The coalition administration led by Prime Minister Shehbaz Sharif is merely months old, but it has already established its seriousness of purpose in tackling the nation’s chronic energy woes,...
The coalition administration led by Prime Minister Shehbaz Sharif is merely months old, but it has already established its seriousness of purpose in tackling the nation’s chronic energy woes, largely because the centrepiece of PM Sharif’s strategy is a major pivot towards solar power generation. As September began, he greenlit the addition of 10,000MW of electricity to the national grid through solar power generation. But while the ovation over this step in the right direction is still in the air, word has come that the National Electric Power Regulatory Authority (Nepra) is preparing to revise its tariff for roof-top solar net metering to the disadvantage of the consumers. This is a classic example of a government’s organs working at cross-purposes. It is far from clear how Nepra rationalizes its policy shift, but there is no doubt whatsoever that this move will erode the incentive the electricity consumers have to add solar generation in the hope of reducing their energy bill.
The government needs to realize that electrical power lies at the heart of Pakistan’s economic woes in more than one way. Fossil fuels are the biggest item on our import bill precisely because so much of our electricity comes from thermal generation. Our petroleum imports over FY22 tallied at a colossal $23.318 billion. There is no way we can bring our import bill back to manageable proportions without whittling down fuel imports. Only then can our current account deficit – measured at a four-year high of $17.4 billion for FY22 – become tractable. And lest we forget, the source constraints of our economy being what they are, every dollar spent on fuel imports is a dollar taken away from development spending. Then, too, there is the out-of-control circular debt of the power sector – a huge and perennial drain on the nation’s precious fiscal resources. Currently at Rs2.5 trillion, it is even higher than our defence spending. A pivot to solar energy, therefore, is potentially a game-changer for Pakistan’s economy.
Embracing solar is also essential because of the huge potential we have both because of our sunny climes and our burgeoning power needs. Pakistan’s total installed power generation capacity stands at about 41.5 GW, although only around 28GW of it has been online owing to various technical issues. Going forward, our power needs are only expected to rise because of our growing population as well as the great potential that exists for development. Above all, PM Sharif’s emphasis on solar is rooted in the need for cheaper electricity, and rightly too: after taking the reins of power this April, his government has raised the power tariff by almost 100 per cent. On the ground, however, the share of solar in our power generation mix stands at an abysmal 0.5 per cent. This is unacceptable because solar energy is the nearest thing to free energy in that all you have to do is harvest it. It is there for the taking – and technologies are now on hand that promise solar solutions to match the nation’s needs. The only limiting factor for PM Sharif’s National Solar Energy Initiative at this point is the fiscal resources the government can pony up, which are no doubt limited given the state of our economy. That is where the roof-top solar with net metering comes into play in a big way. Here is a solution that can potentially cut our fuel import bill by a substantial proportion without requiring an upfront capital cost investment from the government.
Under the circumstances, one would expect the government to double down on roof-top solar with net metering. The thing to do would be to further incentivise power consumers to migrate to grid-connected solar generation so they can help ease the peak burden. But here we have Nepra poised to dilute the existing incentive regime, potentially rendering the setup unattractive for the common consumer. The government would do well to review and rationalize this in view of PM Sharif’s strategic focus on solar power generation. They may find that a proliferation of grid-connected roof-top solar establishments has the potential to become the backbone of the national grid. They may find that this initiative needs boosters, not speed bumps – which is just another way of saying PM Sharif must attach a higher priority to rooftop solar, even to the extent of diverting some of the resources going into large-scale solar farms.