High vitality costs and taxes have been robust drivers for industrial and industrial (C&I) photo voltaic initiatives in Pakistan. Omar Malik, the CEO of Pakistani C&I photo voltaic developer Shams Power, spoke pv journal about market traits and challenges.
C&I energy customers are more and more deploying photo voltaic arrays in Pakistan attributable to excessive vitality costs and tariffs.
“The common industrial client now pays a tariff of $0.12/kWh,” Omar Malik, the CEO of Pakistani photo voltaic developer Shams Power, stated. pv journal. “But that is solely half the story, as a result of in addition they should pay a $0.10 tax for each kilowatt-hour they purchase from the grid. The authorities depends on 5 to 6 sectors for a lot of the oblique tax assortment, that electrical energy is among the greatest.”
High self-consumption means decrease electrical energy prices and decrease taxes. Under the nation’s present laws, the sale of extra electrical energy to the grid underneath web metering is barely allowed for mills as much as 1 MW in dimension.
The authorities additionally exempted the import duties of photo voltaic panels. “The exemption of photo voltaic inverters was just lately eliminated,” stated Malik. “But it has no penalties for the event of the market.”
Pakistan’s National Electric Power Regulatory Authority (NEPRA) has issued 1,596 net-metering licenses throughout the nation with a cumulative capability of 221.05 MW within the 2022-23 fiscal yr, in response to official statistics from the Associated Press in Pakistan.
Malik stated the market can be rising by way of panel imports.
“In 2022, 2.8 GW of photo voltaic panels will probably be imported into Pakistan. In 2023, about 5 GW, regardless of import controls, and this yr the forecast is as much as 12 GW,” he stated.
Financial issues
One of the primary hurdles to deal with within the C&I sector in Pakistan is entry to financing.
“Banks and lenders in Pakistan proceed to think about photo voltaic belongings as very quickly depreciating belongings,” Malik defined, noting that the fluctuation of the Pakistani rupee continues to be a difficulty in comparison with India, the place entry to financing is simpler. “Indian foreign money is powerful sufficient for worldwide buyers.”
Despite these challenges, Shams Power was capable of increase $20 million in debt from native banks backed by a assure from a global credit score enhancer, GuarantCo.
“To obtain this, we have to deliver the financial institution to the financing stage of the mission,” Malik defined. “Or we are able to do it after a yr or two of operation, when we’ve got some outlined money flows and we are able to present how these properties are and get the portfolio refinanced.”
Many Pakistani firms exporting denim and textiles to the US and European markets are dealing with stress from their consumers to help their provide chains with clear vitality.
“Actually, there’s some stress to maneuver in direction of renewables, however it’s not from the federal government,” Malik stated.
Storage section
The C&I section has but to supply a considerable enterprise case for battery storage.
“Batteries are nonetheless not economically viable relating to grid parity due to excessive import duties and taxes on batteries and storage applied sciences,” stated Irteza Ubaid, chief working officer of Shams Power. pv journal. “With the present electrical energy pricing scheme, you may solely make a revenue if there’s a energy outage. Or when the height fee hits, you can begin utilizing the batteries. However, the extent price of storage of C&I tier-1 batteries at present, nonetheless, continues to be near $0.35/kWh. We nonetheless can’t present financial advantages to shoppers who arrange storage as a result of they will purchase grid energy for lower than $0.30, they aren’t actually – except they’ve a steady manufacturing course of and can’t attain any interruptions .”
Shams Power is at the moment constructing 5 MWh storage initiatives in Pakistan.
“We educate our shoppers and persuade them about not solely trying on the price per kWh, but in addition taking a look at further advantages resembling energy high quality and environmental advantages,” stated stated Ubaid.
Import duties are nonetheless imposed on batteries, which implies that preliminary prices stay larger than in different, extra mature renewable vitality markets.
Shams Power has a monitor file of deploying greater than 40 MW of C&I photo voltaic for main shoppers resembling Coca-Cola, Mondelez, AkzoNobel, Metro, Packages, Shifa Hospital, Hyundai, and Sanofi. It has a pipeline of greater than 200 MW with massive multinational and native companies throughout Pakistan.
This content material is protected by copyright and might not be reused. If you need to cooperate with us and need to reuse a few of our content material, please contact: editors@pv-magazine.com.