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PV Demand Analysis of the Belt and Road Initiative: Pakistan of Southeast Asia

Pakistan Country Profile

Pakistan, with a total population of 197 million, has been in hostile relations with India for many years. Due to religious and political disputes, there have been wars going on in the past. As the nation’s debt repayment and risk tolerance have been questioned by other countries, it started to witness unstable economy. Recently, the domestic currency – rupee is depreciated by 7%. In October 2018, the country’s foreign direct investment (FDI) reached US$ 161 million, a 55% dip compared to the same period last year. Moody, an international credit rating agency, has assigned B3 ratings to Pakistan with negative future outlook.

The climate in Pakistan is hot and dry. Summer begins from May through August and rainy season from July through August. The average annual rainfall is less than 250mm due to the climate. However, the nation has abundant sunshine, with an average daily solar radiation of 5-6 per square meter/kWh.

Renewable Energy Development in Pakistan 

Pakistan, which relies mostly on oil and natural gas, has been suffering from power shortages over the past years. It has launched a renewable energy development plan in 2006 and later released a revised version of Alternative and Renewable Energy Policy 2011, which aims to source 5% of its energy from renewables by 2030.

The renewable energy projects defined by the Pakistan government are wind, solar and bagasse. By 2017, the installed capacity of renewable energy has reached 1,845MW, of which 521MW was newly added in 2017, a 12.5% increase compared to last year. 521MW is also the highest amount of newly-added installation in a single year over the past few years.

Pakistan Cumulative Installation

Source: State of industry report 2016 & 2017

Pakistan's PV Policy

1. Upfront Tariff (terminated in late 2017)

Launched in 2015, Upfront Tariff was a key policy to push for the development of renewable energy in Pakistan. The price of the PPA and levelized tariff were announced by the National Electric Power Regulatory Authority (NEPRA) as a reference to Pakistan Electric Power Company (PEPCO) and local independent power producers (IPPs). Once the relevant costs of the project, such as EPC and construction costs, are confirmed with a contract signed, power plants will submit a price application to NEPRA for approval.

2.Tariff-based Auction

In March 2017, the NEPRA issued the official document of NEPRA/LA (Leg.)/NCBT-01/6072 to confirm the implementation of the electricity price auction.

The first pilot project of the policy took place in Sindh County with an installed capacity of 50MW. The project was expected to complete the auction by the end of 2018 and will begin operation by the end of 2020.

3. Net-Metering Scheme

On September 1, 2015, the NEPRA released a Net-Metering policy targeting projects with a capacity of 1kW-1MW. The solar PV plant owners were allowed to deduct the excess electricity produced from the electricity bill or sell it to distribution companies (DISCO) in different regions.

Pakistan's PV Development Status

Although Pakistan didn’t set a PV installation target, it didn’t slow down the local PV development. By late 2017, the cumulative installed capacity has reached 730MW, of which, the newly-added installation reached 500MW in total between 2016 to 2017, a 284% growth rate compared to 2014 to 2015.

 Pakistan Cumulative Installation

Source: IRENA RE CAPACITY STASTICS 2018

2015 marked a milestone for Pakistan's PV industry. In 2015, Pakistan started launching utility-scale projects with a scale of over 100MW. With the release of upfront tariff policy, the amount of PV installation began to increase significantly since 2015 owing to policy support and project demand. 

Pakistan-China Trade: Module Imports and Exports

1. Analysis of China's Export Performance with Pakistan

According to PV InfoLink’s customs database, China’s module export to Pakistan reached 1GW in 2017. The total shipment reached 865MW from January to October in 2018, dropping by 4.5% compared to the same period last year. If conducting a further comparison between 2017 and 2018, demand was slowly picking up and even reaching a peak between mid Q1 and mid Q2. From late Q2 to Q3, demand started to decline but again rebound in 4Q17. Based on this, PV InfoLink estimates that Q1 and Q2 are the peak seasons with the strongest demand; Q3 is the low season, and Q4 is the high season with an average demand in Pakistan.

 Pakistan China module shipment

2Pakistan-China Mono & Multi Module Shipment

Pakistan has high demand for conventional multi modules, taking up 89.6% of the total demand. The market share reached 6.1% for mono module (including PERC) and 4.1% for other types of modules. There’s still a gap between Pakistan’s module demand and the global trend of using more mono than multi.

 Pakistan Module Type of  China shipment

Conclusion

Pakistan's policy has turned to auctions in late 2017. Since it requires some time to promote and practice new policies, the result of the new policy is expected to show in 2019.

It’s noteworthy that the new government took office in mid 2018 and is currently solving the economic crisis while consolidating the relationship with the US and the neighboring countries. If Pakistan could solve the economic problem successfully, it will help promote PV and even the entire renewable energy development.

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