N H ZUBERI

KARACHI: Solar power generation can still be considered as a viable option for saving money by reducing electricity generation.

A consumer can shift his entire or partial electricity load on solar generation system either with battery backups or directly utilize solar power to run their electrical appliances during the day time without installing batteries as they are expensive and have a shorter life (2 years) which nullifies a portion of the benefit due to high recurring cost.

Karachi Chamber of Commerce and Industry Research and Development Department report said that once the net-metering facility is rolled out in Karachi, hopefully soon, an individual or entity will be able to opt for net-metering for the purpose of saving as well as investment.

In case of net-metering, any domestic, commercial or industrial consumer having 3 phase 400V or 11kV connection is permitted to submit an application to interconnect its own solar or wind power generation facility of up to 1MW with the distribution network of the Discos like K-Electric after obtaining a licence from Nepra to operate as a ‘distributed generator’.

The agreement between net metering customer and the Disco is for a term of 3 years under the current law. However, it is emphasized that this period should be enhanced to at least 10 years with an additional clause stipulating that ‘the Disco will issue a new agreement after the end of a term, if no relevant objections are observed’ to encourage investors to take it up as business with better security of investment.

To execute net-metering, the Disco is required either to stall a single meter with the capability of recording two way electricity or two separate meters one for selling the electricity to the consumer and other for purchasing electricity from the same consumer who is a licensed distributed generator.

The rate at which the Disco has to buy the electricity from the consumer is determined at the consumer’s latest applicable off-peak rate as determined by Nepra.

The State Bank of Pakistan also provides refinance to local banks who offer loans at the reduced rate of 6 per cent to net metering customers for up to 12 years with installations of 4-1,000kW as per IH&SMEFD Circular No. 03 of 2016 from June 20th, 2016.4

A sample plan of costs and equipment is presented in the table below to apprise readers who may be interested in setting up net metering business. The payback period varies significantly depending upon the solar resource availability, ratio of sunny days along with size, utilization, and optimal operations and maintenance of the system. However, in our base case assumption of 5kva solution, it came out to be around 2 years which makes it a very lucrative investment opportunity. This solution has the capability to run equivalent load of 30 Energy Savers, 12 Fans, 1 Refrigerator (12 Cu.ft.), 1 Split Ac (1 Ton), and 1 washing machine.

If it is installed on the rooftop, it also keeps the accommodation cooler underneath by reducing the heat impact of the sun on the roof, thereby reducing the need of air conditioning.

In the USA, third-party owned model for net metering is also popular in the residential sector, where house owner provides rooftop space and turnkey installers lease solar power plants to them who in turn pay them a monthly lease rental.

The electricity generated is used to meet the on-site captive load while the excess generation is put into the grid on net metering basis.

Even KE itself should look at inducting more wind and solar power into its system to improve its Energy Mix as these are amongst the cheapest sources of energy.

Many issues of electricity in Karachi are inherent of any monopoly which cannot be addressed unless competition is induced.

Pakistan is yet to allow multiple private electricity transmission and distribution companies to operate targeting the same consumers through infrastructure sharing thereby infusing a healthy competition.

Although efforts were initiated to get the vertically integrated monopoly - KE unbundled, it was strongly resisted by KE by terming it ‘not a commercially or practically viable option’.

On the other hand, to promote competition in India, the Indian Electricity Act 2003 laid down a roadmap for utilities to transform from vertically integrated monopolies to unbundled autonomous entities.

It supported private participation in electricity distribution by providing for multiple distribution licensees and non-discriminatory open access for consumers.

Resultantly, like in case of Mumbai, a competitive service environment has been created, where at least 3 electricity companies compete to gain consumers to provide power through better services and lower tariffs.

Pakistan is passing through a critical phase where it is envisaging heavy investments from China and other investors under the umbrella of China-Pakistan Economic Corridor (CPEC), huge spending on power and infrastructure are already underway.

On the other hand, it is facing difficulties in managing its balance of payment position due to unprecedented increase in imports and sluggish export performance along with heavy debt foreign repayments in the pipeline. Under such a situation, there is immense responsibility on the government authorities to bring in efficiencies in every sector of economy where power sector is at the center stage. It is, therefore, crucial to manage the upfront issues in this sector on war footings to minimize the damage to the economy, promote investments as well as protect the consumers’ interests.

There are indeed challenges but these can be handled through all-encompassing reforms and ensuring prompt implementation.