Did the world turn black when you saw your latest electricity bill? If so, you are not alone.
The heat demands air conditioning, electricity providers demand fistfuls of money, the International Monetary Fund demands higher tariffs and Russian President Vladimir Putin demands Ukraine’s annihilation.
But it is impossible to explain the concoction of reasons to a toddler who just wants to sleep with a teddy bear while the AC is running. Harnessing solar power is a happy solution for those who can afford it.
Here are some factors to consider before opting for a solar solution:
One can take a gander down Regal Chowk in Karachi and pick up a solution that costs a few hundred thousand rupees compared to a million-plus option that a branded supplier could provide but it comes with its set of drawbacks.
The solution providers at the lower price end tend to import a container of solar paraphernalia and hire an everyday electrician to install it. Given its technical nature, the lack of support may create some issues.
Shoddy-quality solar panels can cause short circuits and sparks. In the best-case scenario, the system will shut down and you will be chasing after the supplier that may or may not be able to provide after-sales service.
“Even if a top-tier branded solar solution was installed in your house, it can act up a year or two after purchase,” says Musa Khan Durrani, the head of business and planning at SkyElectric. “You call up your local supplier but he may have switched his business to real estate and suggests you contact the manufacturer directly.”
“In the worst-case scenario, the sparks from inferior quality panels can start a fire,” cautions Mujtaba Raza, CEO of Solar Citizen.
Reputable solar providers are registered with the Alternative Energy Development Board (AEDB). While AEDB in no way vets or guarantees the quality of the panels or service, its registration allows the supplier to set up the net metering system which is where all the cost savings lie.
Compare it to buying a car: given the price tag and longevity of the purchase, you would opt for a trusted name such as Toyota or Honda rather than an unknown entity, if your budget permits. Solar panels generally have a warranty of 10-15 years and a life of 25 years so they may be lighting up your toddler’s wedding functions.
Cost savings lie in net metering, which is a billing mechanism that credits solar energy system owners for the electricity they add to the grid.
A company registered with AEDB can set up the net metering process on behalf of its customer. According to its website, KE processes applications received by AEDB-listed vendors only though this may not apply to all electric supply companies.
For example, you have a bungalow in Defence, Karachi, with a photo voltaic system on your terrace. It may generate more electricity than you need during the day, allowing you to sell the surplus to K-Electric.
Using the numbers of your annual electricity consumption, some companies can offer you a package that will bring down your electricity bill to zero. If your household consumes Rs1,000 of electricity at night on average, you can sell Rs1,000 worth of credits while the sun shines that can be availed after the sun goes down.
So during the day, you would use your own generated solar energy and KE would purchase the excess. Without batteries, at night, you would shift back to using electricity by KE which means load shedding at night requires the use of the good old generator running on the ever-pricey diesel.
To avoid power outages completely, you will need batteries to store the electricity generated while the sun is shining. There are different kinds of batteries, from the tubular batteries you are familiar with from the UPS system to the more expensive solar-specific solutions that can cost a further Rs250,000 per kilowatt for a home solution from a reputable company.
Solar solutions are less feasible for apartments because there is not enough open space that gets direct sun exposure. Though arguably, common areas such as parking can theoretically be solarised which may not take a complete load of all the apartments but can subsidise electricity bills.
Upfront cost and maintenance
Ali Karimjee, a resident of DHA in Karachi, installed an 11kW solar system in 2018 that cost him about Rs1.1m. “With the credits I earn through solar, I don’t pay electricity bills during the cooler months from November to March,” he says.
At the previously lower tariffs, at the peak of summer, his bill did not exceed Rs7,000-8,000 per month though three air conditioners, two fridges and an assortment of household appliances run on electricity. As electricity tariffs climb, he expects higher savings.
All this is peachy keen but the cost of solar is a hefty one and rises with the exchange rate. “As a rule of thumb, a normal household with three to four ACs and the usual appliances requires a solution of 10kW which now costs roughly Rs1.3m without batteries,” says Raza.
However, it can go as high as Rs2m, says Durrani. A 10kW system, including batteries, can cost between Rs1.8m to Rs3m but while the panels can last decades, the batteries may have a life of only a couple of years.
Being completely independent from grid electricity entirely is not the wisest of options. Batteries are expensive and need to be replaced frequently, so it could be upwards of an extra Rs300,000 every two years. If the purpose of the PV installation is to decrease the electricity bill, then a hybrid solution adds up to the most savings. If the purpose is to thumb your nose at KE, than by own means, go ahead.
A small additional cost is related to maintenance which involves washing the solar panels frequently. “A man comes to service my solar panels every week,” says Karimjee. “I pay him Rs3,500 per month.”
How can one afford a Rs1m-plus solar system? The State Bank offers financing at a flat six per cent rate, which is not linked to the Karachi Interbank Offered Rate. Generally, the tenure of the loan is three to five years with a down payment of 20pc equity.
Depending on electricity consumption and the amount spent on the solar solution, what you owe the bank could tally up to a smaller figure at the end of the month compared to your bill. For example, if you spend Rs25,000 a month paying off the bank when your electricity consumption is at Rs40,000, you will be saving money, even with a loan.
Keep in mind that while electricity tariffs increase, the amount of instalments remains constant so your savings will increase in proportion to the rise in energy rates.
However, banks take months to process solar loans, industry insiders complain. Given the technology involved, panels and assorted parts are imported and the rapid depreciation of the rupee jacks up prices. A few months down the road when the loan is finally processed, the cost of the package could have risen as well.