Sustainable Energy Development in Pakistan: An Interview with Fareed Shahid of SABCO Solutions
Updated: Oct 19, 2020
Fayaz Ahmed : First of all, tell us a little bit about yourself and a little about your industrial experience.
Fareed: Hailing from a middle class military background (father was an Army officer and mother an educationist), I am a Computer Systems Engineer by qualification, followed by MBA from Lahore School of Economics. It has been more than 13 years in the professional world where I have worked with various organizations in varied sectors from Software Development enterprise to Telecommunication to Agriculture to Energy working in a vast array of organizations (startups, conglomerates & Fortune 500).
Fayaz Ahmed : Could you give us a bit of background about your involvement in the renewable sector?
Fareed: In the renewable energy sector, I can safely consider myself as one of the early birds. In my humble capacity, I have been in off-grid segments, domestic and commercial solutions. I have seen the industry taking shape and moving forward towards development, seen the players enter and exit, learnt the good practices and discovered the pitfalls.
During my stint with dlight(starting 2013 till mid 2016) , I was primarily responsible for market development of the portable lighting solutions in tandem with our distribution partners (REON Energy Solutions). During that stint, I worked directly on setting up retail infrastructure for the portable solar product line, developing channels, building partnerships (commercial as well as social). All these activities were done in partnership with the distribution partner. Moving forward, International Finance Corporation (IFC) launched their initiative of Lighting Pakistan (in which they support the GOGLA Associates to provide match making services, advocacy for the products and help them grow business or make an initial point of entry). As dlight was one of the associates, so I had a support role for IFC where I shared with them the potential channels and their modalities ( on the basis of learnings we had in the other parts of the world through similar partnerships), and I must say, IFC played a role of catalyst in match—making, but unfortunately, many of the local partners were not able to develop further. The tenure at dlight was enriching in many ways, that was the point, I got an insight of how channels in rural distribution of energy products can be developed (which we did develop to scale) , how can a robust last mile distribution system be developed, market mapping (off-grid geographies), degree of grid connectivity, market dynamics and various other facets.
By this time, I had founded my own entity, and in a span of 10 months we have secured membership of World Alliance for Efficient Solutions(globally there are 1000 members of which 2 are from Pakistan(including us)), won D-Prize award( this is an entity based in SF, that funds enterprises with the startup capital that are operating or plan to operate last mile distribution for high impact products in RE, Agri, Healthcare & Education).
Fayaz Ahmed : A study conducted by Harvard University showed that Pakistan’s GDP is expected to grow more than 5% per year for the next ten years. Would it be possible to meet such projections when there is serious energy crisis looming?
Fareed: If we look at the energy state in year 1998, we were in a position to sell energy outside of Pakistan. Later, either the sector didn’t feature much on the priority lists or for various other reasons, despite the massive increase in population, we were not able to upgrade our energy systems (in terms of generating). In the times of Gen. Pervez Musharaf, there was some work done for solar energy, which was later taken on by Prime Minister Nawaz Sharif(2013-2017).
Energy access has two main components (generation & transmission). During the tenure of Nawaz Sharif (as energy access was their main slogan in election campaigns as well), they invested heavily on energy access where we see Nandipur Plant, Quaid-e-Azam Solar Park (generation capacity of 1000MW), Sahiwal Coal Power Plant (1320MW) and so on. While the energy generation has been on the rise, the transmission side did not develop in proportion.
With the next government coming in, I am optimistic that they would take things forward and develop the transmission side as well. Here I would like to share, that now as people are getting more aware of the renewable energy products, there is a higher adaptability of alternate energy. Assuming, even if there is a lag from government’s side, the people are getting alternate energy systems at their place, and now with net metering/ reverse metering in several cities, the propostion has become more attractive. Moreover, Pakistan is one of the countries that has the most friendly regulatory policies for renewable energy systems and components. With this, I am optimistic that with the passage of time, we would be able to address to the issue of energy crisis (not to discount energy management practices).
Fayaz Ahmed : Where Pakistan stands today as for as Renewable Energy sector is concerned?
Fareed: I would say Pakistan holds a tremendous position as far as adoption is concerned. Few submissions here to back my comment:
As per the GOGLA Market Trends Report (2018), Pakistan is second largest importer of PV modules (after India). This includes the import of all grades of panels. (quality is a separate discussion point)
Since most of the areas of Pakistan are rural, so the farmers who can afford (in some areas) have installed Biogas Plants for energy access. Some use it for irrigation, some organizations like Nestle use it for Milk Chilling etc.
Even in the remotest town, where you might come across the least educated people, you would still come across a lot of people who at least know about solar.They do not have the technical understanding of the technology or knowledge of working of the RE systems but they do appreciate the fact of Solar being a means of energy.
In Urban segments, people are even switching to the reverse metering systems, for which there is an additional demand for solar solutions to be installed domestically.
Fayaz Ahmed : What are the long-term prospects for Pakistan’s renewable sector? And are there any specific sectors that are doing better than others?
Fareed: Long terms prospects include energy generation at a mass scale through alternate sources. This can be in the form of wind energy, solar energy, Biogas etc. The gauge to measure who is doing better or otherwise is very wide parameter(s). It depends upon what parameter you are trying to assess. I would state in terms of being self reliant and increasing productivity.
As far as choosing any specific sector is concerned, I would say that if we take into account the acceptance of technology and adapting to it, the industries and factories have taken a leap forward to convert significant loads on to solar. Industrial sector in general has taken lead versus others. We see factories being converted on to solar, with loads of upto 1MW or above being directly served by RE. This is followed by domestic segment.
Fayaz Ahmed : National Renewable Energy Labs (U.S.A.) has developed the wind map of Pakistan and estimated the total wind potential of about 340,000 MW. How much of that potential has been exploited so far?
Fareed: Of the stated figure of potential, I can safely say that a fraction of this has been exploited. Talking strictly of wind potential exploited , I can assume it to be <1%. Since exploiting wind energy is highly capital intensive and infrastructure intensive, some of the local corporations have completed their feasibility to start installations, while some are interested to explore this sphere. But results are yet to be seen. The current mix is greatly skewed towards the wind corridors in Sindh, while a great deal of potential exists along the coastal belt in Balochistan.
Fayaz Ahmed : As per statistics released by World Energy Outlook (2016) 51 Million people in Pakistan lives without access to electricity and 105 Million people (56% of total population) have traditional use of biomass for cooking purposes. Off- Grid utilization of Solar Energy could make their lives better, Please comment?
Fareed: Certainly, this is another very important segment of our population that is living off-grid. As per the IFC figures, annually USD 2.3bn is spent on lighting expenses (through kerosene/ wood, candles etc), mobile charging is a separate expense altogether. Imagine a life where you are living in conditions where you have to inhale fuel fumes all through the night, have a risk of fire by tipping over, have to travel miles to get the mobile phones charged. With access to such solutions which have a relatively longer life, are rugged, and completely eradicate the risks mentioned earlier, there would definitely be positive impact. All that needs to be done is to share the value proposition with the target audience.
Many people in the rural segments still use wood as the primary cooking source, which is neither eco-friendly nor a feasible or viable option given the threat of climate change and massive deforestation. Introduction of Solar Energy products (quality products) would definitely impact the lives and help improve the living conditions. I would like to add here, that Pakistan has now come to notice of international organizations working for climate change, off-grid potential. Earlier(and even now), there is a lot of focus on energy access in Africa (off-grid segments). If we dig down a bit deeper, we realize that the off-grid population of Pakistan outnumbers the total population of a minimum of 3-4 African countries (you can choose randomly any set of countries.)
Fayaz Ahmed : In your opinion, what are key challenges obstructing development of renewable sector in Pakistan and how those challenges could be overcome?
Fareed: Main challenges are:
Price Sensitive market: Pakistan is a very price sensitive market, mainly attributed to the limited income levels of a vast majority. While the people plan to opt for RE as source of energy, they end up sourcing low quality goods (mainly knockoffs of quality vendors) which are sold at a price which either the local players (dealing with quality equipment) cannot match or end up squeezing their operating margins. Consumers on the other end, directly opts for the less pricy components or equipment. This consumer mindset leads the people to end up purchasing low quality goods, which when breakdown bring a bad name to technology in general (and not the choice that they made at the time of purchase). To address to this, the market players need to carry out awareness sessions at trade level as well as at consumer level.
Smuggled goods: This is one of the major challenges. Since Pakistan hosts Afghan citizens to significant extent, many of them have setup business locally or have local counterparts. Moreover, the consignments for Afghanistan (if full container load), moves out of the port without customs or paying local charges. Mostly these consignments get traded in the feeder markets (Peshawar & Quetta) which makes things even tougher for the local entities to operate. The Alternate Energy Development Board(AEDB) – an entity of Government regulatory, has developed certain standards of equipment for importation which would be considered for exemption of duties and taxes. It is matter of time, when the standards actually get implemented. Government has also taken up some initiatives to regulate the imports which might curb the negative elements moving forward.
Lacking technical expertise: many sellers in the market have no product knowledge and have limited technical capacity. This makes them do experimentation at consumer’s expense resulting in a bad taste of mouth. The only way to deal with this challenge is to perform capacity building of the local partners and entities to equip them with the product knowledge.
External Factors: Currency depreciation and fluctuation is a major deterrent here. While the global prices are sliding down, the local currency depreciation is coming out to be a challenge.
Fayaz Ahmed : Could Pakistan be energy self-sufficient? If yes, when do you see that thing happening?
Fareed: Yes, Pakistan can be energy self-sufficient, but to reach that stage would take sometime. Geographic conditions and the population density in some areas is such that they may not have grid access even in the farther future (since its doesn’t make the proposition economically feasible for power companies to develop infrastructure). If we exclude such segments, I believe, we can expect a greater pace towards energy self-reliance. With the introduction of NetMetering, greater adaptability towards RE, use of RE at domestic and commercial levels, the load is partially getting off the national grid. People with NetMetering are contributing to the national grid, the unused generated units, which get used by someone else.
The previous government has done a lot of work on the generation, transmission needs to be upgraded to match generation capacity. If the next governments take up the transmission part, things can eventually move in the right direction.
Fayaz Ahmed : Government of Pakistan needs to formulate a definite long term strategy for ensuring reliable energy supplies for economic activities in the country. What are your expectations from the newly formed government after General Elections 2018?
Fareed: There is definitely a requirement of a long term strategy to ensure reliable energy supplies to fuel economic activity. The current regulatory framework is very supportive of energy access development ( be it in the form of tariffs, duty structure, taxes or any other). I personally feel that in addition to Long Range Plans for energy access initiatives, there is also a requirement to enforce threshold standards.
The resolve exhibited by the members of newly formed government (to address core issues) coupled with their reiterations to develop energy infrastructure, I am optimistic of a better overall outlook. But realistically speaking, the new government is already embarking on an uphill task, and the issues warranting higher precedence are aplenty, so we need to see where the energy access scale-up features on the priority list. Personally, I believe, that they would at least lay some solid founding for the power projects (if not complete).
Founder of SABCO Solutions