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Bundesverband Solarwirtschaft e.V. (BSW-Solar)
Value Chain Analysis of the PV Market in Pakistan
Project “Pakistan Solar Quality Potential“
Content
Project “Pakistan Solar Quality Potential“
The value chain analysis
• Energy situation & key stakeholders for PV development
• Key actors in the value chain
• PV import data
• Feedback from interviews & market research
• Market segments & perceptions
• Business environment for German PV companies
• Target segments for German PV companies
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German Solar Association:
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TASK To represent the solar industry in Germany in the
thermal and photovoltaic and storage sector
VISION A sustainable global energy supply provided by solar
(renewable) energy
ACTIVITIES Lobbying, political advice, public relations, market
observation, standardization
EXPERIENCE Active in the solar energy sector for over 30 years
REPRESENTS More than 800 solar producers, suppliers, wholesalers,
installers and other companies active in the solar
business from all over the world
HEADQUARTERS Berlin
Equipment Materials System
components
Wholesale & Distri-bution
Project Develop-
ment
Con-structi
on O&M
3
BSW-Solar: Working world wide
to improve frameworks for the use of
solar energy!
Partnerships,
business networks
Market reports, esp.
“Enabling PV”
Partner countries in
“PV FINANCING”
Objective
To achieve a sustainable quality demand of PV products,
through the improvement of the capacity building of local
institutions helping them to achieve an organizational structure
that allows them to continue with the dissemination of quality
standards and norms in Pakistan
• Duration: August – December 2016
• On behalf of the GIZ
• Partners: Pakistan Solar Association
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Project activities & outcomes
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Analyze the value chain of PV in Pakistan
Identification of the PV market potential & the needs of local stakeholders
Development of a training concept & awareness campaign
Target group of the trainings are installers and of the awareness campaign are the end customers
Identification of the key multipliers for dissemination
The pilot region is Lahore. Nevertheless, the training material will be generic and able to be used in all the country
Project activities & outcomes
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Conduction of trainings
To qualify key Pakistani multipliers for the application of the standards and norms. Focused on installers.
Strength cooperation between Pakistan & Germany
Bringing together relevant stakeholders including training institutions and industries in both countries
& disseminate the results with relevant stakeholders in both
countries
Methodology of the study
Development of customized supply chain questionnaire
Compilation & review of published data/statistics on
solar PV
Identification of the key value chain actors
Interviews were conducted with key solar PV value chain actors
Results based on interviews and complemented with statistics and
available market data
Solar irradiation levels - Pakistan
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High irradiation levels
Across the country (4.5-7.0 kWh/m2/day)
In particular: Punjab & Sindh provinces:
4.5 – 6.0 kWh/m2/day
High PV potential in both rural and
urban areas. Industry concentrated in
Punjab & Sindh provinces.
Source: CPPA, NEPRA and AEDB
Share of RES steadily
increasing each year
1136 MW of RES
installed by 2016,
mainly PV, wind and
micro/mini hydropower
2010 2011 2012 2013 2014 2015 2016
RE 50 106 408 1136
Nuclear 462 787 787 787 787 787 1.127
Thermal 14.240 15.753 15.888 15.852 16.963 16.963 16.814
Hydro 6.555 6.627 6.627 6.928 7.097 7.097 7.121
21,257 MW 23,167 MW 23,302 MW 23,617 MW 24,953 MW 25,255 MW 26,197 MW
RE
Nuclear
Thermal
Hydro
Power sector in Pakistan: installed capacity
Power sector in Pakistan: supply & demand scenario
Source: MoWP
The power deficit was near 5 GW in
summer 2016
Multiple power generation projects
from various sources are currently
in the pipeline and are envisaged to
eliminate the power deficit by 2019
- if expected projects are
completed on time
PV based projects can play a key
role in the elimination of the power
deficit, particularly in the industrial
and residential sectors.
19917
21599
25080
27600
30938
17500
14121
21096
18738
26590
23107
17107
24262
18262
25961
Capacity
Availability
Demand
Power sector in Pakistan: higher demand in the
domestic & industrial sector
© BSW-Solar
Source: Pakistan Energy Yearbook 2015
Increase of 11,000
GWh in the last 5
years, specially in the
domestic and industrial
sector
Significant and increasing energy demand in the country
Policy on FITs (Feed in tariffs) catalyzing project development
Introduction of net metering
Introduction of import quality standards
Financing available for PV
Rationale for PV development
Other stakeholders for PV development
• PSA (Pakistan Solar Association) : National trade body of Pakistan’s PV industry. The
association represents and promotes PV businesses in the country
• REAP (Renewable Energy Association of Pakistan): Non-profit organization currently
representing 400 members with the aim to promote renewable energy sources in Pakistan
• International donors/technical assistance programs
BMZ (German Ministry of Economic Cooperation)
GIZ (implementers on behalf of BMZ)
KfW bank
ADB (Asian Development Bank)
USAID (United States Agency for International Development)
JICA (Japan International Cooperation Agency)
ADB (Asian Development Bank)
European Commission
World Bank
UNDP (United Nations Development Program)
UNIDO
DFID
Trend of import of PV panels: Oct’14 - Sept’15 vs.
Oct’15 - Sept’16
• Federal Board of Revenue (FBR), GoP, 2016
• Panel volume imported (MW) calculated based on 0.7 USD/Watt (FBR Valuation Ruling No. 620/2013)
Chinese PV panels have the highest share of imports into Pakistan which has increased between 2014 and 2016.
This is attributed to price competitiveness with similar products from other countries, extensive customer outreach
through dealership networks and a large variation in product quality/pricing which caters to different economic
classes of customers.
95.60% (975.3 MW)
0.62% (6.3 MW)
1.39% (14.1 MW)
0.40% (4 MW) 0.53% (5.4 MW)
1.47% (15 MW)
Oct'15 - Sept'16
China
UAE
Malaysia
Germany
HongKong
Others
94.98% (497 MW)
3.20% (16.7 MW)
0.22% (1.1 MW) 0.21% (1.1 MW)
1.40% (7.3 MW)
Oct'14 - Sept'15
China
UAE
Germany
Korea
Others
Trend of import of inverters: Oct’14 - Sept’15 vs.
Oct’15 - Sept’16
• Federal Board of Revenue (FBR), GoP, 2016 • Inverter volume imported (MW) calculated based on 37.5 USD/kW (FBR Valuation Ruling No. 751/2015) • Inverter statistics presented are for all inverters imported into country (i.e. for use with PV systems and also for use as
UPS for charging only from the grid )
Chinese inverters have highest share of imports into Pakistan which has increased between 2014 and 2016. The
reasons behind this dynamic are the same as in the case of import of PV panels i.e. price competitiveness with
similar products from other countries, extensive dealership networks and a large variation in product quality/pricing which caters to different economic classes of customers.
65.01% (1007.4 MW)
3.11% (48.1 MW)
2.86% (44.3 MW)
6.01% (93.2 MW)
2.55% (39.5 MW)
20.46% (317.1 MW)
Oct'14-Sept'15
China
UAE
UK
Germany
Finland
Others
71.54% (1328.8 MW)
6.93% (128.8 MW)
4.21% (78.3 MW)
3.17% (58.9 MW)
2.58% (47.9 MW)
2.16% (40.1 MW)
2.13% (39.5 MW)
7.28% (135.1 MW)
Oct'15-Sept'16
China
Germany
Finland
UAE
Other EUStates
UK
Italy
Others
Trend of import of charge controllers: Oct’14 - Sept’15
vs. Oct’15 - Sept’16
• Federal Board of Revenue (FBR), GoP, 2016 • Charge controller volume imported (MW) calculated based on 37.5 USD/kW (FBR Valuation Ruling No. 751/2015)
High proportion of ‘Chinese’ Charge controllers being imported into the country with the same reasons behind
this dynamic as those already cited above for the case of PV panels and inverters. Overall volume of Charge
controllers imported from Germany has increased over the last year, although there has been a minor decrease in the market share
36.03 % (211.1 MW)
25.86 % (151.5 MW)
23.58 % (138.1 MW)
4.47 % (26.2 MW)
3.35 % (19.6 MW) 6.72 % (39.4 MW)
Oct'14 - Sept'15
China
Germany
USA
Singapore
Italy
Others
32.78 % (237.7 MW)
21.98 % (159.4 MW)
19.37 % (140.5 MW)
7.02 % (50.9 MW)
5.96 % (43.2 MW)
2.60 % (18.9 MW)
2.41 % (17.5 MW)
2.04 % (14.8 MW)
5.83 % (42.3 MW)
Oct'15 - Sept'16
China
Germany
USA
Italy
Other EUstates
UAE
Turkey
Sweden
Others
• Federal Board of Revenue (FBR), GoP, 2016 • Deep cycle battery volume imported (tonnes) calculated based on 1.72 USD/ kg (FBR Valuation Ruling No. 723/2015)
High proportion of Chinese ‘deep cycle’ batteries being imported into the country with the same reasons
behind this dynamic as those already cited above for the case of PV panels and inverters. Overall volume of
batteries imported from Germany has increased over the last year, although there has been a minor decrease in the market share
85.13% (24,970 t)
3.24% (950.0 t)
3.03% (888.1 t)
3.70% (1086.6 t)
1.81% (530.6 t) 0.98% (286.4 t) 0.47% (137 t)
1.65% (483.2 t)
Oct'15 - Sept'16
China
Vietnam
USA
Korea
Singapore
Other EUstatesGermany
Others
Trend of import of deep cycle’ batteries: Oct’14 -
Sept’15 vs. Oct’15 - Sept’16
82.44 % (19,900 tonnes)
5.17% (1249 t)
2.62% (634.3 t)
1.97% (475.2 t)
2.57% (621.3 t)
1.03% (247.9 t)
0.49% (117.4 t)
3.71% (899.8 t)
Oct'14 - Sept'15
China
USA
Vietnam
France
Korea
UK
Germany
Others
Results based on interviews with PV key value chain actors (wholesalers, importers, installers, retailers etc.) and on market research. The list is not exhaustive and may not include all available brands. The component brands are listed in no particular order. Considering the scope of this study, it was not possible to assess the specific market share of each respective brand mentioned here. Classification of equipment into ‘Tiers’ is currently not possible, due to the lack of quality standards in Pakistan.
Inverters Batteries PV panels
Yingli (China)
Kyocera (Japan)
Rene Sola (China)
LG (Korean)
JA Solar (China)
Canadian Solar (China)
Alfa Solar (Germany)
Hitek (UK)
Jinko Solar (China)
GH (Belgium)
Trina Solar (China)
Solar World (Germany)
Phono (China)
Beyond PV (Taiwan)
Eurener (Spain)
Hanergy (China)
Shanghai Solar (China)
Long (Vietnam)
Hoppeke (German)
Powersonic (China)
Trojan (USA)
Narada (China)
Baykee (China)
JTE (China)
CSB (Taiwan)
Huawei (China)
Sunny Power (China)
Inti Power (China)
Voltronic (Taiwan)
Schneider Electric (French)
Sacred Sun (China)
SMA (Germany)
ABB (Swedish-
Swiss)
Outback (USA)
Nedap (Holland)
Sungrow (China)
Baykee (China)
Studer (Swiss)
TBB Power (China)
Fronius (Austria)
Victron (Holland)
I-Energy (Taiwan)
Kaco New Energy (Germany)
PV products & service range in Pakistan
imported brands available
* Results based on interviews with PV key value chain actors (importers, wholesalers, retailers, installers etc.) and on market research
PV products & service range in Pakistan
• Chinese products have a considerable market share of the PV market in the country
with over 90 % of the PV panels and over 80 % of the ‘deep cycle’ batteries. This is
attributed to the price competitiveness with similar products from other countries, extensive
dealership networks and a large variation in product quality/pricing which caters to different
economic classes of customers.
• Considerable variation in quality and price of PV products (panels, batteries, inverters)
being imported from China
• There is a niche in every market sector (industrial, commercial and residential) that
requires high quality and reliable PV products, particularly inverters and batteries. These
elements of the market constitute the target customer group for European products.
• Most existing and potential users of PV from the industrial sector in Pakistan claim to prefer
European products since they are bankable and more reliable. However, currently they
purchase Chinese products (PV panels and inverters) due to the high costs of the
European products and the limited offer of after-sales services in comparison to the
Chinese ones.
Local ‘assembly’ of panels being conducted by five companies in Pakistan. However, imported panels manufactured by reputed brands are currently preferred due to the higher reliability and trust enjoyed by foreign brands
No
Panels
Local manufacturing
Yes
Limited volumes and questionable quality
Import of PV panels
Low quality panels (low cost brands & smuggled) High quality panels (reputed brands)
Customers NOT satisfied with performance of local panels (efficiency versus price)
* Results based on interviews with PV key value chain actors (wholesalers, importers, retailers, installers etc.)
Local assembly
PV products & service range in Pakistan: panels
Manufacturing of AGM batteries is expected to commence soon in Pakistan with four different industrial groups
setting up factories in the southern Pakistani city of Karachi:
Daewoo Group
Treet Group
Eco Star (DWP & GREE Groups)
Homage
* Results based on interviews with PV key value chain actors (wholesalers, importers, installers, retailers etc.) ** Rough estimates based on feedback collected during interviews and market research. Detailed surveys are necessary to determine more accurate statistics regarding the battery landscape in Pakistan.
Imported battery
(≅40%)**
Sub-standard (≅70%) ** (Low grade Chinese)
High quality (≅30%)** (High-end European, American,
Chinese)
Local battery (≅60%)**
Landscape of batteries for PV systems in Pakistan
Sub-standard (≅100%)** (Lead acid car batteries)
High quality (Yet to start manufacturing)
PV products & service range in Pakistan: batteries
Results: customer awareness
Question: What is the general level of ‘Customer awareness’ related to PV products in Pakistan?
:
• ‘Low’ level of awareness (≤2) : 23%
• ‘Moderate’ level of awareness (>2≤5): 67%
• ‘High’ level of awareness (>5≤10): 10%
Note: ‘Customers’ collectively refers to clients from the residential, commercial, industrial and public sectors
Awareness scale (0 to 10) 0: Unaware 10: Aware
23%
67%
10%
≤2
>2≤5
>5≤10
Results based on interviews with PV key value chain actors (wholesalers, importers, installers, retailers etc.)
Results: payback expectations
Question: What are the ‘Payback expectations’ from PV products of the different customer segments in the
Pakistani market?
Note: ‘Customers’ collectively refers to clients from the residential, commercial, industrial and public sectors
The shortest payback expectations
are for the commercial sector (3.5
years), followed by the industrial
sector (4.5 years)
0,0
0,5
1,0
1,5
2,0
2,5
3,0
3,5
4,0
4,5
5,0
Commercial Residential Industrial Public Sector
3.5 years
5 years
4.5 years
5 years
Pay
bac
k Ti
me
(ye
ars)
Target Sector for PV Products
Results based on interviews with PV key value chain actors (wholesalers, importers, installers, retailers etc.)
Question: What is the proportion of ‘Certified’ PV components in the local market?
0
2
4
6
8
10
12
14
16
18
20
Inverter Battery Panel
14%
9%
20%
Pro
po
rtio
n o
f C
ert
ifie
d C
om
po
ne
nts
in P
ak M
arke
t
Solar system components
Exact statistics on the specific brands and their respective volumes being imported into Pakistan are only available with the customs authorities. However, this information is
restricted and classified.
Low proportion of ‘certified’ PV components available in the local market
Results based on interviews with PV key value chain actors (wholesalers, importers, installers, retailers etc.)
Results: certified PV components
Perception of the PV market segments
http://www.sbp.org.pk/smefd/circulars/2016/C3.htm
Commercial Industrial
Typical installation size
1 MW – 10 MW
High potential industries & locations
• Textile (spread across Punjab province)
• Sports (focused in Sialkot city)
• Food industry (across the country)
• Pharmaceutical industry (Karachi)
Possible project financing models
• Financing through recently announced scheme for
RE project financing by State bank of Pakistan.
Loans being offered at 6% for solar PV projects up to
50 MW
• Conventional financing through lending from bank
along with equity from project developer
Product preferences
Based on past trends, industry prefers to install reliable
and high quality components to ensure project
bankability.
SMA, Schneider and ABB quite popular in terms of
reliability compared to Chinese products
Typical installation size
100 kW – 1 MW
High potential segments & locations
• Hospitals (across the country)
• Private educational institutions
• Hotels & restaurants (across the country)
• General provision stores (across the country)
Possible project financing models
• Financing through recently announced Scheme
for RE project financing by State bank of
Pakistan. Loans being offered at 6% for solar PV
projects up to 50 MW
• Conventional financing through lending from
bank along with equity from project developer
• Equity
Product preferences
In the past, tendency to install cheaper and less
reliable quality Chinese brands. However, slowly
trend moving towards increasing awareness leading
to installation of SMA, Schneider and ABB due to
high level of reliability
Results based on interviews with PV key value chain actors (wholesalers, importers, installers, retailers etc.)
Perception of the PV market segments
1. http://www.sbp.org.pk/smefd/circulars/2016/C3.htm
Residential Public sector (Government funded)
Typical installation size
1 kW – 20 kW
High potential locations
• Urban centers (Karachi, Lahore, Islamabad, Rawalpindi,
Faisalabad, Multan, Hyderabad)
• 40,000 un-electrified off-grid villages across the country
• Agricultural areas across Punjab, Sindh and KPK
provinces owned by farmers with land holdings of different
sizes
Possible Project Financing Models
• Financing through recently announced scheme for RE
project financing by State bank of Pakistan. Loans being
offered at 6 percent1 for solar PV projects up to 50 MW
• Equity
• Funding through donor projects in off-grid areas
Product Preferences
High price sensitivity exists with niche market for ‘high
quality’ and certified products. Large proportions of clients in
this sector opting for Chinese products although increasing
interest in ‘certified’ high quality products as result of ‘lessons
learnt’
Typical installation size
50 kW – 200 kW
High potential segments & locations
• Public hospitals & health facilities
• Government educational institutions (across the
country)
• Public parks and recreation facilities (across the
country)
• Public offices (across the country)
Possible project financing models
• Public financing from national approved budget as per PC-
1 document
• Grant aid from international donor agencies
Product preferences
Tendency remains to maximize project size within allocated
budget. Also, ‘open’ tenders bidding mechanism based on
awarding project to ‘lowest’ bidder results in high quality and
durable products losing out to competitors offering lower
quality products
* Results based on interviews with PV key value chain actors (wholesalers, importers, installers, retailers etc.)
Net Metering introduced by NEPRA in Sept 2015. To increase the share of PV and generate revenue by feeding back into the grid. Issuance of licenses for net metering has commenced
Challenges Opportunities
Financing through recently announced scheme for RES project financing by State Bank of Pakistan. Loans with 6% interest rate for solar PV projects up to 50 MW Implementation of ‘Import Quality Standards’ to be implemented soon. It will ensure reduction in ‘uncertified’ solar PV components in the market and promote quality ‘certified’ products
Limited technical expertise & product knowledge on PV components leads to issues during commissioning for system configuration and also during operation
Limited after sales’ support of European products in comparison to e.g. China.
‘High Price sensitivity’ for European products compared to non-European products. • Residential sector: customers willing to pay 20%
Industrial sector: 30 to 40% higher cost • Commercial sector:10-15% higher cost
‘Customer awareness’ for PV and the benefits of investing in high quality and certified equipment need to be increased
German products enjoy high level of trust and reliability in all customer segments of the Pakistani solar PV market. Specially grid tied systems
The focus should be on Large industry (textile, sports, pharmaceutical etc.) . These industries are the mainstays of the Pakistani economy generating a high annual profit. Solar pumping applications also possess considerable potential for projects in the pipeline from the public sector in Sindh and Baluchistan provinces
* Results based on interviews with PV key value chain actors (wholesalers, importers, installers, retailers etc.)
Business environment for German PV companies:
opportunities & challenges
Technical consulting services
(techno-economic feasibility studies, grid
connection studies, support in project tendering process, monitoring of
commissioned projects, maintenance and operation of large scale grid connected &
medium scale PV projects) Batteries (Flooded or AGM) The residential, off-grid & the commercial sector installations requiring battery back up. Installed system are expected to scale
up to use the economic benefits of net metering and will require larger battery
banks. (Potential for high quality batteries exists but price competitiveness will other comparable products will be critical)
‘Grid tied’ inverters for use in medium scale (100kW-1 MW) and large scale (>1 MW) grid connected projects being set up by industrial and commercial sectors. (Price competitiveness with comparable products from other countries will be critical)
Products Services
PV testing & monitoring equipment (battery testers, PV panel testers, PV
analyzers, PV panel flash test equipment)
EPC Companies for developing both commercial sector
(kW scale) and large scale (>1 MW) grid connected projects
EPC contracting companies with a strong profile of developing large scale projects are in high demand
Results based on interviews with PV key value chain actors (wholesalers, importers, installers, retailers etc.)
Target segments for German PV products & services
Nr. IEC Standards Title
1 IEC 61646:2008 Thin-film terrestrial photovoltaic (PV) modules design qualification and type approval
2 IEC 61439-1:2011 Low-voltage switchgear and Control gear assemblies – Part 1: General rules
3 IEC 60947-
3:2008+A1:2012
Low voltage switchgear and control gear – Part 3: switches, disconnections, switch
disconnections and fuse combination units
4 IEC: 62103:2003 Electronic equipment for use in power installations (e.g. EN 50178:1998)
5 IEC: 62930 Electric cables for photovoltaic systems (BT(DE/NOT)258)(e.g EN 50618)
6 IEC 62103 (2003-07)
Ed.1.0
Electronic equipment for use in power installations
7 IEC 61701:2011 Salt mist corrosion testing of photovoltaic (PV) modules
8 IEC 62116:2014 Protection against islanding of Grid (Utility-interconnected photovoltaic inverters –
procedure of islanding prevention measures)
9 IEC 61683: 1999 Photovoltaic systems – Power conditioners – Procedure for measuring efficiency
10 IEC 62509:2010 Battery charge controllers for photovoltaic systems – Performance and functioning
Adopted as Pakistan standard in 94th electro-technical national standards committee meeting held on October 21st, 2015. Implementation of these standards has yet to commence.
IEC quality standards
Nr. IEC Standards Title
11 IEC 62093:2005 Balance-of-system components for photovoltaic systems – natural
environments
12 IEC 62124: 2004 Photovoltaic (PV) stand alone systems – Design verification
13 IEC 62253: 2011 Photovoltaic pumping systems – Design qualification and
measurements
14 IEC 62257 (2013) Recommendations for small renewable energy and hybrid systems for
electrification – Part 1: General introduction to IEC 62257 series and
electrification
15 IEC/TS 62257-9-5: 2013 (E) Recommendations for small renewable energy and hybrid systems for
electrification – Part 9-5: Integrated system – Selection of stand-alone
lighting kits for rural electrification
Adopted as Pakistan standard in 94th electro-technical national standards committee meeting held on October 21st, 2015. Implementation of these standards has yet to commence.
IEC quality standards
Nr. IEC Standards Title
1 IEC 62109-1:2010 Safety of power converters for use in photovoltaic power systems –
General requirements
2 IEC 62109-2:2011 Safety of power converters for use in photovoltaic power systems –
Particular requirements for inverters
3 IEC 61730-1:2004 Photovoltaic (PV) module safety qualification – Part 1: Requirements
construction
4 IEC 61730-2:2004 Photovoltaic (PV) module safety qualification – Part 2: Requirements
testing
5 IEC 61439-1: 2011 Low-voltage switchgear and Control gear assemblies – Part 1:
Adopted as Pakistan standard in 94th electro-technical national standards committee meeting held on October 21st, 2015. Implementation of these standards has yet to commence.
IEC safety standards
Nr. IEC Standards Title
1 IEC 61000-6-4:2006 + A1:2010 Electromagnetic compatibility (EMC) – Part 6-4: Generic standards –
Emission standard for industrial environments
2 IEC 61000-6-1:2006+ A1:2010 Electromagnetic compatibility (EMC) – Part 6-1: Generic standards –
Immunity for residential, commercial and light-industrial
applicable)
3 IEC 61000-6-3:2006 + A1:2010 Electromagnetic compatibility (EMC) – Part 6-3: Generic standards –
Emission standard for residential, commercial and light industrial
environments (if applicable)
4 IEC 60068-2 Environmental Testing (more than 70 standards in this series (From
2-1 to 60068-2-83)
Adopted as Pakistan standard in 94th electro-technical national standards committee meeting held on October 21st, 2015. Implementation of these standards has yet to commence.
IEC environmental standards
Luz Alicia Aguilar
International Project Manager
German Solar Association
Phone: +49 (30) 29 777 88-40
E-Mail: [email protected]
© BSW-Solar