By Hassan Siddiq
With its abundance of land, labour capital and entrepreneurs, Punjab in Pakistan is rich in all four factors of production required for economic growth. With a population approaching 100 million people, majority of which is young, and a GDP (Purchasing Power Parity basis) of nearly $300 billion, it has endless potential to grow exponentially over the next many years. However, the growth is being hampered by one single constraint: lack of energy. With a current demand-supply gap of about 4,000 megawatts (MW) in the province, the problem is expected to continue to exacerbate at the rate of 6.0 percent per annum in the business as usual scenario.
Since 2010, new hope has emerged in the form of 18th Amendment in the constitution of Pakistan. Punjab, like other provinces, is free to set up its own energy policies. To capitalise on the opportunity, Punjab has painstakingly produced an Annual Energy Plan. It sets out to produce 3,200 MW over the course of three years. Although a commendable and realistic plan, it is way too passive on solar energy. From various independent research reports, Punjab has one of the highest solar radiation amounts in the world and has the potential of producing in excess of a million Mega Watt of energy per annum from solar. Setting a 50 MW target over three years for solar is, then, too limited in scope.
Given the depth of energy crisis and its impact on the industrial sector, Punjab needs to immediately replicate the successful projects from other emerging countries. In this regard, it would be worthwhile to pay particular attention to the successful execution of solar projects in the Indian state of Gujarat that has raised its electricity production from 4,000 MW to 18,000 MW within a decade. As a result, 24-hour electricity supply in all the cities and villages is no longer a dream.
Although shocking success in Gujarat resulted from successful implementation of many different policies, solar policy played a significant role and currently contributes in excess of 600 MW to the grid. Given the geographic advantages two provinces share, Punjab can benefit from policies that are similar to that of Gujarat as follow:
Gujarat has established solar parks at various locations in the state and can boast Asia’s largest solar park. Known for government efficiency, Gujarat was able to attract international firms and investors for the project by fixing tariffs in transparent purchasing power agreements. In Punjab, Cholistan and two other sites have been earmarked for solar projects of 10, 30 and 50 MW in size. Given the lack of investor confidence in the country, it might be worthwhile for the government to identify multiple locations for small 5 MW plants so that international investors can enter the market here at a level of risk they are comfortable with. Once international firms start making 15 percent returns on their investment as being guaranteed by the provincial government, it would be far easier to attract large-scale developers for mega-projects.
Gujarat has also pioneered relatively small-scale pilot projects. Despite miniscule contribution to overall power production, small projects play a vital role in raising awareness in the public of the potential of solar energy. Consequently, a multiplier effect occurs as people adopt solar products at home and reduce the burden on the grid. Punjab can get inspiration from Gujarat in implementing a rooftop policy that would turn Lahore into a solar city by installing panels on existing public roofs. Another project to install panels on Punjab’s extensive irrigation canals can be highly attractive as it does not require allocation of land and also reduces loss of water from evaporation.
Returning government in Punjab will have to take concrete steps to explore the viability of solar energy in the province. However, giving away of solar panels to industrial units and students would not result in sustainable addition to power generation capacity in the province. Attracting international firms for scalable projects subsidized or otherwise, would.
The writer is an Environmental Engineer from Yale University and a former investment banker, the founder of Hillhouse Tech.
Courtesy: Daily Times