Pakistan plans to prioritize installation of 9GW photovoltaic systems
Pakistan, which has long lagged behind in installed PV system capacity, is finally starting to catch up.
If successful, the installed PV system capacity in Pakistan could exceed 15GW by 2024, up from less than 1GW currently.
The Pakistani government is currently beset by an ongoing power crisis that has resulted in prolonged blackouts and soaring electricity costs, ultimately prompting the country to reverse its energy direction by adding more photovoltaic systems to its grid. While an announced target to install 1.4GW of PV systems this year, Pakistan appears to want to make up for lost time sooner. Considering that Pakistan can get help from Chinese PV developers in installing gigawatt-scale PV projects, the installed capacity of large-scale PV projects installed in the country will surge in the future.
With the recent rise in electricity prices along with rising fuel costs, the Pakistani government is prioritizing the launch of 9GW of PV projects under the Photovoltaic Initiative. The boost to the surface PV market is associated with different PV project completion times, which typically range from 6 months (for PV projects below 4MW) to 12 months (for large-scale PV projects).
To ensure the successful installation of PV projects, the Pakistani government is doing all it can to attract investors and various industries to join. From timely payments, land availability, tariff relief to 70% tariff indexation on a quarterly basis, the country has done everything to ensure gains are made and proven. Installing more PV systems is a major focus for investors in the country right now.
The Pakistani government has pledged to implement specific electricity tariffs through a set bidding process to ensure quick decision-making. EPC companies in “friendly countries” will receive attractive electricity prices that are lower than the benchmark electricity prices for projects on an inter-government basis.
The Pakistani government will purchase all the electricity from the PV system on a 25-year BOOT (build, own, operate and transfer) basis and will sign an Energy Purchase Agreement (EPA) under a 12-month Commercial Operation Date (COD). Investors will be exempt from all import-related duties. The country’s government even exempted income tax on COD profits for the first 10 years, highlighting the huge demand for photovoltaics.
In addition, the country is encouraging rooftop PV systems to be net metered through lease model tenders, either on a 10-year BOOT basis or on an own-cost model. As ever, Punjab appears to be the bigger focus, the province that houses the majority of Pakistan’s population and tends to dominate in many other ways.
The moves underscore the desire for cheap renewable energy and the lack of any domestic supply chain to support PV projects. In the midst of a severe foreign exchange crisis, the Pakistani government has also pledged to release foreign exchange for such projects within 60 days of prioritizing invoicing.
The energy storage system is a missing element in the policy so far. Once some photovoltaic projects are up and running, the deployment of the energy storage system may be considered, but obviously, the Pakistani government believes that the deployment of the energy storage system is not necessary at this stage, so the power of the photovoltaic system has been In short supply.