There are many advantages to commercial rooftop solar in Pakistan. First and foremost, the benefits are clear for the third-party owner of the solar panel, since the internal rate of return for this investment is higher than the capital cost. Second, the government benefits from increased grid stability, since the extra power is supplied to surrounding neighbourhoods and not burned for additional electricity. However, Pakistan's power distribution companies are not very enthusiastic about the concept.
Barriers to installation
There are many barriers to commercial rooftop solar installation in Pakistan. First, there is the lack of manufacturing capacity. Secondly, there are a lot of barriers related to the installation process. These barriers can be eliminated by ensuring that the manufacturing is done locally. Finally, there is a need for government capital to help the solar industry in Pakistan.
The current government has set a goal of increasing the share of renewable energy in the electricity mix by 30% by 2030. Even though the country is blessed with abundant renewable resources, the current share of renewable energy is very low. This ambitious goal has rekindled efforts to promote Distributed Generation (DG), a market-driven approach that engages the commercial, agricultural, and industrial sectors. In addition, Net Metering is a crucial component in unlocking prosumer potential. However, these efforts have been hindered by inefficient regulatory procedures and uncooperative distribution companies.
A good power market structure in Pakistan is a critical component in ensuring the viability of renewable energy and facilitating access to finance. Power purchase models with a one-buyer, take-or-pay model help ensure that power purchase is economically feasible. However, such a model also increases the cost of energy for consumers, and burdens the government with additional costs.
Cost
The cost of commercial rooftop solar in Pakistan varies widely and depends on the type of system and location of the installation. In many cases, the third party will bear the cost of the installation, and will sell the electricity generated to the customer for a lower price than the grid tariff. This type of system is known as an operation expenditure model, and accounts for less than 10 percent of solar installations in Pakistan. However, this model isn't taking off as quickly as it might in other countries. In Pakistan, for example, electricity rates are volatile, and there are also government taxes to consider.
A PPA requires zero upfront costs and zero maintenance, and is ideal for businesses that are concerned with electricity costs. PPA agreements help commercial and industrial entities transition to solar sustainability without incurring the costs associated with the system. They also provide benefits such as guaranteed savings and discounted rates on energy tariffs.
