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A case for solar electricity

The only solution to the chronic electricity shortages in Pakistan lies in harnessing the obvious potential of solar electricity created by photovoltaics.

Out of all the known energy sources on the planet, only PV has the practical capacity to single-handedly meet the long-term electricity demand of humans on earth. None of the mature energy industries come even close to PV in terms of their maximum technical limit of global power production capacity. Not even by an order of magnitude. The other renewables are particularly puny in comparison.

So what is photovoltaics (PV? ) PV is the direct conversion of light, known as photons to physicists, into electricity. In other words, it’s about capturing and transforming the energy of photons contained in light into electricity — ‘robbing’ energy from daylight for electricity.

The amount of photovoltaic electricity that can be generated on our planet is therefore limited by the amount of suitable semiconductor materials which we can produce.

The most popular semiconductor material among humans is a variety of crystalline silicon. The global microelectronics industry, including the mobile phones and computers we use, is built on a house of silicon.

As the microelectronics industry pushed for tinier and tinier circuits, the supply of silicon feedstock contracted and became concentrated in the hands of a few producers. The resulting prices of silicon feedstock discouraged its use in large-area devices such as photovoltaic panels.

A false impression was created that silicon semiconductors could not be used for PV because of high material production costs.

There never was any fundamental technical or economic reason to justify this impression. It was always a matter of cultivating the demand for a new application of the same material, and galvanising industrial supply chain expansion to meet this demand.

The material production costs dramatically fall with the growth of new demand and supply expansion. That’s exactly what has happened with silicon for the PV industry, quicker than anyone predicted. A major advantage for the PV industry is that it needs a cruder grade of crystalline silicon than the microelectronics requirement. Now more silicon feedstock is consumed by the relatively young PV industry than the decades old microelectronics market.

A one Megawatt (MW)-peak grid-connected PV farm, with a twenty five years performance warranty for the photovoltaic panels, can at present be deployed in Europe for a turn-key installation cost of one million euros. The deployment costs are still falling, thanks to a most competitive global market. A one MW-peak farm corresponds to an electricity burden of about two hundred homes.

The paramount figure of merit for any electric power project is the energy output cost per kilowatt-hours over the project lifetime (also known as the levelised electricity generation cost, abbreviated LEC).

For a PV farm, it will depend on the daily average insolation levels at the location: let’s take conservative estimates of about 80 Watts per m2 and 160 Watts per m2 for the south of England and Punjab respectively.

The annual energy yield of standard silicon PV panels at these locations would come to about 700 MW-hours and 1400 MW-hours per MW capacity installation. Add another fifty per cent to the installation cost to cover for financing, management, device replacements, maintenance, insurance and other items for a total project financing bill over twenty five years of one and a half million euros, and adjust the annual energy yield for performance slippage by a factor of one per cent per year. Now multiply the adjusted annual energy yield by twenty five years and divide it by the total project financing bill.

The corresponding figure of merit, i.e. the LEC, comes to euro0.11 per kilowatt-hours and euro0.055 per kilowatt-hours for the south of England and Punjab respectively. Suitably placed PV farms in Pakistan can generate electricity at an unsubsidised cost of Rs7 per kWh! Total electricity demand requiring a power capacity of 60,000 MW-peak, a 2020 estimate for Pakistan, could be satisfied with a capital investment of around 70 billion euros in PV farms. The area needed for these PV farms,

conservatively assuming a power conversion efficiency of 12 per cent for the PV panels, would be 500 km2 (13 percent of the area of district Multan or 0.14 percent of Baluchistan). An area the size of 1/9th of Baluchistan covered by PV farms would match the entire world’s current electric power capacity of five million MW.

So what’s stopping PV farms on the ground and PV panels on rooftops all over Pakistan? A major impediment is the lack of a publicly available feed-in-tariff structure for PV electricity generation in Pakistan.

Feed-in-tariffs are pre-determined government backed fixed payments to existing or new energy producers per amount of electric kilowatt-hours they produce and feed to the grid. Feed-in-tariffs have been predominantly responsible for the development of PV infrastructure worldwide. It has driven the global glut of PV panels and falling prices.

The revenue of a feed-in-tariff based PV project has the same financial profile as that of a government backed bond, with the financing cost varying according to the credit rating of the government. The trick is to introduce a sliding-down scale of feed-in-tariffs to encourage PV infrastructure investment without drilling a gigantic hole in government finances (like what’s happened in Spain and Italy).

PV suppliers and financiers flock to the countries which offer the relatively highest and most secure feed-in-tariffs, handicapping poorer governments who cannot afford the same payment scheme.

The development of PV infrastructure in Pakistan does not have to rely on the abetment of feed-in-tariffs from the government.

Alternative business models of collective power purchasing agreements from industrial users or aggregated household consumers, and peer-to-peer infrastructure financing, can be used to raise the required capital with the diversification and hence minimisation of revenue risk.

Knowledgeable, skilled, and competitive PV procurement is essential.

The high insolation levels across Pakistan, large tracts of sunny barren land close to densely populated areas, a widening electricity supply-demand gap, the global glut of silicon PV supply, and the ubiquitous ease of speedy PV installation, all work in favour of a grand of producing solar energy. The opportunity for widespread PV deployment in Pakistan is outstanding.

The writer is director, Vivantive Ltd , London

email: omar@vivantive.com

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