Haq's Musings

Riaz Haq writes this data-driven blog to provide information, express his opinions and make comments on many topics. Subjects include personal activities, education, South Asia, South Asian community, regional and international affairs and US politics to financial markets. For investors interested in South Asia, Riaz has another blog called South Asia Investor at http://www.southasiainvestor.com and a YouTube video channel https://www.youtube.com/channel/UCkrIDyFbC9N9evXYb9cA_gQ

Showing posts with label electric vehicles. Show all posts

Saturday, June 14, 2025

Clean Energy Revolution: Soaring Solar Energy Battery Storage in Pakistan

Pakistan imported an estimated 1.25 gigawatt-hours (GWh) of lithium-ion battery packs in 2024 and another 400 megawatt-hours (MWh) in the first two months of 2025, according to a research report by the Institute of Energy Economics and Financial Analysis (IEEFA). The report projects these imports to reach 8.75 gigawatt-hours (GWh) by 2030. Using 5.2 hours per day of peak sunlight translates into 1,898 hours per year. It means that each gigawatt of installed solar capacity can produce up to 1.8 terawatt-hours of electricity in a year, and each gigawatt-hour of battery capacity can store up to 1.8 terawatt-hours of electricity over a year. Currently, Pakistanis consume about 110 terawatt-hours of energy from the grid in a year.

Battery Storage Growth in Pakistan. Source: IEEFA

Chinese battery packs have become particularly affordable with rapidly declining prices due to falling raw material costs, overcapacity in manufacturing, and increased production efficiency. Lithium iron phosphate (LFP) batteries have become the most affordable packs, with prices at $75 per kilowatt-hour as of last year, according to Statista.

Pakistan Leads in Solar Generation Mix. Source: Reuters

Pakistan is investing in battery storage projects to improve grid stability, integrate renewable energy sources, and reduce reliance on traditional power sources. These projects are being developed by both public and private entities, with significant funding from international organizations like the Asian Development Bank (ADB).

Home With Rooftop Solar Panels and Battery Storage

Daily Charge-Discharge Cycle For A Home With Solar Panels and Battery Storage

While negatively impacting demand for grid electricity in the short term, the increasing use of battery storage solutions by rooftop solar consumers will likely improve grid stability, integrate renewable energy sources, and reduce reliance on fossil fuels. Here's how the IEEFA report explains it:

"The grid should adapt to changing consumer dynamics and increasing adoption of alternative energy sources. BESS (Battery Energy Storage Solutions) has inherent peak shaving abilities, which could work to the grid’s advantage and result in cost savings by reducing centralized generation. As more distributed solar systems operate, the grid is already experiencing peak-demand shifting. Consumers with solar PV installations defect from the grid during the day but reappear during the night, leading to declining minimum demand during the day but a rising peak demand during the evening (known as the duck curve). Daytime demand is expected to decrease even further if rapid solarization continues, which may jeopardize system stability. Instances of extremely low demand, such as during holidays, may cause utilities to trip, leading to the risk of grid failure. Conversely, the surge in evening peak requires a quick rampup of fossil fuel-based power generation".

Pakistan's Solar Imports. Source: Reuters

Battery packs are the most expensive components of electric vehicles today. Lower battery pack prices will make electric vehicles more affordable, leading to wider adoption and lower transport emissions. As a signatory to the Paris Agreement, Pakistan is pushing to grow electric vehicle adoption. The country’s New Energy Vehicle (NEV) policy for 2025–2030 targets 30% of all new vehicles to be electric by 2030, rising to 90% by 2040.

Pakistan has contributed only 0.28% of the CO2 emissions but it is among the biggest victims of climate change. The US, Europe, India, China and Japan, the world's biggest polluters, must accept responsibility for the catastrophic floods in Pakistan and climate disasters elsewhere. A direct link of the disaster in Pakistan to climate change has been confirmed by a team of 26 scientists affiliated with World Weather Attribution, a research initiative that specializes in rapid studies of extreme events, according to the New York Times.

Friday, August 30, 2024

New Net Metering Policy: Is Pakistan's Solar Boom in Jeopardy?

Recent experience in California has shown that changes in incentives have a huge impact on residential adoption of solar power technology. Since the introduction of NEM 3.0 last year, new rooftop solar business in California has dramatically slowed. New residential solar installation applications have plunged 80%, according to Cal Matters. This has driven many solar installers out of business. The business that remains is mostly focused on adding batteries to existing solar installations.

Impact of California NEM 3.0 on Solar Business. Source: Cal Matters

California Net Energy Metering (NEM 3.0) was launched last year after heavy lobbying by the state's utility companies like PGE and SoCal Edison. It has reduced payments for the excess power exported by the consumer to the grid by 75%. This change means that the consumer is better off with storage batteries to maximize self-consumption of the power generated by the solar panels. Companies such as Tesla Solar with its PowerWall 3 battery are the main beneficiaries of this change.

With rapidly falling solar panel prices, Pakistan is experiencing a solar power boom. The country imported some 13 gigawatts of solar modules in the first six months of the year, making it the third-largest destination for Chinese exporters, according to Bloomberg. In addition, there is approximately 2.2 gigawatts (GW) of net-metered rooftop solar PV capacity connected to the grid by June 2024, according to IEEFA.

What is likely to happen to this solar boom as Islamabad considers changes to its net metering policy? A recent study published by the Institute for Energy Economics and Financial Analysis (IEEFA) attempts to answer this question.

Net Metering vs Net Billing Payback Period in Pakistan. Source: IEEFA

There are several proposals under consideration by the Pakistani government to change its net metering policy. All are designed to significantly reduce payments to the consumer for energy exported to the grid. One of these proposals likely to be adopted is to switch from "Net Metering" to "Net Billing".

Net metering transactions are usually one-to-one, so the credits are often equal to the retail rate of electricity (aka what you pay). Net billing credits are often equal to the wholesale rate of electricity (aka what your utility pays), which is less than the retail rate, according to Energy Sage. Utilities tend to oppose net metering programs, so alternative compensation programs are increasingly being used.

Analysis by Haneea Isaad, an Energy Finance Specialist at IEEFA, shows that the switch from net metering to net billing would still reduce the payback period for 5kW to 25kW solar systems combined with 50% to 70% self-consumption. She concludes that the payback period will be well under 4 years for a system that has a life of 25 to 30 years. It is better than the 5-year payback period in California under NEM 3.0.

Would consumers without solar be stuck with high electricity bills? It is quite likely because capacity charges paid to independent power producers (IPPs) accounted for 62% of energy expenditure in Pakistan for the 2023-2024 fiscal year. For the 2024-2025 fiscal year, 64% of the total power purchase price is expected to be fixed capacity costs. Lower consumption of grid electricity will result in a disproportionate impact on consumers who rely entirely on grid power.

Higher levels of self-consumption closer to 100% would require larger batteries which are still quite expensive in Pakistan. This is likely to change as traditional lead-acid battery makers switch to lithium ion batteries in the country. Recent launches of electric vehicle assembly plants in Pakistan are expected to boost the lithium-ion battery production and bring down prices in the country in the coming years, according to Mordor Intelligence.

Thursday, January 7, 2021

Karachi-born NED University Alum Leads Mercedes Entry into Electric Vehicles Market

Pakistani-German Sajjad Khan is leading German luxury carmaker Mercedes-Benz's entry into the electric vehicle market with six new all-electric “EQ” models, according to media reports. Sajjad Khan was born in Karachi and graduated from NED Engineering University with a degree in computer science.

Sajjad Khan, Executive Vice President, Mercedes Electric Vehicles

Sajjad Khan is currently executive vice president and a board member of Stuttgart-based Daimler. He is partnering with entrepreneurs around the world, including those in Silicon Valley where Mercedes has a development team of over 300 people in Sunnyvale, California. Mercedes-Benz EQS line is the first to utilize the new electric architecture designed for high-end luxury and executive EV models.

Prior to the CES 2021 show in Las Vegas, Sajjad Khan has unveiled details of Mercedes' 56 inch MBUX Hyperscreen system that represents the latest evolution of the automaker’s MBUX (Mercedes-Benz User Experience) central command center. “The MBUX Hyperscreen is at the same time the brain and nervous system of the car, [as] it is connected to all components of the vehicle and communicates with them,” says Khan.

Sajjad Khan was born on October 30, 1973, in Karachi, Pakistan. Sajjad Khan joined DaimlerChrysler AG in 2001, according to Mercedes-Benz website. There he worked on various projects in the field of infotainment before transferring to the materials purchasing department in 2004, where he procured electronic components for cars.

Sajjad Khan left Mercedes and moved to Magna in 2007, where he was responsible as director for the e-car and electronics unit as well as for cross-section functions in global procurement. From 2011 to 2015, he worked for BMW Group AG, where he ultimately became Vice President, responsible for the Connected Drive system worldwide.

Sajjad Khan took over the responsibility for Digital Vehicle & Mobility as Vice President at Daimler AG in spring 2015. He has also served as Chief Technology Officer (CTO) of CASE (Connected, Autonomous, Shared & Services, Electric). Since October 2018, Sajjad Khan leads the entire CASE organization.

Related Links:

Haq's Musings

South Asia Investor Review

Is Pakistan Ready For Clean Energy Revolution?

Pakistani-American Starts Defense-Focused AI Company

Minorities Are Majority in Silicon Valley

Riaz Haq's Youtube Channel

PakAlumni Social Network

Monday, December 16, 2019

Is Pakistan Ready For Clean Energy Revolution?

Rising worries about climate change have recently made me join the Clean Energy Revolution by installing rooftop solar and leasing an electric car. What is the Clean Energy Revolution? It is the growing use of solar panels, battery storage and electric vehicles to reduce carbon emissions. Is Pakistan ready to join the Clean Energy Revolution?

Tesla Surpasses China's BYD in EV Sales. Courtesy Electrek

Tesla Electric Cars:

Silicon Valley is at the forefront of this clean energy revolution led by Tesla. Tesla is more than an electric car company; the company also supplies solar panels and batteries. Other automakers are also taking their cues from Tesla. China's BYD Auto has only recently been surpassed by Tesla in production volumes. Auto giants General Motors and BMW are both building electric cars and planning to build "gigafactories" like Tesla's to manufacture battery packs for vehicles and homes. Pakistan is building up renewable power generation capacity. The country has also recently announced its National Electric Vehicle Policy that offers incentives to transition to clean energy.

Bloomberg estimates that Batteries and electric transmission account for about 40% of passenger cars’ costs. European demand is met by mainly Japanese and South Korean battery makers like Panasonic, LG Chem Ltd. and Samsung SDI Co. In the U.S., Tesla has built its own battery cells at its Gigafactory to manage costs and satisfy demand for the cars it produces. Chinese demand for battery packs is met by BYD.

Battery Backed Renewable Energy Costs:

High-capacity battery pack costs have dropped nearly 40% since 2015, according to Wood Mackenzie data as reported by Wall Street Journal. The prices of lithium and vanadium—two of several key raw materials that are used in such batteries—also have declined over the past year or so.

Battery storage costs have fallen nearly 90% in the past decade, according to NextEra Energy. Cost reductions are expected to continue to only $8 to $14 per MW-hour by 2020, or about a penny per kW-hour. For perspective, the average kW-hour of electricity costs about 13 cents for retail users.

NextEra Energy forecasts that post-2023, wind plus energy storage costs will be $20 to $30 per MW-hour, and solar plus energy storage will be $30 to $40 per MW-hour. Natural gas is expected to match the solar-plus-storage costs.

Pakistan Electric Vehicle Policy:

Pakistan has a low level of motorization with just 9% of the households owning a car. Nearly half of all households own a motorcycle. Motorization rates in the country have tripled over the last decade and a half, resulting in nearly 40% of all emissions coming from vehicles. Concerns about climate change and environmental pollution have forced the government to to take a number of actions ranging from adoption of Euro6 emission standards for new vehicles with internal combustion engines (ICE) since 2015 and announcement of a national electric vehicle (EV) policy this year.

Private vehicle ownership in Pakistan has risen sharply over the last 4 years. More than 9% of households now own cars, up from 6% in 2015. Motorcycle ownership has jumped from 41% of households in 2015 to 53% now, according to data released by Federal Bureau of Statistics (FBS) recently. There are 32.2 million households in Pakistan, according to 2017 Census.

Vehicle Ownership in Pakistan. Source: PBS

Pakistan's National EV Policy is a forward looking step needed to deal with climate concerns from growing transport sector emissions with rapidly rising vehicle ownership. It offers tax incentives for buyers and sellers. It also focuses on development of nationwide charging infrastructure to ease adoption of electric vehicles.

Low Carbon Energy Growth:

In recent years, Pakistan government has introduced a number of supportive policies, including feed-in tariffs and a net metering program to incentivize renewables. These have been fairly successful, and renewables capacity in the country surged substantially over 2018 when 1245 MW was added, of which 826MW was contributed by the solar sector, according to Fitch Solutions.

Non-Hydro Renewables in Pakistan. Source: Fitch Solutions

Pakistan’s Alternative Energy Development Board (AEDB) recently signed deals for projects that will see the country expand its wind power capacity by 560 MW. Fitch Solutions forecasts Pakistan's solar capacity to grow by an annual average of 9.4% between 2019-2028, taking total capacity over 3.8GW by the end of our forecast period.

Sindh government has recently signed a deal for 400MW solar park at Manjhand, 20MW rooftop solar systems on public sector buildings in Karachi and Hyderabad, and 200,000 solar home systems for remote areas in 10 districts of the province. The project is estimated to cost USD105million, with the World Bank funding USD100 million.

The biggest and most important source of low-carbon energy in Pakistan is its hydroelectric power plants. Pakistan ranked third in the world by adding nearly 2,500 MW of hydropower in 2018, according to Hydropower Status Report 2019. China added the most capacity with the installation of 8,540 megawatts, followed by Brazil (3,866 MW), Pakistan (2,487 MW), Turkey (1,085 MW), Angola (668 MW), Tajikistan (605 MW), Ecuador (556 MW), India (535 MW), Norway (419 MW) and Canada (401 MW).

New Installed Hydroelectric Power Capacity in 2018. Source: Hydroworld.com

Hydropower now makes up about 28% of the total installed capacity of 33,836 MW as of February, 2019. WAPDA reports contributing 25.63 billion units of hydroelectricity to the national grid during the year, “despite the fact that water flows in 2018 remained historically low.” This contribution “greatly helped the country in meeting electricity needs and lowering the electricity tariff for the consumers.”

Electricity vs Fossil Fuel Demand Forecast. Source: Economist

Chinese BYD in Pakistan:

Multiple media reports suggest that China's BYD is about to enter Pakistan market following the announcement of Pakistan National EV Policy. These reports indicate that Toyota, one of the largest automakers in Pakistan, has signed a deal with BYD to manufacture electric vehicles.

Other reports indicate that Pakistan's Rahmat Group is in talks with BYD to set up an electric vehicle plant at Nooriabad in Sindh province.

Minister for Science and Technology Fawad Chaudhry has claimed that in three years Pakistan will become the first country to manufacture electric buses, which will be driven by an electric motor and obtains energy from on-board batteries.

Summary:

It appears that Pakistan is starting to get serious about joining the Clean Energy Revolution to deal with rising climate change concerns. The country has set targets for renewable energy growth and announced National Electric Vehicle Policy. In recent years, Pakistan government has introduced a number of supportive policies, including feed-in tariffs and a net metering program to incentivize renewables. These have been fairly successful, and renewables capacity in the country surged substantially over 2018 when 1245 MW was added, of which 826MW was contributed by the solar sector, according to Fitch Solutions. High-capacity battery pack costs have dropped nearly 40% since 2015, according to Wood Mackenzie data as reported by Wall Street Journal. Cost reductions are expected to continue to only $8 to $14 per MW-hour by 2020, or about a penny per kW-hour. While production and use of renewable energy are growing, the electric vehicles in Pakistan have yet to find traction. Hopefully, the National EV policy will encourage production and adoption of electric vehicles in the country.

Related Links:

Haq's Musings

South Asia Investor Review

Pakistan Electric Vehicle Policy

Nuclear Power in Pakistan

Recurring Cycles of Drought and Floods in Pakistan

Pakistan's Response to Climate Change

Massive Oil and Gas Discovery in Pakistan: Hype vs Reality

Renewable Energy for Pakistan

Digital BRI: China and Pakistan Building Fiber, 5G Networks

LNG Imports in Pakistan

Growing Water Scarcity in Pakistan

China-Pakistan Economic Corridor

Ownership of Appliances and Vehicles in Pakistan

CPEC Transforming Pakistan

Pakistan's $20 Billion Tourism Industry Boom

Riaz Haq's YouTube Channel

PakAlumni Social Network

Friday, November 29, 2019

Brief Overview of Pakistan's Electric Vehicle Policy

Pakistan has a low level of motorization with just 9% of the households owning a car. Nearly half of all households own a motorcycle. Motorization rates in the country have tripled over the last decade and a half, resulting in nearly 40% of all emissions coming from vehicles. Concerns about climate change and environmental pollution have forced the government to to take a number of actions ranging from adoption of Euro6 emission standards for new vehicles with internal combustion engines (ICE) since 2015 and announcement of a national electric vehicle (EV) policy this year.

Vehicle Ownership in Pakistan. Source: PBS

EV Policy:

Pakistan electric vehicle policy 2019 sets EV adoption targets and includes incentives for buyers and manufacturers. It also focuses on development of nationwide charging infrastructure to ease adoption of electric vehicles. Here are some of the salient points of the policy:

Policy Targets:

1. Goal for cars: 30% of new sales by 2030 and 90% of new sales by 2040

2. Goal for 2 and 3 wheelers: 50% of new sales by 2030 and 90% of new sales by 2040

3. Goal for buses: 50% of new sales by 2030 and 90% of new sales by 2040

4. Goal for trucks: 30% of new sales by 2030 and 90% of new sales by 2040

Buyer Incentives:

1. 1% GST for EVs vs 17% for regular vehicles

2. Lower electricity tariffs for EVs

Charging Infrastructure:

1. Only 1% import duty on charging equipment.

2. Lower power tariffs for charging stations.

3. One fast DC charging station per 3km by 3km area in all major cities

4. DC fast chargers on all motorways every 15-30 km.

5. Ensure uninterrupted power on feeders for charging stations.

Manufacturer Incentives:

1. All greenfield investments apply to EV manufacturers and those converting their existing facilities to manufacture EVs.

2. State Bank to offer lower rate financing for EV manufacturing.

Summary:

Announcement of National Electric Vehicle (EV) Policy 2019 by Pakistan government is a step in the right direction. It is a forward looking step needed to deal with climate concerns from growing transport sector emissions with rapidly rising vehicle ownership. It also focuses on development of nationwide charging infrastructure to ease adoption of electric vehicles. Meanwhile it's crucial that Euro6 emission standards be seriously enforced with proper inspections to limit emissions from internal combustion engine (ICE) vehicles being sold now.

Related Links:

Haq's Musings

South Asia Investor Review

Vehicle Ownership in Pakistan

Low Carbon Energy in Pakistan

Pakistan Transport Sector

Recurring Cycles of Drought and Floods in Pakistan

Pakistan's Response to Climate Change

Massive Oil and Gas Discovery in Pakistan: Hype vs Reality

Renewable Energy for Pakistan

Digital BRI: China and Pakistan Building Fiber, 5G Networks

LNG Imports in Pakistan

Growing Water Scarcity in Pakistan

China-Pakistan Economic Corridor

Ownership of Appliances and Vehicles in Pakistan

CPEC Transforming Pakistan

Pakistan's $20 Billion Tourism Industry Boom

Riaz Haq's YouTube Channel

PakAlumni Social Network