Rooftop solar promises revolutionary potential

Solar power cost crashed in 2009 with China becoming the largest manufacturer and exporter of the solar power equipment. It made solar power attractive and with multiplying installation the cost is continuing to come down following the economies of scale. Take for example the case of the US, from 2009 to 2015, the installation of solar power went up by 4000% and the cost came down by 70% rendering it increasingly attractive and feasible option. Of the three categories of unconnected rooftop solar, grid-connected rooftop solar and utility solar, it is the rooftop solar without batteries and grid connection that is experiencing the highest growth in the US for the cheapest power it provides during the solar hours. Since each household in the US is grid-connected they switch over to grid electricity at night. The US authorities provide 30% upfront subsidy for rooftop solar and accelerated depreciation @ 80% for tax rate. Consequently, for 3000 dollars per KW cost the homeowner pays only about 1596 dollars. In 2015, the US added 7260MW solar capacity of which residential alone was about 4200MW.

Rooftop solar is creating a global wave of revolutionary potential for power users connected with the grid as well as those who still have no access to grid electricity. The latter can have a cheaper access to power through micro-grids and customised solar-wind-biomass power centres saving all the cost on extension of expensive grid and consequential transmission and distribution losses besides the thefts. The government could provide incentives and micro-financing for solar electricity for the unconnected communities. It may be added that innovation and information economy correlates with the INTERNET penetration density, and providing electricity to unconnected areas can bring the youth into Infirmation loop.

For the grid-connected households there are three options: 1) self-contained rooftop solar with storage batteries, which is expensive and entails loss of electricity in charging and discharging the batteries; 2) grid-connected rooftop solar with two-way meters for sale of surplus electricity and purchase when solar is not generating, this model is adopted in India and is also being considered for Pakistan; and 3) rooftop solar without batteries and without grid connection, this is commonly employed in the US, it provides the cheapest power during solar time and requires grid electricity during non-solar hours.

The neighbouring India has set up a Ministry of New and Renewable Energy and that has defined the National Solar Mission in 2014 and is working to make solar energy compete with the fossil fuel generated electricity by reducing the cost through policy initiatives, economy of scale installation goals, aggressive R&D and indigenous manufacture of equipment.

It offers the following incentives: 

— Exemption from excise duty and concession on import duty;

— A 10-year tax holiday;

— Wheeling, banking and third party sales; and buyback facility by the States;

— Reduced wheeling charges;

— Subsidy of 30% on project cost;

— Loans on subsidised rates for off-grid solar;

— And a payment security mechanism for default by utilities/distribution companies. India has about 5500 MW utility and grid-connected solar installed capacity and has set a target of increasing it to 100000MW by 2022. Pakistan basks in the hot sun with high horizontal irradiance that yields higher solar power. Nearly 50% of the countryside has no access to grid electricity. It is an ideal case for unleashing the rooftop solar revolution. But unexplainable it has a sordid history of solar electricity.

In 2013, the private sector imported 350 MW of solar panels but myopically seeing it as a revenue niche, the GOP lapped 32.5% duty on the solar panels and the following year the import went down to 128MW in 2014. I could not reason out the basis of the counterintuitive policy. In a plain manner it simply means blocking the trend to go solar, it may have some other meaning that does not meet the eye which might justify the regressive policy twist.

The duty was slashed after one year and one hopes the import of solar equipment would start picking up again. It goes without saying that the government needs to provide the required incentives to remove hurdles and facilitate the potential revolution through duty/tax relief, strict quality control, and effective policy reforms.

Some of the needed reforms are identified as following: 

— Permitting/ permissions;

— Micro-financing;

— Zoning;

— Net metering where required;

— And interconnection processes for residential and small commercial solar power consumers.

Wind power is also becoming increasingly competitive with the thermal power. Its global growth has become exponential and it grew from 395.5 GW installed capacity in 2014 to 432.4 GW in 2015. Total wind installed capacity in Pakistan stands at 255.9MW, India on the other hand has 98 times larger at 25217MW. China has now emerged as the largest manufacturer and exporter of the wind power equipment in the world and like the case of solar, wind power cost is expected to further come down substantially, which would make it an attractive option for power utilities. A recent UK based study predicts that both solar and wind power costs would be less than the hitherto cheapest thermal power from CCGT using natural gas as fuel by 2020.

Paris Agreement relating to climate change control has created new dynamics for cleaner power generation and it is imperative to substantially reduce fossil fuelled electricity especially that of coal and oil by 2030 to achieve the target of at the most 2 degrees Centigrade average annual temperature above the pre-industrial era in 2100. This factor will also provide greater impetus to renewable energy. Pakistan needs to join the global wave in time to improve the energy, and indeed the national security.