Home / Energy / The government, banks must jump on to financing the solar projects

The government, banks must jump on to financing the solar projects

Published on 31st Aug, Edition 35, 2015


Solar energy is forecasted to become a new source of power to lead the world to a low-carbon future and expectedly, away from a global climate catastrophe. For solar energy to become very cheap that it can compete with coal and oil, its deployments need to be greatly developed.

Solar power can meet wholly the world demand of electricity. It has the capability to provide several times the country’s energy demand. The world’s covered desert area of 40 percent can supply all of universe electricity. Even the Gobi Desert could supply all of the world’s electricity. It has a discontinuous production of supplying electricity and is generally kept by storage or another energy source with the wind, power, and hydropower. Its major problem is with the escalating installation cost. But as time is passing by the cost of solar power installation is decreasing.

Solar energy helps to reduce the release of carbon dioxide on earth and provide beneficial health from the clean air in houses. It reduces deforestation and time of the people who spend a larger time in gathering wood, allowing more time to work on productive and income generating activities. The use of solar energy system increases agriculture and industrial production by creating rich soil and smooth water flows.

Many countries are utilizing solar energy for a wide range of users including cooking, water heating. Solar water heating water is a confirmed technology with hundred of thousand units being used in this world. Utilizing the solar water heating can reduce about 50 to 60 percent domestic water cost. In this context, the gas and electricity saved can be utilized in the industrial sector.

Fast expansion worldwide

Many developing countries do not have large funds to build huge solar plants, but somehow or another they are solving their problem by introducing small solar application. Solar power works by taking energy from the sun and using solar panels. It is usually installed on the roof, to convert into usable- electricity.

Western countries like Germany and Spain are developing solar energy. In South Asia, Bangladesh and India are quickly deploying this technology already, which is becoming cheaper each year. The Chinese have actually managed to bring down prices in the last few years. It is estimated that in 2011 Photo Voltaic (PV) modules cost 60 percent less than what they did in 2008. China has an abundant of solar panel production and Chinese manufacturers that supply most of the world’s solar panels are struggling to expand fast.

Spain has been the forefront of universal efforts to produce solar energy as high as 432MW, hitting the United States by 10MW. It has opened the largest solar power station, overtaking the United States as the biggest solar generator in the world. Spain is one of the countries of Europe with more days of the hour of sunshine. It exports 80 percent of the solar energy to Germany. According to official sources, another 600 MW will be added to the grid. It is anticipated the overall solar capacity to be 2,500 MW. In Spain the world’s Biggest Solar Power Tower, Abengo began commercial operation of a 20MW solar plant tower near Seville in the late April 2009, called the PS20.

Israel has successfully introduced solar energy. There is no oil in Israel and it does not maintain a cordial relation with Arab oil producing countries and so in order to maintain its economic stability and security it has given utmost importance to solar energy. With abundant sunshine available in the country, it has made immense use of solar energy for the economic development of its country. The innovative and its advanced research have made the stride in solar energy to such an extent competitive with fossil fuel technology.

India is situated in the Earth’s equatorial Sun Belt. It receives abundant solar radiation. It is said that India experiences clear bright weather for 250 to 300 days per annum. India has kept aside 35,000-kilometer region of Thar Desert that could be sufficient in generating 700 to 21,000 gigawatts for the proposed large solar energy projects.

India has disclosed that by 2020 it will be mandatory to use solar- powered applications and equipment in every government buildings, hospitals, and hotels. In regard to the use of solar powered application and equipment in every government buildings, hotels, and hospitals India shared the first position with the United States.

Affordable and practical contributor in Pakistan

Pakistan is located in a region with ample sun energy that makes it suitable to utilize solar power technologies to overcome the energy crisis. The largest businesses today are effectively making use of solar energy to power their operations. Solar energy can now be an affordable and practical contributor to our country’s energy needs. Reduced capital expense has made it really attractive for industrial and corporate users alike. It helps reduce long term operating costs, provides a reasonably predictable supply of electricity and is a complete hedge against market fuel price volatility.

Presently, Pakistan has an installed capacity of around 23,000 megawatts and a demand of only around 16,000 megawatts so we should go quickly developing solar energy. Energy reforms are of no use unless they are long-term and we need to be thinking of the future. Our government should plan for the long-term taking into consideration population growth and the increased demand for electricity into consideration.

Without any doubt, solar energy has a substantial role to play in the country and needs to be actively promoted by the government on a priority basis. However, without some sort of financing, solar installations for now remain expensive and out of reach of the many. If bank finance schemes are made available, a lot more people will install solar systems. The technology is sound, the vendors are ready, and the need is desperate. The government and the banks must jump on to financing the solar energy.

Pakistan is facing a chronic energy problem. It is unfortunate that there is less production of electricity from the hydro power source during hot and dry months and this cannot keep with the increased rise in energy demand. About 80 percent of the population lives in villages scattered all around the country. Their residence is far from the grid station transmission lines of the national grid. Therefore, in this context it is not economically feasible to connect these villages with the transmission lines to the grid.

In spite of all the hurdles, the prospects of solar energy are very bright as Pakistan receives the high level of solar radiation throughout the year. Solar energy systems have already been developed, but more have to be developed and introduced to generate economy and improve the standard of living of the poor people. The solar system meets the necessary requirement of rural areas and reduces the pressure on traditional energy sources in urban areas. The rest can be utilized fruitfully for other domestic and industrial needs.

The solar technology is not so much sophisticated and is likely to be successful from the commercial point of view. Solar Energy Research Centre has been able to set up an up to date facility for the large production of solar geysers and cookers and provide all necessary technical, support, service, and implementation and management services. Already many have shown their interest in obtaining the Solar Energy Research Centre system for cooking and water heating.

For years, Pakistanis have cried through summer power cuts, but now the present government plans to exploit the sun’s large heat to tackle the country’s chronic energy crisis. The energy crises largely demand that Pakistan should reduce its dependence on costly fossil fuels and make well use of its natural resources like the sunlight or even wind also.

The adoption and utilization of modern solar and geothermal technologies including heat pumps, solar water heater and solar water pumps in Pakistan would lessen dependence on fossil fuel that is extensively imported from UAE and Saudi Arabia. The developed and developing countries have swiftly diversified their energy mix resources and there is no reason why Pakistan blessed by Almighty Allah with a lot of sunlight should adopt solar energy as a first step in the domestic sector.


Largest project in a country

The 900MW solar project is launched in Pakistan with the investment of US $1.5 billion by Zonergy Company Limited and is so far the largest solar power project in the world. This project is developed with the cutting edge technology and the equipment is being procured from the renowned manufacturers of Europe and China. The 900MW solar project is constructed in three phases and expected to connect to the national grid by the end of 2016. It will be invested by Zonergy Company Limited. First 50MW will be put into the national grid by the end of August 2015, an additional of 250MW by the end of December 2015, thereafter every month 100MW will be added to the national grid. 10 power projects are also being set up in Thar to tap the solar heat for power generation. When completed, Pakistan will stand in the list of top 10 countries to produce more than 1,000MW of solar energy. Energy companies working in Pakistan have said that plans for a 50-megawatt solar power plant would help the country avert a long-term energy crisis.

Exporting potential

Pakistan has great potential for exporting solar panels to European and African markets which would boost country economy. Following the European Union granted Technischer Uberwachungs Verein TUV (a German Technical Association) certificate to a Pakistani solar panel manufacturing company Tesla Technologies, a number of European Union and African countries have placed export orders for exporting Pakistani manufactured solar panel to these countries.

German solar energy company Conergy has announced that it has teamed with Hong Kong project developer Ensunt to build a 50-megawatt solar power plant in Pakistan. Conergy described the project as the biggest solar power effort for the country and one of the most ambitious in the region. “With 8-9 hours of the sunshine per day and annual insulation values of more than 1,700-kilowatt hours per square meter, the climatic conditions in Pakistan are ideal (for solar power),” said Conergy.

A Norwegian company signed a Memorandum of Understanding (MoU) with a Pakistani company on to establish three solar power plants in Pakistan. Nizam Energy of Sindh and Scatec Solar signed the MoU in Oslo to establish three solar plants to generate 150MW through clean energy in Pakistan. Prime Minister Nawaz Sharif and his Norwegian counterpart Erna Solberg witnessed the signing ceremony.

A Chinese company has built the power plant in Bahawalpur, in the Punjab province of Pakistan. The Quaid-e-Azam Solar Park is a 229-hectare facility in the Cholistan desert and has been hailed as an early part of China’s Silk Road program. According to China Daily, 100-megawatts of capacity have been installed in just three months, at a cost of $215 million.

Future measures

Amid a worsening energy crisis, Pakistan has approved the use of grid-connected solar energy, rooftop solar installations and mortgage financing for home solar panels to boost uptake of clean energy in the country. The government has also reversed course and eliminated a 32.5 percent tax imposed on imported solar equipment in the country’s 2014-2015 budget.

The State Bank of Pakistan and the Alternative Energy Development Board has recently allowed the bank for the first time to finance rooftop solar installation with home mortgages. Pakistan can cut carbon emissions to a significant extent and access international climate financing by promoting solar energy, besides overcoming its energy crisis.

The government should announce major incentives for importing and installing solar systems; make all components of solar system tax-free and not just the solar panels, which currently is the case, and direct banks to significantly reduce their mark-up on loans for renewable energy investors. New constructions should be bound to generate at least 20 to 25 percent of their total energy from solar. The solar business should be regulated by binding the importer to produce a certificate indicting that the products meet the certain international standard.


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