IEEFA: Solar revolution now extends to batteries in Pakistan, with rapid ROI

In a report published this week, the US-based think tank the Institute for Energy Economics and Financial Analysis (IEEFA), says that Pakistan’s renewable boom has extended to batteries. The organization estimates that even with taxes and customs duties adding 48% to battery import costs, home systems offer a payback period of three to five years, with commercial and industrial setups paying for themselves in four to six.

The says the falling cost of solar, combined with rising electricity prices, has rapidly driving uptake of rooftop solar in the country. That boom has continued to batteries as well, as falling costs have occured in energy storage as well.

Pakistan imported 1.25 GWh of batteries last year, according to IEEFA, and a further 400 MWh in January and February. If imports remain at that level, the think tank estimated, the nation could import 8.75 GWh of battery storage capacity through 2030. That would be the equivalent of 26% of Pakistan’s electricity demand, according to the IEEFA report.

IEEFA does have some warnings though: this surge in adoption, across a nation already hosting 17 GW of solar capacity, could destabilize Pakistan’s electricity system unless the government urgently modernizes the grid.

Centralized generation problems

With the government having committed itself to long-term fixed, dollar-indexed “capacity payments” to electricity generators – whether their sites are feeding power into the grid or not – such a fall in demand for grid electricity would leave remaining grid users facing ever steeper network charges.

IEEFA says demand for grid electricity is already falling in Pakistan, thanks to the affordability of solar panels, to the extent the nation had to postpone collection of LNG shipments due from Qatar this year, until 2026.

The government is considering reducing net metering payments for excess solar electricity which is injected into the grid from PV rooftop owners, according to IEEFA, but such a move would only further incentivize the purchase of batteries, in turn exacerbating the grid exodus.

Report co-author Haneea Isaad, quoted in an IEEFA press release, said, “Pakistan is leading a solar revolution, with 17 GW of solar-based capacity deployed across both distributed [small scale] and utility-scale levels. Integrating BESS to these systems is the next logical step, especially in decentralized, ‘behind-the-meter’ applications.”

The report suggests the government offer “take and pay” contracts to electricity generators and modernize its grid by incorporating technology, such as smart meters, which could collect sufficient “bottom-up” data to correctly understand and forecast electricity distribution demand.

Updated energy regulation, new small-scale solar and storage-optimized electricity tariffs, and better grid company governance have also been suggested by IEEFA to solve Pakistan’s grid conundrum, as well as ensuring small-scale batteries work to strengthen grid supply.