This article is the second in a series on solar energy in Pakistan. You can read the first article here.
Imagine yourself living tens, perhaps hundreds of kilometers from the nearest electricity grid connection.
It’s a little Mad Max-ish: you’ll spend a fortune on diesel for a generator or a series of cheap, roughly made Chinese solar panels, and the distance puts more innovative solutions out of reach since they may require a more hands-on approach from the seller.
This is what it’s like for people living in the depths of Pakistan’s countryside and mountains. Ever so slowly companies are penetrating this market of 50-70 million people. Another 70 million have limited grid access and those in the cities suffer from constant blackouts.
Wamda identified seven startups and ex-startups working in this field. They are adapting systems tested in East Africa and benefiting from an ability to obtain high quality solar panels and devices duty-free from their neighbor China.
The companies are targeting two distinct markets: middle class suburbanites wanting to lower their energy costs and backup power during blackouts, and the vast offgrid population.
Pakistan’s cities are connected to the power grid but load shedding, caused by a shortage of generated electricity, means continuous blackouts.
Pak Shine founder Jasim Sheikh said his startup made “solar energy affordable” by using a client’s existing uninterrupted power system (UPS), a device that provides a small amount of backup power following a blackout to allow sensitive equipment such as computers to shut down ‘gracefully’ or time for a generator to kick in.
Sheikh's idea is twofold: to switch people over to a solar energy supply instead of a generator, which should work out cheaper in the long run, and if the government fulfills promises to provide round the clock electricity, make use of an expensive UPS which would otherwise be useless.
“We’re not trying to find a solution to load shedding, we’re trying to find a solution to high electricity costs,” he said.
According to the founder the 20 million UPSs installed in Pakistan make up a $3.5 billion market, on- and off-grid.
A Pak Shine solar panel and intelligent charge controller, the design of which was outsourced to the Lahore University of Management Sciences, costs about $200 and Sheikh expects to have the first trial round of up to 40 units installed by the end of the year. But he expects to “press the gas” in February next year.
Pantera Energy were Pakistan’s only ‘luxury’ solar installers when Wamda interviewed them in Lahore. They provide everything from a basic system that can power home appliances as well as fans and lights, to one that can support a commercial office, as well as systems to support agricultural businesses.
Cofounder Farooq Saeed said that as industry leader Nizam Energy had moved away from domestic solar, they were moving to take over.
Pantera also intends to capitalise on the new nationwide smart metering rollout.
Alternative Energy Development Board (AEDB) CEO Amjad Ali Awan told Wamda smart meters would be a “game changer” by allowing people to sell solar energy back into the grid. Some industrial companies already do this, but some Pakistanis are skeptical about how readily residential customers will take this up, given their years of energy deprivation.
Saeed said the market needed another few years to mature, and Pantera would be looking westward for expansion - they already had a base in Dubai and the product itself worked well for upwardly mobile consumers.
If the urban market is about selling an alternative to generators to an educated elite, the rural market is selling an alternative to candles to everyone from lowly paid government employees to the very poor.
The way they make solar power affordable is through a rental model known as pay-as-you-go (PAYG) via mobile operators, and via installment payments over time backed by microfinance institutions.
There are two leaders in this field, Karachi-based Nizam Energy and SRE Solutions, which have been around since 2012 and 2010 respectively, as well as Roshan Energy which is part of a telecommunications corporation.
Nizam signed a $300 million deal last year to build 150 megawatts (MW) of solar power plants and SRE received a $250,000 equity investment from Acumen in 2013. Both deal in the small scale, off-grid systems that are becoming popular among entrepreneurs in the solar sector.
The three other companies Wamda spoke to are all taking a slightly different approach to how they are tackling the sector.
Lahore-based Harness Energy is the newest startup to enter Pakistan’s off-grid sector, launching this year.
CEO Mohammad Shehryar said they bought solar products from Niwa Solar, a now-global company that sells hyper-efficient devices for solar or low-wattage use.
Shehryar expects to sell at least 30,000 fans and TV solar units at around $135 each from March to August next year.
Brighterlite is actually part of a global franchise that includes Kenya and Myanmar, but as the most heavily backed by international funding it’s also been able to push the service model forward, fastest.
Managing director Mohammad Omer took us on a tour of one of the communities that had adopted the Brighterlite system, a rented system of anything from a seven watt panel and a battery with a light and a phone charger, to a 40 watt panel that can charge lights, a fan and even a television. Users pay a one-off subscription fee and monthly pre-paid rentals of 490-1090 Pakistani rupees (US$7-16).
‘Retailers’ sign people up and do free installations, and can collect the monthly bills if the renters can’t get to a Telenor or Easy Paisa phone shop. All payments are made via the phone companies, which give renters a code to enter into control boxes in their homes, which remotely monitor whether the panel is working properly, and if the customer has paid.
In the ‘Paris’ colony or shantytown, which despite being inside the Islamabad city limits was not connected to the electricity grid, the units had allowed women to stop using candles and kerosene for cooking, children to study at night, and former pharmaceuticals rep Sajjad Masih to found a school. He said the monthly rental was essential as they’d not be able to afford a full system up front
Omer said the products had initially been a hard sell. One woman had questioned whether the fan would “even move my hair” because it was so small and they quickly found people wanted fans, not lights.
“People always ask, always ask, so when will it be ours?” he said, as the rental model for appliances was a foreign concept. Other common sentiments in the early days were “If I switch this box some genie will come and top my phone up?” and “I can pay with my phone? You’re a fraud”.
Eco Energy cofounder Jeremy Higgs said during a recent phone interview they had pivoted from a product-based business model, as Harness is pursuing, to a services model similar to Brighterlite.
Higgs said they’d realised that all the products on the market were underpowered for what people wanted: people had a system that could run a fan for six to eight hours, but in fact wanted one that could go for up to 12 hours and this was driving the products and batteries into the ground.
So instead they were focusing more on offering ongoing services than on selling individual products.
“We need to make it as easy as possible to create a grid-like experience,” he said.
This meant they could also start collecting data on customers’ spending information, and so were working on a mobile app that works offline to do credit scoring. They partnered with phone company Telenor to be able to check details such as whether potential clients made regular payments on their phone. Nizam Energy also offers a similar option.
They are also planning to offer a system which they can switch on and off remotely, so if a client rents a six hour a day fan they can’t run it into the ground by using it for 12 hours.
Higgs said there was so much focus on PAYG in Africa, yet there was a much larger market in Asia which needed the same systems.