The message that came through the United Nations’ climate change conference (COP27) in Egypt's Sharm el-Sheikh is loud and clear: nations need to do more to slow down climate change or the consequences will be catastrophic.
For Pakistan, the deadly effects of climate change are already here. This year's monsoon floods have caused devastation on a scale never seen before.
At COP27, Pakistan iterated that while it was responsible for less than one per cent of global carbon emissions, these emissions triggered the floods, submerging a third of the country, killing over 1,700 people and leaving millions homeless, impoverished and ill. Damages are estimated at a whopping $40 billion.
Developing countries such as Pakistan wanted to create a 'loss and damage' financial mechanism that would make it mandatory for developed countries to offset the impact of climate change on developing countries and assist energy-poor countries in making the transition to net zero emissions — a balance between man-made greenhouse gas emissions and their removal from the atmosphere. While the recently concluded COP27 reached a "breakthrough" agreement to set up such a fund, a 'transitional committee' will deliberate how to operationalise it at COP28 next year.
With increasing climate change related-disasters occurring across the world, every country has started focusing on climate change in its own way. Many developed countries have set goals for reducing the share of fossil fuels in their resource mix for generating electricity and replacing them with renewable energy resources such as wind and solar.
While wind and solar can be used on a large scale by electricity companies, they require the construction of long and expensive transmission lines.
Unlike wind projects, solar panels are deployable on a small scale on consumers' properties, thereby avoiding expensive transmission expenditures. Excluding massive solar projects by electricity companies, this does not need large tracts of empty land because solar panels can be mounted on the roofs of homes and businesses. When paired with batteries, they can continue to provide electricity during power outages.
According to many experts, solar energy has the highest potential for contributing to meeting the net zero emissions goals because falling costs for solar panels and storage batteries have made solar cost-competitive compared to fossil fuels and other renewable energy solutions.
Several international organisations have stated that solar needs to become the largest single global energy source by 2050 for the world to meet the net zero emissions goal. In order for that to happen, they have estimated that the average annual solar investment needs to be doubled through 2030.
Ideal for the south
Solar panels use photovoltaic cells to generate power. Countries in northern climates with long winters and short summers do not get as much sunlight as countries in southern climates with long summers and short winters. So, the potential benefits of solar energy are going to be higher in countries with southern climates, many of which are developing nations.
Here are a few examples of countries that are utilising solar energy:
Hawaii - US: It has the highest percentage of homes with solar panels of any state in the US. Why? Because it has a tropical climate with plenty of sunshine. Hawaii relies heavily on imported fuels to generate electricity which, consequently, is quite expensive. In contrast, the payback period on solar investments is attractive.
California - US: With the largest population in the United States, electricity rates almost as high as Hawaii’s and a climate suited for solar, it has the largest number of homes with solar panels in the US, totalling around 1.3 million. To further encourage solar adoption, the state has mandated that solar panels will be installed on all new homes.
Australia: It has the highest share of households with solar panels worldwide. A climate ideal for solar and high electricity rates make that possible.
France: People don’t often think of France as an ideal location for solar energy as a very large share of its electricity comes through nuclear plants. However, those plants are aging and experiencing significant downtime because of necessary maintenance. In order to accelerate the decarbonisation process, France is planning to mandate the installation of solar panels on large parking lots.
Jordan: In the Middle East, Jordan is a shining example. With a population of only 10 million people, it has installed rooftop solar panels generating one gigawatt (GW) of energy.
India: It has set a goal of generating 40GW through solar and installed panels generating 10GW so far. Consulting firm Ernst & Young has ranked India as the world’s most attractive market for solar, ahead of China and the US.
According to one source, Pakistan had installed only 305 megawatt (MW) of rooftop solar panels as of December 2021. However, other sources suggest that Pakistan imported 1,000MW of solar panels in 2021 alone so the figure might be higher. Even then, the total installed capacity of solar panels in Pakistan pales in comparison to what it would be if Jordan’s number was prorated upwards for Pakistan’s population, yielding 22GW. Hence, there is a lot of room for growth.
Solar's potential in Pakistan
Pakistan receives a lot of sunlight, yet it relies heavily on fossil fuels to generate electricity. Fossil fuels lead to emissions, are expensive, and since they are often imported, place a burden on the balance of payments. In addition, electricity generated using fossil fuels is often unreliable. Power outages are common. All of this makes a compelling case for installing solar panels on customers' premises.
Pakistan should make it a priority to reduce the share of fossil fuels in electricity generation and increase the share of renewable energy sources, such as wind and solar. Oddly enough, despite being located in a region severely affected by climate change, Pakistan continues to invest in environmentally unfriendly methods of power production. For example, the government is planning to add up to 6,600MW of Chinese-funded coal power plants in the coming years.
Solar power can provide a lot of the electricity that Pakistan needs. For the better part of the year, much of the land is dry and hot. Today, Pakistan only generates around one per cent of electricity through solar power. If fully utilised, solar and wind power could generate more than a third of the electricity required in Pakistan.
A recent case study is worth pondering. In Sindh, rooftop solar panels of 20MW were installed on some 30 hospitals under a World Bank-financed project. The project demonstrated that rooftop solar panels can be installed in Pakistan in less than a year and at a relatively low cost while avoiding the need for additional transmission and distribution infrastructure.
A major driver of solar's potential success in Pakistan is high electricity rates. Another factor that can make solar more beneficial in developing countries such as Pakistan is the low cost of labour. Labour costs come into play in two ways — the cost of installing the panels and the cost of manufacturing panels. There is no doubt that Pakistan’s labour installation costs are far lower than in Australia and the US.
In the long haul, it would make sense to produce solar panels in Pakistan. In the near term, it may make sense to import them from China, which is a world leader in the production of solar panels and a good friend of Pakistan. Once Pakistan sets up a domestic solar production industry, it could start exporting panels to countries in the Middle East.
Consumers who install solar power often have excess power during the day. They import it at other times when the panels are either producing insufficient power to meet their needs or at night time. Net metering — a billing mechanism that credits solar system owners for the electricity they add to the grid — is necessary for encouraging solar installations. It has been in place in Pakistan since 2015. Unfortunately, the regulatory body is thinking of modifying the export compensation rate, which would be a setback.
What the government can do
Instead of decreasing compensation rates, the government needs to move in the opposite direction. It should subsidise the installation of solar panels through rebates. The key is to make sure that the customer’s investment in solar panels can be returned in five to seven years. In the US, those who install solar systems receive an income tax credit of 30pc.
To address the concern that only the rich can afford to install solar panels, additional incentives should be provided to low-income customers such as higher rebates and low-interest financing. For instance, India is providing a subsidy of 40pc for small solar systems (under 3kW) and 20pc for medium-sized solar systems (under 10kW).
Additionally, Pakistan should take steps to encourage installing batteries that are paired with solar panels.
Battery installations in California receive a $2000 rebate, offsetting approximately 15pc of battery costs. Additional incentives for installing batteries can be provided by instituting time-of-use pricing for electricity. Such rates allow the homeowner to lower their energy costs by using the battery to arbitrage against the rates. They can be made mandatory for new solar customers.
Finally, it may be worth mandating the installation of solar panels on new homes.
Header photo: A petrol station in Karachi with solar panels on its roof. — Shutterstock