged dramatically in recent years.
“Nowadays, everyone is entering the industry,” he said, explaining that the previous monopoly on pricing has ended due to increased competition.
Despite the current supply glut, Bilal believes local demand for solar panels will remain strong.
“According to our estimates, only about 20% of households in Karachi have installed solar panels, so there is considerable room for growth. Furthermore, as long as electricity prices remain above Rs10 per unit, solar energy will continue to be a viable option.”
The potential for renewable energy remains substantial, and the outlook for the sector is highly promising in the near future.
The government, on the other hand, is left scratching its head as it now has to contend with some level of lower power usage from the national grid. This is expensive power, made even more costly through inefficiency, corruption, line losses, theft, and a general lack of being able to predict consumption pattern.
It is not the public’s fault and it can’t be blamed for rising solar adoption, especially since the government hasn’t really supported it.
Now, Sindh and Punjab want to ride the bandwagon and offer solar panels as part of the budget.
Why now? Why when they themselves were seemingly complaining about net-metering costs.
Something doesn’t add up. But when it comes to official numbers, it rarely does.
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