The renewable revolution
THERE is far too much negativity in the air, and some feedback I have received from those who follow my articles says they are keen to hear what suggestions I might have for the government, rather than just relentless criticism. It is a fair challenge and I accept — so here goes.
I have made it clear in the past that I am a big fan of the renewable energy revolution that is currently sweeping the world. I am very keen to see this revolution reach its full potential here in Pakistan and have some ideas on how it can be catalysed.
First, consider how the industry is developing. Back in 2010, the Obama administration launched what they called the Sunshot Initiative, an ambitious drive to bring down the price of utility-scale, grid connected solar power to a point where it achieves what they call ‘grid parity’, or the same price as the electricity that is already present in the power grid. At that time, they figured this grid power price was six cents per unit, whereas solar was 28 cents (for utility-scale grid connected power), and they targeted to bring solar down to six cents by the year 2020.
Likewise, they brought down the price of residential and commercial solar power from 52 and 40 cents to 16 and 11 cents respectively by 2017. By the end of this year, they want these numbers down to 10 and eight cents respectively. It is quite possible these targets have already been reached or surpassed.
In utility-scale, grid connected solar power, they passed the six cents mark by 2017 instead, three years ahead of schedule. Now they are targeting to bring it down to three cents by 2030.
Our challenge is to catalyse this process, not sit and wait for it to arrive on its own.
Last year, the International Renewable Energy Agency (IRENA) found that “83 per cent of the utility-scale PV pipeline commissioned for 2020 will boast prices lower than the cheapest fossil-fuel alternatives.” As per their survey, utility-scale solar projects will have an average tariff of 4.8 cents per unit, beating the target set for the Sunshot Initiative. They find that solar and wind will, in this year, beat the 700GW of total operational coal fired power generation worldwide, meaning the revolution will hit a tipping point in both financial and operational terms in this year. From here, there is no looking back.
We are in the middle of a profound revolution in power generation that is perhaps similar to the revolution in communications that cellular phones ushered in about a decade and a half ago. In the late 1990s, it was rare to see people with a mobile phone. Today, it is rare to see someone without one. It will be the same with solar panels. By the time the 2020s end, it will be rare to find someone who does not have a solar panel in their home, office or factory.
Our challenge here is to catalyse this process, not sit and wait for it to arrive on its own. Unlike the mobile communications revolution, this one does not rely on large operators, with billions of dollars in investment. Small traders are now importing the technology that can bring an entire home’s power bills down to zero.
In 2015, the country’s first ‘net metering’ regime was initiated by Nepra, the power sector regulator. This enables a power consumer to generate electricity on their own premises and sell whatever they are not using back into the grid. As of 2010, large sections of our power bureaucracy had not heard of such a thing. For a couple of years after 2015, when the regulations were announced, the number of net metering license applications actually processed remained near zero.
Today, hundreds of these applications have been processed, with the number rising exponentially and processing time coming down significantly.
How can it be catalysed? The energy ministry simply needs to put some incentives for the power distribution companies to issue more net metering licenses. They can do this by helping create a partnership between the distribution companies, the banks and authorised suppliers of solar panels whose products have passed quality control guidelines set by the Alternate Energy Development Board.
The banks will provide the capital for each home-based installation, much like an auto loan, to be repaid through the consumer’s power bills. The vendor will provide the technology, installation and after sales service. The distribution company will advertise the scheme through its monthly bills, telling the consumers that there is no upfront cost. The bank will pay the upfront cost, and the loan will be repaid from the savings that the consumer gets from the installation. For the first year or two, the savings are used to repay the bank (depending on the repayment plan the consumer chooses), and after that the savings belong to the consumer.
The distribution companies can be told that every unit of power that you buy from rooftop solar entitles you to an equal number of units to be purchased from the grid at a reduced price. They can be given benchmarks to reduce their receivables and increasingly told to rely on their own liquidity to run their business, with appropriate bonuses for performance.
Bringing the renewal revolution into the homes of millions of people around the country is a visible marker of progress, and will have a lasting impact on power sector development in the future.
Our power sector difficulties, such as the continuously rising circular debt, will not be solved through reforms because the power of the entrenched, vested interests — whether the bureaucracy, the rackets, or the large independent power producers — is too powerful for the state to manage without upheaval. Ultimately, these chronic problems will only disappear when technology makes the entire apparatus anachronistic, much like cellular technology made large-scale landline telephone infrastructure obsolete. Reforms to mitigate the rise of the circular debt are important, but why not start pushing large-scale solar installations as well?
The writer is a member of staff.
Twitter: @khurramhusain
Published in Dawn, February 20th, 2020