Moving on, lessons learnt
Based on the information I’ve gathered over the past 4 months, I’ve decided to discontinue Solar Electric Installations in Pakistan.
I gave myself 1 to 2 summers to pilot in Pakistan. The goal was to bring high quality solar system design, installation, and customer service to a country dealing with a massive 30% electricity deficit.
However, there are challenging trends that are difficult to overpower.
Solar is something people need, but don’t want
Adapting to difficult conditions is Pakistan’s perennial habit. Think unemployment, corruption, dictatorship, terrorism. The masses have made peace with the fact that they’ll live without power for 6 to 12 hours a day. The fortunate ones use the barebones UPS system while waiting for the grid to return.
Solar based electricity and storage can provide respite from crippling power outages and exponentially increase quality of life. If affordable, it’s truly a measure of how much one values their time.
But in the third world, money is valued over time. Valuing one’s time is a first world luxury.
Even amongst the wealthy, solar exposes the veneer of spending power. I totally misjudged this.
Solar is an expensive investment with long term returns requiring customers that have access to capital and think long term.
In a volatile economy where a 5x return in 5 years or 100% loss is possible (real estate), long term thinking is absent.
A cash based economy with poor financing options further weakens the proposition at scale. (Existing financing schemes for solar flopped, I learnt).
Given these factors, I don’t think solar based electricity will reach critical mass in Pakistan anytime soon.
I came to sunny Pakistan thinking solar energy would be the perfect solution to the energy crisis. On paper it is. But ultimately I think I was wrong. I really hope it finds its place in the country’s energy mix soon.
Dirty Games
Customers are ecstatic when getting the cheapest deal — but that’s because the equipment is defective, the provider is evading sales tax to lower the quote, the system is designed poorly because of incompetence, and the provider lied about the amount of electricity the system would produce.
90% of solar panels in the market are defective, and hence much cheaper.
And it’s not just the solar equipment providers. It’s the air conditioner manufacturers who lie about power consumption data, the electricians who install poor quality circuit breakers because they’re cheap, and use DC cables that aren’t built to stand high roof temperatures. The list goes on…
Most importantly, the average Pakistani customer is fine with a defective system as long as it’s cheap.
Customer expectations & standards are at historic lows and Providers are making a killing on these sentiments.
Expectedly, there is no regulation, no enforcement, and no accountability.
Very difficult to do legitimate business in this environment if aiming to grow. Less difficult if legitimacy is not a concern. Even less difficult if legitimacy is not a concern AND if happy with a small piece of a small pie.
Net metering won’t succeed
Some say Net Metering (where customers sell excess electricity from solar back to the grid), when implemented, will encourage conversion to Solar. I disagree.
These defective systems are designed too poorly and will underperform so heavily that there will be no excess electricity to sell back to the grid.
The systems required to produce excess electricity will cost at least 50% more but the market is not being prepared for the price point that will make Net Metering impactful.
Solar will start to get a bad name soon. It will get much worse before it gets better.
Pulling the plug
I had three options and I chose the third.
- Join the competition and make a killing.
- Stay legit & wait until a) the Pakistani government steps up regulation, enforcement, & accountability, or b) Pakistanis raise their expectations. I’m betting against both for at least a decade.
- Leave after a 4 month experiment where I learnt ground realities while installing & consulting a few systems, without losing money. I then make an informed decision to leave a market with weak long term prospects.
