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

Basic Information of Pakistan

Pakistan, with a total population of 197 million, has been in a tense political relationship with India for many years. Due to religious and political factors, there have been many wars going on in the past. The nation’s debt repayment and risk tolerance have been questioned by the outside world and the country has started to witness unstable economic condition. Recently, the domestic currency – rupee is even depreciated by 7%. In October 2018, the country’s foreign direct investment (FDI) reached US$ 161 million, a 55% dip from the same period last year. Moody, an international credit rating agency, also gave Pakistan a credit rating of B3 with negative future outlook.

The climate in Pakistan is hot and dry, with summer from May to August and rainy season from July to 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.

Pakistan Renewable Energy Development

Pakistan, which has suffered from power shortages for many years, has launched a renewable energy development plan in 2006, in addition to its current major energy - oil and natural gas. In 2011, the nation launched a revised version of Alternative and Renewable Energy Policy 2011. The new version 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. Up until 2017, the installed capacity of renewable energy has reached 1,845MW, of which, 521MW was newly added in 2017, a 12.5% rise from 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 PV Policy

1. Upfront Tariff (announced to terminate in late-2017)

Upfront Tariff, launched in 2015, is a key policy to promote 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 and a contract is signed, power plants will file a price application and have the NEPRA approve.

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-run project of the policy is located in Sindh County with an installed capacity of 50MW. The project is expected to complete the auction by the end of 2018 and will begin the operation by the end of 2020.

3. Net-Metering Scheme

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

Pakistan PV Development Status

Although Pakistan didn’t set a PV installation target, it didn’t affect the local PV development. Up until late-2017, the cumulative installed capacity has reached 730MW, of which, the newly-added installation reached 500MW in 2016 and 2017, respectively, up 284% from 2014 and 2015.

 Pakistan Cumulative Installation

Source: IRENA RE CAPACITY STASTICS 2018

2015 is a big step forward for the PV industry in Pakistan. In 2015, Pakistan launched utility-scale projects with a scale of over 100MW. Also, the upfront tariff has stimulated the installation. Driven by policy support and project demand, the amount of PV installation has started to increase significantly since 2015.

Analysis of Pakistan Module Imports and Exports

1.Pakistan Export Analysis

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 2018, a 4.5% dip from the same period last year. If conducting a further comparison between 2017 and 2018, we can see that demand was slowly picking up and even reaching a peak between mid-Q1 and mid-Q2.  From late-Q2 to Q3, demand has started to decline. Then, demand has begun to rebound again in 4Q17. Based on this, we can estimate that Q1 and Q2 are the peak seasons with the strongest demand, Q3 is the off-peak season, and Q4 is the peak season with an average demand in Pakistan.

 Pakistan China module shipment

2Pakistan Proportion of 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 (use more mono than multi).

 Pakistan Module Type of  China shipment

Conclusion

Pakistan preferred auctions after late-2017. Since it usually takes a while for new policies to adapt, the result of the new policy is not likely to begin emerging until 2019.

It’s noteworthy that the new government took office in mid-2018 and is currently solving the economic downturn problem and consolidate the relationship with the US and the neighboring countries. If Pakistan can solve the economic problem successfully, this will benefit the promotion of the PV or even the whole renewable energy development.

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