OFF-GRID MARKETS - PAKISTAN PERSPECTIVE
September 28, 2017
Memmingen, Germany
FROM FRONTIER TO EMERGING MARKET
Pakistan has officially re-entered into emerging market status - Borgen Magazine, July 2016
Pakistan has made significant economic progress - Christine Lagarde, Managing Director,
International Monetary Fund, October 2016
Three key factors driving Pakistan’s economic awakening: An improved security climate,
relative political stability and a growing middle class. These three interlocking pieces are
fueling Pakistan’s growth story - Dawn, March 21, 2017
Morgan Stanley Capital International (MSCI) upgraded Pakistan from Frontier Markets (FM) to
Emerging Markets (EM), effective May 2017. This transition is only precedented by Qatar & UAE
in 2014.
“The upgrade will put the country on people’s radars, whereas they wouldn’t have had the
desire to invest before.” – Bloomberg Markets, May 25, 2017
Austria + Belgium +
Czech Republic +
Denmark +Germany +
Netherlands + Slovenia +
Switzerland+ Portugal
=
Pakistan (Five Provinces:
Balochistan, Sindh,Punjab, KPK, Gilgit-Baltistan)
ECONOMIC DRIVERS
23% AGRI BUSINESS
24% INDUSTRY
2% ELECTRIC GENERATION
& DISTRIBUTION
5.7% FINANCIAL SERVICES
53% SERVICES
INDUSTRY DRIVERS
193.2 MN POPULATION
(WORLD BANK)
58% YOUTH LITERACY
RATE
$ 2,34.5 BN FOREIGN DIRECT INVESTMENT IN
AUGUST 2017 (STATE BANK OF PAKISTAN)
140.2 MN MOBILE SUBSCRIBERS: I.E. 73%
OF POPULATION
(DIGITAL IN 2017 GLOBAL REPORT)
6th AMONG TOP SMART PHONE
MARKETS IN THE WORLD
85.6 GWH ENERGY CONSUMPTION
(WORLD BANK)
35.1 MN INTERNET USERS:
I.E. 18% PENETRATION
(DIGITAL IN 2017 GLOBAL REPORT)
ENERGY CHALLENGE - 2017
25
20
15
10
5
0
ENERGY (GW)
22
15
REQUIREMENT
GENERATION Daily Shortfall of about 7 GW
ENERGY INVESTMENTS
Investment In Energy With Private
Participation: US $ 1.68 BN (World Bank 2016)
Public Private Partnership Investments
in Energy: US $ 450 MN (World Bank 2016)
As a result:
Energy Generation
Increase: 3.4%
Government Target: supply 15-20%
commercial energy through renewables by 2030
90% of the money for renewable energy projects to come in the form of foreign direct investments
Licences to private sector players for generation, transmission and distribution are being issued easily
CLEAN ENERGY FOCUS
7 GW of distributed and off-grid renewable technologies expected in the next 15 years. (Source: Planning Commission, AEDB)
Pakistan was the
scene for a record
$723 million of asset
finance for
renewable energy in
2015. Among
investors
announcing specific
project proposals
were Scatec Solar
(150MW), Desert
Tech (180MW) and
China Zonergy
(900MW).
Provincial government
plans for off-grid
electrification:
Especially plans for
Solarization of
Government Schools
and Colleges (Punjab,
Sindh, Balochistan) as
well as micro-hydro in
Khyber Pakhtunkhwa,
Azad Jammu + Kashmir
(BNEF, 2017)
Asian Development
Bank has approved
$325 million for
rural electrification
(ADB, 2017) In 2016, Pakistan
added: 300 MW of
solar power, 244 MW
of wind, 85 MW of
biomass + 48MW of
small hydro
FUTURE INVESTMENTS
POTENTIAL OFF-GRID MARKET
144 MILLION people have no reliable access
to electricity
Only
7.7 Million people tap into solar
power in the rural off-grid
Off These,
68 Million people live in off-grid
rural areas
To be captured:
61.3 Million potential users
GROWTH
Opportunity Bridging the Energy Gap
Through Solar
90% of off-grid customers have access to a mobile - 67% of them, access financial services through their network operators, particularly mobile money
transfer technology
SOLAR OPPORTUNITY
400 energy startups
0 Duty on all PV import
2900 GW solar power potential
Clean Energy project financing through local
banks
BANK
Over 72% rural population are interested to take microloans for
solar home systems.
(MicroEnergy International,
2014)
Solar considered a dependable source of
power connection in rural areas,
both at households and on farms and
fields. Solar panels being utilized for
tunnel farming & poultry farming
(Stimulus Research)
Existing 300 MW of total electricity consumption of
Pakistan
Expected to reach 500 MW post new
installations currently
in planning & design stage
Currently more than 1000 MW being run
through diesel generators can be transitioned to solar
More than 8000 villages to be
electrified; potential for micro-grid /
mini-grid projects
Potential for business opportunities: milk
chillers for dairy farming, cold
storage for medicines
Government has allowed captive
power generation through renewable
energies. In this regard, no license or approval from any
governmental
authority is required
A potential of approx 5 MW per project
POTENTIAL OFF-GRID APPLICATIONS
SOLAR STREET
LIGHTING
COMMERCIAL
LIGHTING
SOLAR
WATER PUMPING
RURAL
ELECTRIFICATION
CAPTIVE POWER
GENERATION THROUGH
SOLAR PV APPLICATION
SOLAR OFF-GRID BUSINESS MODELS
Organization •Formal •Informal
Outreach •Direct Marketing •Retail
Offering •Sell •Sell & Service
Management •Community Based •Entrepreneur Based
Financial Model •Full Payment •PAYG •Credit (MFL, non-interest based micro-loans)
MARKET DYNAMICS CUSTOMER PREFERENCES IN PAKISTAN
WHAT
CUSTOMERS DESIRE:
More knowledge
Product that is within financial means but delivers what it promises
Commitment for & delivery of quality product and service
EXISTING CUSTOMER
SCENARIO:
Limited knowledge
Preference for low cost products
Misconceptions about what PV is and what it can deliver
Lack of awareness about benefits of quality PV products
GOVERNMENT OF PAKISTAN
Energy Department ACADEMIA
Universities | Vocational
Training Centers
PRIVATE
Investors
LOCAL
Solar
Industry
STAKEHOLDERS
BILATERAL / MULTILATERAL
DONORS
GIZ | UN | ADB
World Bank / IMF
STIMULUS ... CONNECTING THE DOTS
Awareness, Knowledge & skill
Enterprise & Development
Enabling Technology Financing Opportunities
Reform &Regulation
Outreach & Delivery
Network
Enabling Impact &
Sustainability
STIMULUS ... CONNECTING THE DOTS