A rumor that Pakistan’s electricity price might drop caused a sharp drop in the stock prices of some photovoltaic equipment companies.
The most serious plunge was in Deye Co., Ltd., the leader in photovoltaic inverters.
According to industry media reports on September 23, a person from the securities department of Deye Co., Ltd. said: “Pakistan is just one of our important overseas markets. We have not received any definite news about the sharp drop in Pakistan’s electricity price. The stock price fluctuation may be affected by many factors. The photovoltaic sector as a whole is facing downward pressure, and it is not only our stock price that has fallen.”
On the 23rd, the stocks of photovoltaic-related companies such as Mubang Hi-Tech, CHINT Solar, Homai Co., Ltd., Sineng Electric, and Maxwell Co., Ltd. also followed the decline. Among them, Mubang Hi-Tech fell 8.06%, Homai Co., Ltd. fell 5.16%, Sineng Electric fell 2.03%, and Maxwell Co., Ltd. fell 3.94%.
In fact, Pakistan, a niche market, has emerged as a new overseas market for Chinese photovoltaic companies. According to statistics from the Photovoltaic Association, Asia surpassed Europe to become the largest export market for photovoltaic products in the first half of this year. Pakistan has become the second largest component export market after Europe. During the same period, my country exported inverters worth a total of RMB 1.714 billion to Pakistan. In August, the export value of inverters to Pakistan reached RMB 326 million, a year-on-year increase of 429.04%.
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“We are short of electricity there, and we have suffered from floods in the past two years, so we have a great demand for photovoltaic power.” On September 22, a Pakistani businessman told “Foresee Energy” at the China Western International Investment and Trade Fair.
Similar to South Africa in 2022 and Ukraine now, although the economic level is average, Pakistan’s power shortage has become a long-standing problem.
Pakistan’s energy structure is mainly thermal power and hydropower, of which thermal power accounts for about 50%.
From the perspective of installed capacity, in 2023, Pakistan’s thermal power installed capacity of oil, natural gas, coal, etc. will account for more than 50%, and hydropower will account for more than 20%. The proportion of new energy installed capacity is relatively low, with wind power installed capacity accounting for about 4% and photovoltaic installed capacity accounting for only about 1%.
From the perspective of power generation over the years, thermal power is also a big part. Data shows that in 2022-2023, Pakistan’s thermal power generation accounted for 52%, hydropower 26%, nuclear power 17%, wind power and photovoltaic power generation accounted for 3% and 1% respectively.
But Pakistan is a country short of coal.
According to BP data, by the end of 2020, Pakistan’s total provable coal reserves were 306.4 billion tons, accounting for 0.3% of the world’s provable reserves.
Therefore, Pakistan’s coal consumption mainly relies on imports. According to data from the China Coal Economic Research Association, in the 2020-2021 fiscal year, Pakistan’s domestic coal production was about 3.8 million tons, and imported coal was about 18.91 million tons, accounting for about 83% of the total supply.
In addition to relying on imports, the circular debt of the power sector, the slow development of the transmission network, and the high line damage rate have also seriously restricted the development of Pakistan’s power system.
Among them, the line loss problem in the field of power transmission and distribution is the most prominent, and it is also the root cause of Pakistan’s power triangle debt. Pakistan’s distribution network is basically monopolized by state-owned enterprises. Most of the transmission and transformation lines and equipment were installed in the 1970s and 1980s. The equipment is old and backward. Pakistan’s average transmission and distribution loss in the ten years from 2005 to 2015 was as high as 20.84%, while the international standard for the same period was about 7%.
However, compared with the constrained power generation side, Pakistan, located in the tropics and subtropics, has a higher demand for electricity. From the perspective of per capita electricity consumption, according to World Bank data, Pakistan’s per capita annual electricity consumption was about 448KWh/person in 2014, and it has been increasing year by year. Compared with India, Vietnam and China in the same period, it is at a lower level.
However, due to its location near the equator and large deserts and arid areas in the south and southwest, Pakistan has excellent lighting conditions and huge potential for the development of photovoltaics.
According to the World Bank’s Global Solar Atlas data, taking Balochistan, which has good lighting conditions, as an example, the annual average photovoltaic output power of a 1KW household photovoltaic system can reach 1990kWh (corresponding to about 1990h of lighting hours), which is about 41% and 59% higher than New Delhi, India and Shandong Province, China respectively; the global tilt irradiation can reach 2536.5KWh/square meter, which is about 36% and 61% higher than New Delhi, India and Shandong Province, China respectively.
In recent years, the Pakistani government has also highly supported the development of renewable energy such as hydropower, wind and solar power, and has successively issued a number of policies such as the Renewable Energy Development Policy, the Integrated Energy Plan, and the Renewable and Alternative Energy Policy (2020). It has formulated a strategic goal of increasing the proportion of renewable energy and alternative energy in Pakistan’s electricity market to 20% by 2025 and to 30% by 2030.
Specifically, in terms of photovoltaic power generation layout, Pakistan’s energy authority NEPRA has actively launched photovoltaic power station project bidding, launched a competitive trade bilateral contract market, and added a new electricity wholesale market model to stimulate the construction of photovoltaic projects in Pakistan.
According to the plan released by the Pakistan National Electricity Regulatory Authority, it is expected that by 2030 and 2048, its photovoltaic installed capacity will reach 12.8GW and 26.9GW respectively.
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“Electricity prices have been rising, and people are trying to find their own way out.” said the Pakistani merchant.
In fact, the continued increase in electricity prices has also been a major driver of the explosion of photovoltaic storage installations in Pakistan since last year.
In the 2024 interim report released not long ago, Deye Co., Ltd. stated: “Pakistan has been experiencing long-term power outages due to fuel shortages, weak power generation capacity, and high degree of aging of the power grid. At the request of the IMF, the sharp increase in residential electricity prices has driven the demand for photovoltaic storage… In the first half of this year, emerging markets represented by Pakistan, India, the Philippines, and Myanmar have formed rigid demand due to severe power shortages, as well as high electricity price increases, policy promotion, and economic improvements brought about by component and battery price cuts. Demand has emerged.”
Currently, the Pakistani government is facing a fiscal crisis. Due to the long-term serious losses in the power sector, the Pakistani government hopes to increase the power sector’s revenue by raising prices.
According to information from the Pakistan National Electricity Regulatory Agency, in the next fiscal year starting in July this year, the average electricity price increase of Pakistan’s 10 distribution companies will be about 19%, and residential electricity consumption will increase by 104-138% compared with 2020.
According to Huachuang Securities, the current yield of Pakistan’s household photovoltaic storage system is about 37.5%, and the payback period is 4-5 years. Overall, Pakistan’s household photovoltaic storage is economically strong under high electricity prices. If electricity prices are further raised in the future, Pakistan’s household storage demand is expected to remain high.
“Now cheap Chinese photovoltaics are crowded with Pakistan’s ports.” A Chinese businessman who knows Pakistan said.
Against the background of falling prices, with the support of domestic policies and the influence of electricity price fluctuations, Pakistan’s photovoltaic installation demand is rapidly exploding. According to statistics from the Photovoltaic Association, Asia surpassed Europe to become the largest export market for photovoltaic products in the first half of this year. In terms of specific categories, although Europe is still the largest export market for photovoltaic components, its market share has declined significantly. Pakistan has become the second largest component export market in the first half of the year, accounting for 8.90%.
However, there have been some new policy changes recently.
According to a report by Pakistani media on the WeChat public account of “Overseas Solar Storage Observer” on September 22, Pakistan’s Minister of Power Sardar Awais Leghari announced that the revised agreement with independent power producers (IPPs) is expected to be announced to the public in the coming weeks.
Minister of Power Leghari stressed that the current electricity price level is unsustainable. The working group is studying which power plants are necessary and exploring the possibility of reducing the electricity price to 1 rupee per unit.
It is precisely because of the news of the electricity price reduction that the stock prices of some photovoltaic companies such as Deye Shares have fluctuated.
But overall, the prospects of Pakistan’s photovoltaic market are still relatively bright.
According to the “Generation Capacity Expansion Plan (IGCEP2047)” released by NEPRA, Pakistan’s photovoltaic installed capacity will achieve rapid growth in the next few years. It is expected that by 2030, the photovoltaic installed capacity will reach 12.8GW, and by 2047 it is expected to reach 26.9GW. According to estimates, to achieve the 2030/2047 targets, the average annual new photovoltaic installed capacity needs to reach 1.65/1.07GW respectively.
According to Huachuang Securities, Pakistan’s photovoltaic installed capacity is expected to account for 16.7%/16.0% in 2030/2047, and wind power installed capacity is expected to account for 13.5%/6.1% respectively.
