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

25

20

15

10

5

0

ENERGY (GW)

22

15

REQUIREMENT

GENERATION 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

of 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 on 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 opportunities: milk

chillers for dairy farming, cold

storage for medicines

Government has allowed captive

power generation through renewable

energies. In this regard, no license or 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