Gessey Global PV Market Insights-Pakistan

Global PV Market Analysis-Pakistan-GesseyNewEnergyInfo 2020
Global PV Market Analysis-Pakistan-GesseyNewEnergyInfo 2020

1. Brief Intro-Pakistan

The Islamic Republic of Pakistan is a multi-ethnic Islamic country. It is located in the northwest of the South Asian subcontinent, bordering India in the east, Afghanistan and Iran in the west, China’s Xinjiang province in the north, and the Arabian Sea in the south. Pakistan is China’s neighbor. With an area of about 800,000 square kilometers and a population of nearly 200 million, Pakistan is one of the most important countries in South Asia.

Pakistan’s most important neighbor is India, and the long-term conflict between India and Pakistan has greatly restricted the development of the country. The Pushtuns, Baluchis and the Bata terrorist group have not been well addressed. The border areas of Kashmir and the border areas of Afghanistan are also in constant turmoil, and the overall infrastructure construction and economic development of the country are relatively low.

In 2015, China’s “One Belt And One Road” strategy was formally put forward. Pakistan has become the most important cooperative country in this strategy due to its superior geographical location and good inter-governmental relations. Pakistan economic corridor and Gwadar port have been built successively. With China’s help and cooperation, Pakistan’s economy and people’s livelihood are expected to move towards prosperity and stability.

Pakistan Anual GDP BillionUSD-GesseyNewEnergyInfo
Source: sorted by GesseyNewEnergyInfo, July 2020

Pakistan has a tropical climate in the south and a subtropical climate in the north, with high overall temperature and low precipitation, and excellent irradiation resources. The average annual radiation reaches 2050-2300kwh/M2, and 2400KWH/M2 in the southern region. Twice as many as in Japan and Europe.

PakistanChinaUSAJAPANEU
Annual Radiation (KWH/M2)2050-23001050-24501000-21001050900-1300
Source: sorted by GesseyNewEnergyInfo, July 2020
Pakistan-GHI-Horizontal Irradiation-map-Solargis
source: solargis

2. Pakistan Power Generation Structure

Pakistan has lots of available energy. Its coal reserves of 185 billion tons, relatively rich. Three of the world’s most famous mountain ranges, the Himalayas, the Karakoram and the Hindu Kush, converge in the north of Pakistan, where the elevation difference is large and the Indian River basin is extremely rich in hydropower resources. Sizable oil reserves have even been found along the Iranian border and in the Arabian Sea. Due to historical reasons, Pakistan is one of the few developing countries with nuclear power plants, and the construction of nuclear power plants has no technical or resource barriers. Therefore, fossil energy, hydropower and nuclear power account for a high proportion of Pakistan’s power generation energy, and their distribution is balanced. At the same time, the Pakistani government is also actively developing renewable energy sources such as photovoltaic and wind power.

At present, the total generating capacity of Pakistan is still at a low level, with great potential for growth. It is expected that all energy installations in Pakistan will be greatly improved in the future, and traditional energy and renewable energy are expected to flourish together.

PAKISTAN POWER GENERATION STRUCTURE GWH-GesseyNewEnergyInfo
Source: sorted by GesseyNewEnergyInfo, July 2020

The Government of Pakistan set up the Committee on Alternative Energy Development as early as 2003 to develop a national strategy for renewable energy. In 2010, the Pakistani Parliament passed relevant legislation on alternative energy. In 2011, the “Alternative Renewable Energy Policy (medium term)” was officially released, and details of policies such as FIT, carbon credit and power grid purchase were determined. Wind power and solar started to develop vigorously in Pakistan.

By the end of 2019, the grid-connected pv capacity is 1.33GW, accounting for 44.3% of all non-hydropower renewable energy (biomass, PV and wind power). Due to the limitation of grid carrying capacity, the actual installed capacity of PV has already exceeded 3GW by the end of 2019. It is estimated that in 2020-2021, with the improvement of the power grid and the gradual implementation of the power price bidding, large-scale solar power generation projects will be connected to the grid in succession.

PAKISTAN RENEWABLE ENERGY CAPACITY-MW-GesseyNewEnergyInfo
Source: sorted by GesseyNewEnergyInfo, July 2020

3. Related Developing Policy

  • Alternative and renewable energy policies (short, medium, long term)

In 2006, the Ministry of Water and Power of Pakistan issued three policies for the first time, namely short term, medium term and long term. The first short-term policy was issued to allow the sale of electricity from renewable energy sources, and the net metering was implemented

In 2011, the medium term policy was issued, the policy details were improved, the renewable energy development fund was established, the independent FIT electricity price of renewable energy was established, and the mandatory and preferential power purchase requirements for renewable energy in the power grid were clarified.

The long-term policy is still being worked out and has not yet been released, but is expected to be released in 2021-2022 as the bidding and auction process takes effect.

  • FIT Feed-in tariff (discontinued)

In 2014, the first FIT 50MW photovoltaic power station was implemented

Year 1-10 Rate PKR/KWHYear 11-25 Rate PKR/KHW
Capacity of PlantNorthSouthNorthSouth
1MW-10MW22.079721.11389.13258.7568
Source: sorted by GesseyNewEnergyInfo, July 2020

Since Jan 2015, FIT rate start to go down

Year 1-10 Rate PKR/KWHYear 11-25 Rate PKR/KHW
Capacity of PlantNorthSouthNorthSouth
<20MW19.218.48.68.25
20-50MW1918.28.588.23
50-100MW18.8188.558.19
Source: sorted by GesseyNewEnergyInfo, July 2020

Since Jan 2016, FIT rate changed for the last time

Year 1-13 Rate PKR/KWHYear 14-25 Rate PKR/KHW
Capacity of PlantNorthSouthNorthSouth
ALL11.782911.12835.91665.5879
Source: sorted by GesseyNewEnergyInfo, July 2020

From March 2017, FIT feed-in tariffs will officially end and be replaced by competitive power auctions.

  • Power Price auction

In March 2017, the Tariff Based Auction officially replaced the FIT policy. Due to a large probability of a large price reduction range compared with FIT, the bidding was “cold”.

In January 2020, the 150MW project was granted a grid-connected electricity price of 5.8PKR/KWH, nearly half the price of the last FIT rate.

The first official auction took place in March 2020 in Sindh province, with the 50MW project in Manjhand district being bid for. The results of the auction have not yet been announced. Sindh also announced that 400MW projects were on the pipeline by 2021.

  • Net Metering

In September 2015, the State Electricity Administration (NEPRA) formally approved the net metering policy for small wind power and solar projects. Distributed solar and wind power projects with installed capacity of less than 1MW are allowed to sell surplus power generated after self-consumption to the grid at a price equal to off-peak electricity prices.

In 2018, the net metering policy was updated to simplify the policy framework and implementation details, ensuring that projects applying for the net metering policy can be connected to the grid for electricity sales within one month.

  • Other Policy

Medium and long-term Development objectives of the Government:

In 2030, the accumulative installed capacity of solar will reach 33GW.

Financing support for renewable projects:

It was officially launched and implemented in 2009, and renewable energy projects including solar, wind power, hydropower and biomass can be provided with preferential interest rate financing support to encourage construction.

4. Solar Power Generation Development

Since the first batch of 50MW PV projects in Pakistan was implemented in FIT system in 2014, FIT has carried out 2 price reductions from 21.5PKR/KWH to 11.5PKR/KWH from 2014 to March 2017. A total of 850MW of photovoltaic grid-connected installations have been added in the past 3 years. From March 2017, the FIT policy will no longer be implemented. In 2018 and 2019, the number of new grid-connected installations per year has dropped significantly to about 150MW.

In March 2017, after the full implementation of bidding and auction electricity prices, Pakistan’s grid-connected solar installation was seriously affected. The number of projects that have been installed and not connected to the grid continues to rise because of repeated postponements and cancellations. The power pricing of individual projects was granted separately, and project transfer becomes the main exit route for the investors. Meanwhile, the relatively backward level of power grid construction also restricts the construction and grid connection of solar power station projects.

Small off-grid power generation projects that do not need grid connection are very popular in Pakistan, and the actual installed capacity of this part is difficult to be included in the national installed capacity statistics.

From 2017 to 2019, the State Electricity Regulatory Administration (NEPRA) has successively reviewed about 150MW of new solar projects. Punjab, Pakistan’s most economically developed province, announced plans for a 1GW auction, but only about 100-200MW projects have been put to work.

The first auction was held by Sindh province until March 2020, with a total capacity of only 50MW. The province plans to auction a total of 400MW photovoltaic projects by 2021.

PAKISTAN Solar install capacity GRID-TIED-MW-GesseyNewEnergyInfo
Source: sorted by GesseyNewEnergyInfo, July 2020

GNEI estimates that in 2018 and 2019, the actual new pv installations in Pakistan (grid-connected + unconnected) are 800MW and 1200MW respectively, which have actually become the GW level market. By the end of 2019, the estimated capacity of the unconnected project is 1.5GW. With the continuous reduction of solar module costs, the feed-in tariff for bidding and auction is expected to be fully implemented in 2020. It is estimated that at least 1GW of existing photovoltaic projects will be connected to the grid in succession from 2020 to 2021.

GNEI expects Pakistan to add 1.5GW of photovoltaic capacity in 2020 and more than 2GW a year by 2022.

PAKISTAN ACTUAL SOLAR INSTALL CAPACITY AND FORECAST-MW-GesseyNewEnergyInfo
Source: sorted by GesseyNewEnergyInfo, July 2020

5. Chinese Solar Module Export to Pakistan

China exported 1.1GW of pv modules to Pakistan in the whole of 2018 and climbed to 1.6GW in 2019, according to GNEI’s solar module export data. From January to May in 2020, the export volume has reached 893MW, and the monthly export volume has exceeded 100MW.

It is worth noting that the demand for solar modules in The Pakistani market is relatively special. The demand for conventional mainstream modules, such as 60 cell / 72-cell, accounts for only 2/3 of the demand, while the demand for non-conventional modules, around 150W, accounts for more than 1/3. This is related to the underdeveloped local power grid and more off-grid power generation projects for self-use meanwhile according to our research solar modules are exporting to other countries like Afghanistan as well.

Chinese Module export to PAKISTAN BY TYPE-MW-GesseyNewEnergyInfo
Source: sorted by GesseyNewEnergyInfo, July 2020

According to the export analysis report of GNEI data of exporting companies, from January to May in 2020, among the solar panel brands in Pakistan market, Canadian Solar shipped the most, and JA Solar, Jinko, Trina, and Risen were also among the TOP10.

Due to the large demand of 150W unconventional solar panel in Pakistan, there are five trading companies among the top 10 solar panel brands or companies. The distribution of companies shipment is very dispersed.

top 10 solar Export to PAKISTAN Jan-May 2020-MW-GesseyNewEnergyInfo
Source: sorted by GesseyNewEnergyInfo, July 2020

6. Summary

The biggest driver of Pakistan’s PV market development is the country’s relatively backward economic development level, as the country’s total electricity generation is still at a low level, the installation of all types of power generation energy needs to be greatly improved, including photovoltaic projects. Due to Pakistan’s very special government-to-government relations with China and its important geographical position and cooperation status in the “One Belt And One Road” strategy, the CPEC is expected to contribute to the steady growth of Pakistan’s economy.

Since the end of FIT policy in 2017, the postponement of alternative power price auctions has led to a downturn in Pakistani pv grid-connected installations in 2018-2019. Nevertheless, as

1. existing unconnected projects are expected to be included in the approved list after completion

2.off-grid projects are very popular in Pakistan, there is a strong demand for about 150W of small solar panels. For these two reasons, solar panel demand in Pakistan has always been good.

In 2020, with the downward trend of module prices, the cost performance of pv projects will gradually become apparent. The bidding and auction planned by the Pakistani government for many years will be implemented, which will further boost the demand for PV modules. GNEI estimates that in 2020, the number of new photovoltaic installations (off-grid + connected) in Pakistan will reach 1.5GW, and it is expected to exceed 2GW/ year in 2022. The development prospect is worth looking forward to.

About GesseyNewEnergyInfo-GNEI

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