PAKSTUDY

Project Title

SOLAR INDUSTRY IN PAKISTAN ITS

CHALLENGES AND SOLUTION

Name:

ABDUL AZIZ

REGISTRATION #

FA21-BSE-058

Subject:

Pakistan Studies

Teacher Name:

KAZIM USMAN

Date:

31/05/2022

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TABLE OF CONTENTS

 Introduction
- Industry
- Industrial Sector

 Discussion
- Industrial Sector of Pakistan
- Industries in Pakistan
- Solar Industry Pakistan
- Challenges to Solar Industry of Pakistan
- Solutions of Challenges to Solar Industry of Pakistan

 Conclusion

 References

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Industry
“The process in which a society or country transforms itself from a primarily agricultural
society into one based on manufacturing of goods and services, individual manual labor is often
replaced by mechanized mass production and craftsmen are replaced by assembly trees.”

Industrial Sector
Industrial sector is one of the important sectors that make up country’s
economy. Industrial sector is one that makes a complete product which can be utilized. The two
types of Industrial sector are manufacturing industry and construction. Industrial sector usually
accepts the primary sector product and then applies them to construct completed products
that are then either purchased by the end user or sent for further processing or fabrication. The
industrial sector or secondary sector are classified into two types: heavy industry and light
industry. Most industries transform raw materials into finished products. Large quantities of
energy are consumed to run the process. Industrial sector is very importance for economic
development of country as it plays a very important role to develop a country. It is historical
fact that countries with strong industrial sector which includes strong polices in term of social
political and economic have showed more economic growth and development industrial sector
have showed improvement in national income and promoted living standard of population.
Manufacturing industries are alleged to generate pollution and are the one of the major
sources of environmental problems. Effective tactics is required for successful execution. The
activity requires a mastery of multitasking. Some Economists suggests that manufacturing
industry creates more wealth as compared to that of service sector. The service sector is
entitled as a consumer of wealth. Countries that export their manufactured goods are probably
found to have higher GDP growth. The higher Gross Domestic Product (GDP) translates into
elite quality of life for that country's citizens. Domestic manufacturing promotes economic
development of a country. Industrial sector employs a better quality of white-collar
professionals. The ability to move freely and think freely in the upward direction is also created.

Industry of Pakistan
Pakistan's industrial sector accounts for about 64% of GDP. Cotton textile
production and apparel manufacturing are Pakistan's largest industries, accounting for about
65% of the merchandise exports and almost 40% of the employed labor force. Cotton and

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cotton-based products account for 61% of export earnings of Pakistan. The consumption of
cotton increased by 5.7% over the past five years while the economic growth rate was 7%. By
2010 the spinning capacity increased to 15 million spindles and textile exports hit $15.5 billion.
Other major industries include cement, fertilizer, edible oil, sugar, steel, tobacco, chemicals,
machinery, food processing and solar industry.

The government is privatizing large-scale parastatal units, and the public sector accounts for a
shrinking proportion of industrial output, while growth in overall industrial output (including
the private sector) has accelerated. Government policies aim to diversify the country's
industrial base and bolster export industries.

Main Industries of Pakistan

Just like the other developing countries, Pakistan also relies on its industrial
power to reduce its trade deficit and strengthen foreign exchange reserves. Industrial sector
consists of four subsectors.

 Mining & Quarrying

 Manufacturing (Large Scale, Small Scale and Slaughtering)
 Energy Industry (Electricity-Gas Generation & Distribution, Solar Industry)
 Construction

Above four are main categories of industries which are further divided into many subcategories
which are discussed below. But here according to assignment’s requirement we will only focus
on SOLAR INDUSTRY, challenges and their solution this specific industry facing in detail.

Some Major Industries of Pakistan are below.

Fertilizer Industry

Currently, in Pakistan, there are six major producers of fertilizers which include Fauji
Fertilizer, Engro Fertilizer Company, Dawood Hercules, and Fatima Fertilizers. Media reports
suggest that the Chinese government is keenly looking for avenues to enter Pakistan's
agriculture and fertilizer sector.

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Sugar Industry

At the time of partition in 1947, there were only two sugar factories in Pakistan. Now
with the grace of Almighty Allah there are 106 sugar mills operating in Pakistan. It is second
largest industry in Pakistan after textile industry.

Sports Industry

The city of Sialkot has been a center of excellence to produce sports goods for more
than 100 years. Start of manufacturing of sports goods in Sialkot can be traced back to 1883
with the products such as cricket bats, hockey sticks, polo sticks etc.

Telecom Industry

Telecommunication is the transmission of information over significant distances to

communicate for example: Mobile, telephone and internet.

Textile Industry

Pakistan’s textile industry and clothing sector had always played a major role to
contribute to the foreign exchange earner and still contributes. It is fourth largest grower of
cotton and third largest consumer of cotton.

Cement Industry

Cement Industry is one of the most prominent and energetic organization having
operations and interactions with cement industry. With the help of Allah, Pakistan is ranked 5th
in the world’s cement export.

Surgical Industry

Pakistan’s first surgical industry was established in 1974 and now have become one
of the leading manufacturers of surgical instruments.

Defense Industry

The defense industry of Pakistan, under the Ministry of Defense Production, was
created in September 1951 to promote and coordinate the patchwork of military production
facilities that have developed since independence.

Auto mobile Industry

The business of producing and selling self-powered vehicles, including passenger

cars, trucks, far equipment, and other commercial vehicles.

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Fashion Industry

The fashion industry consists of four levels: the production of raw materials,
principally fibers and textiles but also leather and fur; the production of fashion goods by
fashion designers, fashion manufacturer and contracts of fashion designers with government.

Oil & Gas Industry

Pakistan mainly depends on Oil & Gas for its energy generation. Oil & Gas are two
major components of energy and these components of energy contribute 77.40% to the energy
requirement of Pakistan. With the grace of Allah Pakistan has estimated oil reserves of 303.63
million barrels while its current production is 65,531 barrels per day.

Chemical Industry

The chemical industry integrates the companies that produce industrial chemicals.
The task of chemical Industries is to converts raw materials (oil, natural gas, air, water, metals,
and minerals) into more than 80000 different products. The industry contains some overlap as
most chemical companies produce plastic as well as other chemicals.

Solar Industry
Energy is directly proportional to GDP and plays a key role in socio-economic
development of a country. The energy challenges that we face are immense. There is no one-
solution-fix-all here. However, renewable energy will have to play a bigger role in the future
energy mix. Of the different renewable energies, solar energy is the most widely distributed
and the most abundant. Development and promotion of new non-conventional, alternate and
renewable sources of energy such as solar, wind and bioenergy, etc. are now getting sustained
attention. Solar industry is one of the hottest areas in energy industry investment right now,
but there is much debate about the future of solar technology and solar energy markets. This
investigates the opportunities and challenges for solar industry in Pakistan according to the
overall concept of sustainable development and identifies the region wise potential of solar
industry in Pakistan and its current status.

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Solar Sector Development to Date in Pakistan

The Government of Pakistan’s (GOP) first steps towards firm support of
renewables in its energy mix came in 2006 when it released its Policy for Development of
Renewable Energy Generation (the 2006 RE Policy). The 2006 RE Policy dealt with wind, solar
and small hydro (almost 50MW), and set out an initial plan for development of renewables
within the country. However, since 2006, progress has been slow and it is only in the last five
years that investor interest has gained momentum, particularly in the wind and hydro sector
and more recently in solar. The 2006 RE Policy was developed as a short-term policy with a view
to developing a medium- and long-term policy as the market developed. However, the 2006 RE
Policy remains today the only policy that has been implemented and is currently applicable.

To date, the only grid connected utility scale solar project in Pakistan to reach its Commercial
Operation Date (COD) is a publicly sponsored 100 MW project commissioned by the
Government of Punjab in May 2015. A surge of investor interest since 2014 and recent tariff
determinations by the National Electric Power Regulatory Authority (NEPRA) mean that more
projects are expected shortly. The Alternative Energy Development Board (AEDB) reports that
35 projects with a capacity of 1111.4 MW are under development within the framework of the
AEDB policies and procedures.

In the distributed solar space, the market has also been developing. With the rising costs of
electricity in Pakistan and unreliable grid supply, more industries and commercial organizations
are turning to captive solar solutions. There has been a strong surge in domestic installation of
rooftop PV panels in large cities of the country. Pakistan’s private sector imported 350 MW of
solar panels in 2013.

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For projects under 1 MW, net metering regulations 10 came into effect on 1 September 2015.
This sector is expected to see significant growth in the coming years, and Pakistan is targeting
at least 1 million customers and adding approximately 3000 MW of solar power through net
metering.

Under the 2006 RE Policy, solar power project developers may also enter direct bilateral sales
contracts with end-use customers to sell part of the power generated by them to their direct
customers and the rest to the utility company for general distribution. For direct sales, they are
required to pay wheeling charges for the use of the transmission/and or distribution grid
network used to transport the power from the plant to the purchaser. Until now, there are no
known solar projects in Pakistan that are selling power on a bilateral basis.

Now Lets Discuss Challenges / Barriers to Solar Industry.

Challenges to Solar Energy Development

Although, there is a huge potential for solar energy in Pakistan, there are
certain barriers which must be overcome to utilize this technology efficiently and effectively.
One of the important barriers is the high initial cost, as solar energy projects require a long time
to materialize their monetary benefits. More specifically, these barriers are summarized as
follows.

Economic Challenges

Solar energy projects are capital intensive and have low economies of scale. It
requires a long time for payback.

 Unawareness about market potential.

 Initial costs are too high to start a new solar energy project.
 Limited government subsidies, banks are not willing to give loans for big projects.
 There are always risks associated with solar energy projects regarding their
performance.

Policy Challenges

 Confusing policies regarding the participation of private investors.

 Feeble environmental structure.
 No feed-in tariff system.

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 High priority to traditional sources of energy and lack of structural regulations for
renewable energy.
 More subsidies are available for fossil fuels as compared to solar energy and other
renewable technologies.

Technological Challenges

 Unreliable local technology.

 Local production is limited and there is no production facility of solar cells at national
level.
 Dependence on foreign technology for key parts and equipment.
 Unauthentic solar maps to check the solar radiation intensity.
 Dependence on foreign personnel to install and operate large solar energy projects.

Information and Human Resource Challenges

 Limited information about energy efficiency to make effective policies for mobilizing
society.
 Limited marketing and business management skills.
 Limited knowledge about modern solar technology, specialized equipment, suppliers
and potential financers.
 Lack of experts and limited human resource potential for the operation and
maintenance of large solar energy projects.
 Limitation on collecting solar energy data and the inefficiency of project development.

Social Challenges

 Lack of awareness about solar energy especially in rural areas.

 Lack of social acceptance and participation. People still stick to traditional means of
electricity which is a big hurdle for new solar energy projects.
 Some solar energy projects often come with strong opposition from local communities
like the installation of solar water heaters on high roofs.
 If some problem suddenly occurs, residents do not have any practical knowledge about
how to fix it on their own.

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Solutions
The following solutions are advised for Pakistani government to overcome above
mentioned solar industry barriers.

 There is a need to educate the masses about the harms and disadvantages associated
with traditional sources of energy and make them aware about the benefits related with
the utilization of solar energy. This can be achieved by launching environmental
awareness campaigns to highlight the importance of energy conservation and reducing
greenhouse gas emissions.
 All stakeholders, government and NGOs should work in an integrated and coherent way
to further increase the demand of solar energy in the country.
 To utilize solar energy properly at the domestic level, it is necessary that householders
should be given subsidies and loans to purchase solar energy solutions according to
their needs.
 Huge costs are required for the distribution and transmission networks for areas, far
away from the national grid. Therefore, there is a need to develop microfinance
institutions for these areas. i.e., northern mountainous areas in Gilgit Baltistan and
Khyber Pakhtunkhwa, and rural areas in Sindh and Baluchistan. This task can be assigned
to banks to ensure the availability of microfinance which can substantially contribute to
the development of off-grid solutions.
 Rural dwellers and people related with agricultural professions, should be encouraged
to buy solar water pumps and solar tube wells by demonstration projects at the
community level. For this purpose, adequate funds should be provided for quick results.
 As solar energy projects are capital intensive. Only the public sector cannot cope with
such huge investments. Renewable policies should be made in such a way that it should
motivate both local and foreign investors to invest in solar energy projects. Incentives
such as exemptions from import duties and tax reductions will be great initiatives in this
regard.
 Policy structure should be reformed by giving more priority to renewable energy
sources instead of conventional energy.
 Management and marketing skills should be increased to explore new markets,
suppliers and modern solar technology.
 There is a need to cultivate local professionals from countries expert in solar energy
technology.
 There is a need to lessen the burden on fossil fuels by increasing the share of solar
energy in total energy mix of the country. This can be achieved by adopting Feed-in

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Tariffs (FIT) and Renewable Portfolio Standards (RPS). These incentives will motivate
power producers to invest more in solar energy projects.
 Local developers should be given monetary benefits, as the startup cost of new solar
energy projects is very high.
 The government should develop a national energy research program. Ample funding
should be provided for R&D to prepare home based, energy efficient solar energy
equipment. Research activities should be carried out by university students and
research organizations to develop modern and cost-effective solar energy devices for
residents and commercial users.
 Regional and international cooperation should be enhanced to transfer technology,
knowledge management mechanisms, train local manpower, improve the
manufacturing of key parts and to learn from each other’s experiences.

Conclusion
Energy is vital for the socioeconomic progress of a country. Pakistan, like many other
underdeveloped countries solely relies1 on traditional fossil fuels to meet its energy
requirements. Due to its massive population and recent industrial development, there is a huge
demand for energy. Meanwhile, fossil fuel prices have increased recently, and the country has
no other means to produce energy, resulting in energy shortfalls. The electricity demand and
supply gap has been increased tremendously. Due to the increasing energy gap, all sectors of
life have been affected severely. Policy makers all over the world are looking for alternate ways
of energy to solve energy scarcity problems. Different sources of alternate and renewable
energy are being explored in Pakistan as well. We have compared different renewable energy
sources i.e., solar and wind, based on price, average life span, emission of hazardous gases,
consumption of fuel, operation and maintenance costs. We found that solar energy has
emerged as a best source of renewable energy to tackle all the energy challenges as it is
cheaper, does not require operation or maintenance costs and have a greater average life span
than wind energy. Moreover, good wind speed is only available for 5 to 6 months of the year,
while solar radiation is present all through the year in the country. Solar energy can lessen the
pressure on the national budget, which is being used for importing expensive fossil fuels,
especially oil. The use of solar energy is only limited to solar PV, solar water heaters, solar
geysers, solar cookers and solar pumps in Pakistan. Though, with the construction of the Quaid-
e-Azam solar park and similar projects, the awareness of solar energy and its associated
benefits have been increased among people. But until now, its share in the total energy mix of

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the country is negligible. Pakistan’s topography and climatic conditions are ideal for the
utilization of solar energy at its maximum level. Finally, we have provided some policy
implications to address the barriers in the way of solar energy, make people aware about the
current energy problems of the country, by supporting and promoting solar energy practices
and attract local and foreign investors to invest in solar power projects. To conclude, solar
energy has the potential to solve Pakistan’s energy crises in a short time-period.

References
 Water and Power Development Authority (WAPDA) Home Page. Available online:
http://www.wapda.gov.pk
 Worlodometers Home Page. Available online: http://www.worldometers.info/world-
population/pakistanpopulation
 Research paper on study of Green energy industry:
https://ieeexplore.ieee.org/document/7916603
 https://www.researchgate.net/publication/
316732927_Solar_Energy_Challenges_and_opportunities_in_Pakistan
 https://www.researchgate.net/publication/
254409706_Greener_energy_Issues_and_challenges_for_Pakistan-
Solar_energy_prospective
 https://tribune.com.pk/story/2259799/is-solar-power-the-right-choice-for-pakistan
 https://www.pv-magazine.com/2020/05/01/pakistani-regulator-expects-solar-capacity-
to-hit-27-gw-by-2047/#:~:text=The%20organization%20also%20predicts%20that,of
%20solar%20capacity%20by%202022

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