OFF-GRID MARKETS - PAKISTAN PERSPECTIVE September 28, 2017 - - PowerPoint PPT Presentation

OFF-GRID MARKETS - PAKISTAN PERSPECTIVE

September 28, 2017 Memmingen, Germany

FROM FRONTIER TO EMERGING MARKET

Pakistan has officially re-entered into emerging market status - Borgen Magazine, July 2016 Pakistan has made significant economic progress - Christine Lagarde, Managing Director, International Monetary Fund, October 2016 Three key factors driving Pakistan’s economic awakening: An improved security climate, relative political stability and a growing middle class. These three interlocking pieces are fueling Pakistan’s growth story - Dawn, March 21, 2017 Morgan Stanley Capital International (MSCI) upgraded Pakistan from Frontier Markets (FM) to Emerging Markets (EM), effective May 2017. This transition is only precedented by Qatar & UAE in 2014. “The upgrade will put the country on people’s radars, whereas they wouldn’t have had the desire to invest before.” – Bloomberg Markets, May 25, 2017

Austria + Belgium + Czech Republic + Denmark +Germany + Netherlands + Slovenia + Switzerland+ Portugal

= Pakistan

(Five Provinces: Balochistan, Sindh,Punjab, KPK, Gilgit-Baltistan)

ECONOMIC DRIVERS

23%

AGRI BUSINESS

24%

INDUSTRY

2%

ELECTRIC GENERATION & DISTRIBUTION

5.7%

FINANCIAL SERVICES

53%

SERVICES

INDUSTRY DRIVERS

193.2 MN

POPULATION (WORLD BANK)

58%

YOUTH LITERACY RATE

$ 2,34.5 BN

FOREIGN DIRECT INVESTMENT IN AUGUST 2017 (STATE BANK OF PAKISTAN)

140.2 MN

MOBILE SUBSCRIBERS: I.E. 73% OF POPULATION (DIGITAL IN 2017 GLOBAL REPORT)

6th AMONG TOP SMART PHONE

MARKETS IN THE WORLD

85.6 GWH

ENERGY CONSUMPTION (WORLD BANK)

35.1 MN

INTERNET USERS: I.E. 18% PENETRATION (DIGITAL IN 2017 GLOBAL REPORT)

ENERGY CHALLENGE - 2017

2 5 20 1 5 1 5 ENERGY ( G W ) 22 15 REQUI REMENT G E N E R A T I O N Daily Shortfall of about 7 GW

ENERGY INVESTMENTS

Investment In Energy With Private Participation: US $ 1.68 BN

(World Bank 2016)

Public Private Partnership Investments in Energy: US $ 450 MN

(World Bank 2016)

As a result: Energy Generation Increase: 3.4%

Government Target: supply 15-20% commercial energy through renewables by 2030 90% of the money for renewable energy projects to come in the form of foreign direct investments Licences to private sector players for generation, transmission and distribution are being issued easily

CLEAN ENERGY FOCUS

7 GW of distributed and off-grid renewable technologies expected in the next 15 years. (Source: Planning Commission, AEDB)

Pakistan was the scene for a record $723 million of asset finance for renewable energy in

• 2015. Among

investors announcing specific project proposals were Scatec Solar (150MW), Desert Tech (180MW) and China Zonergy (900MW). Provincial government plans for off-grid electrification: Especially plans for Solarization of Government Schools and Colleges (Punjab, Sindh, Balochistan) as well as micro-hydro in Khyber Pakhtunkhwa, Azad Jammu + Kashmir (BNEF, 2017) Asian Development Bank has approved $325 million for rural electrification (ADB, 2017) In 2016, Pakistan added: 300 MW of solar power, 244 MW

• f wind, 85 MW of

biomass + 48MW of small hydro

FUTURE INVESTMENTS

POTENTIAL OFF-GRID MARKET 144 MILLION

people have no reliable access to electricity

Only 7.7 Million

people tap into solar power in the rural off-grid

Off These,

68 Million

people live in off-grid rural areas

To be captured:

61.3 Million

potential users

GROWTH

Opportunity

Bridging the Energy Gap Through Solar

90% of off-grid customers have access to a mobile - 67% of them, access financial services through their network operators, particularly mobile money transfer technology

SOLAR OPPORTUNITY

400

energy startups

0 Duty

• n all PV import

2900 GW

solar power potential

Clean Energy

project financing through local banks

BANK

Over 72%

rural population are interested to take microloans for solar home systems. (MicroEnergy International, 2014) Solar considered a dependable source of power connection in rural areas, both at households and on farms and

• fields. Solar panels being utilized for

tunnel farming & poultry farming

(Stimulus Research)

Existing 300 MW of total electricity consumption of Pakistan Expected to reach 500 MW post new installations currently in planning & design stage Currently more than 1000 MW being run through diesel generators can be transitioned to solar More than 8000 villages to be electrified; potential for micro-grid / mini-grid projects Potential for business

• pportunities: milk

chillers for dairy farming, cold storage for medicines Government has allowed captive power generation through renewable

• energies. In this

regard, no license

• r

approval from any governmental authority is required A potential of approx 5 MW per project

POTENTIAL OFF-GRID APPLICATIONS

SOLAR STREET LIGHTING COMMERCIAL LIGHTING SOLAR WATER PUMPING RURAL ELECTRIFICATION CAPTIVE POWER GENERATION THROUGH SOLAR PV APPLICATION

SOLAR OFF-GRID BUSINESS MODELS

Organization

• Formal
• Informal

Outreach

• Direct Marketing
• Retail

Offering

• Sell
• Sell & Service

Management

• Community Based
• Entrepreneur Based

Financial Model

• Full Payment
• PAYG
• Credit (MFL, non-interest based micro-

loans)

MARKET DYNAMICS CUSTOMER PREFERENCES IN PAKISTAN

WHAT CUSTOMERS DESIRE: More knowledge Product that is within financial means but delivers what it promises Commitment for & delivery of quality product and service EXISTING CUSTOMER SCENARIO: Limited knowledge Preference for low cost products Misconceptions about what PV is and what it can deliver Lack of awareness about benefits of quality PV products

GOVERNMENT OF PAKISTAN Energy Department ACADEMIA Universities | Vocational Training Centers PRIVATE Investors LOCAL Solar Industry

STAKEHOLDERS

BILATERAL / MULTILATERAL DONORS GIZ | UN | ADB World Bank / IMF

STIMULUS ... CONNECTING THE DOTS

Awareness, Knowledge & skill Enterprise & Development

Enabling Technology

Financing Opportunities Reform &Regulation Outreach & Delivery Network Enabling Impact & Sustainability

STIMULUS ... CONNECTING THE DOTS