‘Unlocking the Economic Potential of Rooftop Solar PV in Pakistan’

Pakistan has one of the largest unserved populations as far as electrification is concerned and so has a genuinely high potential for leapfrogging into a bottom-up solar photovoltaic (PV) diffusion. The
demand for such a diffusion can be very high because of the multiple faults and flaws that characterize Pakistan’s utility-scale energy system (such as low electrification, load-shedding and high cost of grid provided electricity). But, in spite of this potential, solar PV has so far had a limited usage in the
country.
This research study by Rural Development Policy Institute probes the challenges and barriers embedded in the existing policy and institutional governance, restricting financing for rooftop
solar/small-scale PV systems and carries out a systematic review of available solar lending instruments and business model lags in context of small-scale solar systems. The study also uncovers the nature,
intensity and scope of the risks and challenges for renewable energy advancement and implementation of sustainable clean energy supply in Pakistan. It further examines solar PV finance challenges and business model lags that are prevailing in the existing socio-economic landscape and is based on a representative sample and in-depth interviews with several primary stakeholders.
In this study we also analyze the State Bank of Pakistan’s ‘SBP Financing Scheme for Renewable Energy’, which provides loans and financing for solar and wind technology on low interest rates with
the aim to address Pakistan’s climate change and facilitate renewable energy uptake. Few other banks are also advancing similar loans under their independently designed schemes or regular financing with
different terms and conditions. Despite such lending options, solar financing is still in its infancy and is characterized by several demand-side and supply-side barriers. Our analysis reflects the current state of analyses in relation to Category II of the SBP scheme—which covers small-scale and rooftop solar systems (systems up to 1 MW). We specifically provide an updated overview of some barriers and
challenges undermining a more equitable spread of gains of the State Bank’s scheme among different groups of society—warranting urgent attention. We also critically review how and why different
business models have failed to emerge in Pakistan.

The complete study is available on the link below.