Solarise all government buildings, is a policy decision which the government should take in order to deal with the shortfall of energy and to provide relief to the overloaded distribution network.
The Policy will also help to achieve the government’s solar target as estimated by the Alternate Energy Development Board that net metering would add 1,000 megawatts of solar power to the energy grid by 2021 and 4,500MW by 2025. This, in turn, will also help create thousands of direct and indirect jobs. Therefore, the government should take a decisive step to solarise all government buildings to boost clean energy infrastructure in the country. Solarisation will greatly help in meeting the electricity deficit as well.
Solar photovoltaic (PV) is quickly becoming financially competitive compared to conventional forms of power generation using fossil fuels and even other renewable resources in many countries. A massive growth in renewable energy has been witnessed during the last couple of decades in the global energy scenario with Solar PV being the most preferred source of renewable power, due to the various benefits that it offers. Installed capacity of solar photovoltaic (PV) has crossed the 300GW mark, with a record growth of nearly 99 GW in 2017. With the combined annual new investment in solar and wind power crossing $ 260 billion, the former alone is out-beating the combined investment in oil, gas and coal-based power plants.
Pakistan has been blessed with some of the highest values of insolation in the world, with eight to nine hours of sunshine per day, which are ideal for climatic conditions for solar power generation. The country has built its largest solar power park, the Quaid-e-Azam Solar Power Park (QASP) in the Cholistan Desert, Punjab, which has 1 GW capacity with 400MW already installed, and operational. A plant of this size would be enough to power about 725,000 homes. Despite being slow to adopt solar technology, the government has time and again admitted at policy level that renewable energy is crucial for dealing with the energy crisis. After an induction of 30 percent of additional power by the ex-government, distribution companies face a greater challenge to distribute electricity through its existing overloaded system.
To provide immediate relief to the distribution network, the Government needs to consider solarisation of identified buildings owned or controlled by the government. Most of the government institutions are Bulk Power Consumers and a large segment of their budgets are spent on the cost of electricity consumed each month.
To put it in simple terms, if government buildings are solarised, not only the expenditure of electricity will decrease but the cost of these projects can also be recovered from the savings made by the use of cheap solar energy. Another key benefit of such an arrangement is the option of Net Metering in case a projects capacity is up to 1 MW. The government institution as per its load demand will install the solar project and will approach the host Distribution Company for approval of net metering arrangements for the project.
Solar photovoltaic is quickly becoming financially competitive compared to conventional forms of power generation using fossil fuels and even other renewable resources in many countries. A massive growth in renewable energy has been witnessed during the last couple of decades in the global energy scenario with Solar PV being the most preferred source of renewable power
Next important question is that whether the government is ready or in fact is in a position to fund the project of solarisation of its allied buildings? In an ideal scenario, considering the EPC’s cost of solar power projects has been drastically reduced, the government should decide to fund these projects so as to benefit from the savings made. The central bank is also encouraging banks to offer concessionary loans to set up solar power facilities.
However, in case the government considers that currently its financial position is not steady enough, then other business models involving payment of upfront cost by the ESCOs can be explored to install solar projects on government premises. In order to achieve this goal, the government can open tenders and seek bids from ESCOs with a proposal to raise the debt and equity for the Project and recoup it over a maximum 20 year period. The government institution in this case will pay a pre-defined tariff for all energy produced, and pay a levelised tariff. It will be lower than grid cost currently, resulting in an immediate cost saving of 25 percent to 30 percent.
The ESCOs can be asked to install the project and recover the cost of the project through monthly instalments calculated on the basis of the production of energy. To ensure the bank ability of such projects, it is imperative that an adequate amount of collateral in the nature of a bank guarantee or a letter of comfort from government institutions is given to ESCOs to undertake the projects. The proposed arrangement can be materialised through a contract containing key features regarding price, measurement of energy and period of purchase which will attract ESCOs to undertake the projects. In this case ESCOs will provide energy solutions through solar power. Government institutions will propose to purchase the Project from ESCO on a deferred payments basis, as per the terms of an agreement.
The writer has an LLM from University of London and is an advocate in the High Court. He can be reached at [email protected]
Published in Daily Times, September 26th 2018.