Mujtaba Haider Khan is the CEO for Reon Energy Limited, the largest industrial solar solutions provider in Pakistan. Reon is a part of Dawood Hercules Group. Mujtaba took over the company reins in October 2016 and has managed to turn around the decentralized solar market’s landscape in the past 16 months. He has served as Read more An interview with CEO Reon Energy – All incremental power should be renewable
As published on www.towerxchange.com Renewable Energy wing of DH Corp has already deployed 2MW of solar energy to 250 cell sites Salman Khalili, Head of Telco, Reon Read more Solar to improve efficiency of Pakistan’s telecom sites
Now that I’ve laid out the economic and technical argument in favor of renewable power in my last piece, let me highlight some of the Read more Part IIB: Resolving Pakistan’s Energy Crisis – Policy Recommendations
By Mujtaba Khan Chief Executive Officer, Reon Energy I’m writing this blog just a few days after publication of the UN IPCC(Intergovernmental Panel on Climate Change) report Read more Part IIA: Resolving Pakistan’s Energy Crisis – The Economic Argument
By Mujtaba Khan Chief Executive Officer, Reon Energy Limited Goal no.7 of UN Sustainable Development Goals(SDG7) is access to affordable, reliable, sustainable and modern energy for all. Read more Part I: Understanding Pakistan’s Energy Crisis
Renewable energy technologies, especially solar, have seen a rapid growth over the past few years to improve energy security and access and to mitigate climate change. Countries like Germany have long since jumped on the solar bandwagon and are now producing a third of their electricity from solar power. Interestingly, Pakistan is a perfect candidate for solar power generation, considering the high-levels of solar irradiation we receive. Yet, solar only contributes a meager 1% to Pakistan’s energy mix against a potential of 2.9 million megawatt according to Pakistan Alternative Energy Board.
Investment in solar technology can improve energy access, create jobs, increase income, improve trade balance and contribute to industrial development. The socio-economic benefits of solar are astounding and its’ impact can be maximized with sound macro-level policies.
Pakistan’s investment in solar energy will not just be a step towards powering the future but will also be a step towards ‘creating jobs’ in the operations, maintenance and manufacturing sectors. According to the International Renewable Energy Agency (IRENA), the renewable energy job market is booming and is predicted to grow by 24 million jobs by 2030. More so, the IRENA has also predicted that doubling the renewable energy portion in the global energy mix can increase the world’s GDP by $1.3tn. Therefore, a steady switch from the mechanized and capital-intensive fossil fuel technologies to the labor intensive solar industry is the next step to creating more jobs.
For a developing country like Pakistan, solar energy investments can be very stimulating for our economy and trade. Currently, Pakistan’s economy heavily depends on a regular supply of imported fuels, with a demand of 23 million tons per annum, which is expected to rise to 27 million tons by 2020 according to sources. By eventually reducing our fuel imports, we can improve our trade balance and improve our GDP, as we will no longer be spending huge sums of our foreign exchange reserves. More so, we can be a ‘green economy’ beneficiary by encouraging domestic and foreign investments which can enable manufacturing and boost our services sector.
Pakistan’s energy crisis has left its industries in crippling state. Lengthy load shedding and power cuts lasting more than 12 hours has caused a huge decline in production. Moreover, reliance on diesel generators and other energy sources are an additional cost that has to be borne. Hence, by going solar, Pakistan can easily overcome this energy crisis and work actively towards its industrial development and growth.
Solar power being distributed energy is available anywhere. In Pakistan’s case this is particularly favorable as solar energy is easily scalable and can be harvested in areas with little to no electricity. According to IRENA, half of Pakistan’s rural population still has no access to electricity. Hence, providing these villages with solar power systems can easily change their lives for the better.
Lastly, our current dependency on fossil-fuel based power plants is putting us in a compromising situation. Carbon emissions, floods, droughts, heatwaves are just few of the environmental and climate issues we are currently facing. According to the Long-Term Climate Risk-Index (CRI), Pakistan is ranked 7th with a death toll of 523.1 lives per year due to extreme weather events.
In conclusion, there is no denying that the environmental benefits of going solar are great however, in Pakistan’s case it is the potential economic change that makes solar so lucrative. Solar energy, can be the stimulus for our economic growth and development. Our present energy situation can easily be tackled and we can set ourselves on the road to a reliable and sustainable energy infrastructure.
In continuation with the “buying vs leasing” debate, the second financing option is a ‘solar lease model.’ On paper, for many organizations solar leasing sounds Read more Part II: Financing your solar installation
Going solar not only saves up a substantial chunk of your energy bills but is also the biggest step any organization can take at being more environmentally conscious. However, with the decision comes the daunting task of deciding on a solar financing option.
Fortunately, going solar is affordable by making an informed decision about the best funding options; be it buying or leasing. Some key factors to consider when deciding on ‘cash purchase’ as a financial option are as below;
Buying a solar panel system seems like a big up-front cost but it really is a long-term investment. An organization that decides to pay a little more up-front can reap benefits for decades to come. More so, a 30 percent reduction in electricity bills reflects the expected amount of savings. Other advantages include:
• A reduction in the total time required for installation
• Generally, a maximum return on investment is offered
• Complete ownership of the asset
However, with complete ownership of the asset also comes an organization’s sole responsibility of both its operation and maintenance. Therefore, if/when considering the cash purchase route capital costs and product warranties should be taken under careful consideration.
Lastly, the graphic representation of a textile business case model below will help in demonstrating an organization’s cumulative savings. More so, it will help in concluding one part of the ‘buying vs leasing’ debate.
An organization opting to go for a cash purchase on a 1000 KW solar power project that is an on-grid system (with all other factors such as, rooftop etc. constant) can reap savings as high as 800 million. The savings in case of a cash purchase model sees a steep, steady growth as the organization is producing its own electricity. There by reducing their cost and increasing their overall savings.
The State Bank of Pakistan, in light of the global initiative to reduce the impact of climate change has been taking a few steps. One of these includes the “State Bank of Pakistan’s financing scheme for Renewable Energy Projects”. This scheme was made public mid of 2016 and started to fully be used from 2017. Read more SBP Green Financing Scheme for Industries