OFF-GRID MARKETS - PAKISTAN PERSPECTIVE September 28, 2017 Memmingen, Germany
FROM FRONTIER TO EMERGING MARKET Pakistan has officially re-entered into emerging market status - Borgen Magazine, July 2016 Pakistan has made significant economic progress - Christine Lagarde, Managing Director, International Monetary Fund, October 2016 Three key factors driving Pakistan’s economic awakening: An improved security climate, relative political stability and a growing middle class. These three interlocking pieces are fueling Pakistan’s growth story - Dawn, March 21, 2017 Morgan Stanley Capital International (MSCI) upgraded Pakistan from Frontier Markets (FM) to Emerging Markets (EM), effective May 2017. This transition is only precedented by Qatar & UAE in 2014. “The upgrade will put the country on people’s radars, whereas they wouldn’t have had the desire to invest before.” – Bloomberg Markets, May 25, 2017
Austria + Belgium + Czech Republic + Denmark +Germany + Netherlands + Slovenia + Switzerland+ Portugal = Pakistan (Five Provinces: Balochistan, Sindh,Punjab, KPK, Gilgit-Baltistan)
ECONOMIC DRIVERS 24% 23% INDUSTRY AGRI BUSINESS 53% SERVICES 5.7% 2% FINANCIAL SERVICES ELECTRIC GENERATION & DISTRIBUTION
INDUSTRY DRIVERS 140.2 MN MOBILE SUBSCRIBERS: I.E. 73% OF POPULATION (DIGITAL IN 2017 GLOBAL REPORT) 6th AMONG TOP SMART PHONE MARKETS IN THE WORLD $ 2,34.5 BN FOREIGN DIRECT INVESTMENT IN 193.2 MN AUGUST 2017 (STATE BANK OF PAKISTAN) POPULATION (WORLD BANK) 85.6 GWH 58% ENERGY CONSUMPTION (WORLD BANK) YOUTH LITERACY RATE 35.1 MN INTERNET USERS: I.E. 18% PENETRATION (DIGITAL IN 2017 GLOBAL REPORT)
ENERGY CHALLENGE - 2017 2 5 20 1 5 REQUI REMENT 22 Daily Shortfall of about 7 GW 1 0 G E N E R A T I O N 15 5 0 ENERGY ( G W )
ENERGY INVESTMENTS Investment In Energy With Private Participation: US $ 1.68 BN As a result: (World Bank 2016) Energy Generation Increase: 3.4% Public Private Partnership Investments in Energy: US $ 450 MN (World Bank 2016)
CLEAN ENERGY FOCUS Government Target: supply 15-20% commercial energy through renewables by 2030 90% of the money for renewable energy projects to come in the form of foreign direct investments Licences to private sector players for generation, transmission and distribution are being issued easily 7 GW of distributed and off-grid renewable technologies expected in the next 15 years. (Source: Planning Commission, AEDB)
FUTURE INVESTMENTS Asian Development Provincial government Bank has approved plans for off-grid $325 million for electrification: In 2016, Pakistan rural electrification Especially plans for added: 300 MW of (ADB, 2017) Solarization of solar power, 244 MW Pakistan was the Government Schools scene for a record of wind, 85 MW of and Colleges (Punjab, $723 million of asset biomass + 48MW of Sindh, Balochistan) as small hydro finance for well as micro-hydro in renewable energy in Khyber Pakhtunkhwa, 2015 . Among Azad Jammu + Kashmir investors (BNEF, 2017) announcing specific project proposals were Scatec Solar (150MW) , Desert Tech (180MW) and China Zonergy (900MW).
POTENTIAL OFF-GRID MARKET 144 MILLION people have no reliable access to electricity Off These, 68 Million people live in off-grid rural areas Only 7.7 Million people tap into solar power in the rural off-grid To be captured: 61.3 Million potential users
GROWTH Opportunity Bridging the Energy Gap Through Solar
SOLAR OPPORTUNITY 90% of off -grid customers have access to a mobile - 67% of them, access BANK financial services through Clean Energy 2900 GW their network operators, project financing through local particularly mobile money solar power banks potential transfer technology Over 72% rural population are interested to take microloans for solar home systems. (MicroEnergy International, 400 2014) energy startups (Stimulus Research) Solar considered a dependable source of power connection in rural areas, 0 Duty both at households and on farms and on all PV import fields . Solar panels being utilized for tunnel farming & poultry farming
POTENTIAL OFF-GRID APPLICATIONS CAPTIVE POWER SOLAR STREET COMMERCIAL SOLAR RURAL GENERATION THROUGH LIGHTING LIGHTING WATER PUMPING ELECTRIFICATION SOLAR PV APPLICATION Existing 300 MW of A potential of approx Currently more than More than 8000 Government has total electricity 5 MW per project 1000 MW being run villages to be allowed captive consumption of through diesel electrified; potential power generation Pakistan generators can be for micro-grid / through renewable transitioned to solar mini-grid projects energies. In this Expected to reach regard, no license or 500 MW post new Potential for business approval from any installations currently opportunities: milk governmental in planning & design chillers for dairy authority is required stage farming, cold storage for medicines
SOLAR OFF-GRID BUSINESS MODELS • Formal Organization • Informal • Direct Marketing Outreach • Retail • Sell Offering • Sell & Service • Community Based Management • Entrepreneur Based • Full Payment Financial Model • PAYG • Credit (MFL, non-interest based micro- loans)
MARKET DYNAMICS CUSTOMER PREFERENCES IN PAKISTAN WHAT EXISTING CUSTOMER CUSTOMERS DESIRE: SCENARIO: More knowledge Limited knowledge Preference for low Product that is within cost products financial means but delivers what it promises Misconceptions about what PV is and what it can deliver Commitment for & delivery of quality Lack of awareness product and service about benefits of quality PV products
STAKEHOLDERS GOVERNMENT OF PAKISTAN ACADEMIA PRIVATE Energy Department Universities | Vocational Investors Training Centers BILATERAL / MULTILATERAL LOCAL DONORS Solar Industry GIZ | UN | ADB World Bank / IMF
STIMULUS ... CONNECTING THE DOTS Reform &Regulation Awareness, Knowledge & skill Enterprise & Development Enabling Technology Financing Opportunities Outreach & Delivery Enabling Impact & Network Sustainability
STIMULUS ... CONNECTING THE DOTS
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