Closing 2023 with a bang and opening 2024 at a higher node of PKR 120-130 per watt making the most out of the LC restrictions and PKR uncertainty, solar panels became hot investment item for investors of all races – from Jodia Bazar of Karachi to big boys sitting in E-7, Islamabad. The declining global prices which started in the start of 2023 never really recovered. From a $0.30 per watt to now currently being trade at $0.10-$0.11 with the exception of one brand which trades at $0.125 per watt (Yes, you got it right! Jinko Premium guys which in actuality was never a premium just another bubble to lure investors)!
The Background:
Blanket under the slogan of Green Energy was the thirst of wealth for investors who jumped into wafer manufacturing and solar PV module assembling in China. Jumping on the bandwagon, a huge influx of investments came into the solar value chain thereby improving supply side. The demand for solar which initially was high in Europe and USA really moved away quickly to Green Hydrogen, small wind turbines and Big Energy Storage System (BESS) thereby limiting the scope of on-grid systems. Coupled up with tariffs imposed on Chinese products by USA was another blow to the industry. The Chinese quickly saw Pakistan as one of the prominent places for sale. The trick really worked considering the green flag was facing multifaceted troubles on economic and financial front. As Pakistan crippled from its energy woes and higher grid prices, solar became a hot selling item till the greed of few exporters, investors, and big guns brough the entire industry to its collapse.
25 Din men Paisa Double!
The above meme actually became a reality. A typical container of a tier1 brand n-type panels would cost buyers $45,000 (taking $0.13 per watt as an average price). Typical shipment would take 25-30 days and with ease on the import bill, a lot of exporters came and encashed upon their export proceeds to gain import quota. The same container was easily sellable for $83,520 ($0.20 per watt as an average price assuming PKR 55/watt in local market). This way, investors made a whopping 94% return in 25-days. Sounds better than bitcoin, absolutely!
And who would listen to Mr. Buffet quotes when you are making money on Pre-Booking just by investing 30% that too from your client’s pocket. As the import/export condition became better, banks were lenient enough to allow big importers open LC on a 30% margin, Taking the same or even higher 40% from investor – these importers opened up hundreds of LCs without knowing the worse was yet to come.
Within this chaos, few importers took the game to a newer high by importing solar panels from third-party distributors in China to create further panic in the local market. As the price for domestic market (meaning China) and Pakistani market differ as much as $0.02, the panels which Pakistani importers bought directly from OEM were already expensive than the ones being bought by third-party distributors in China.
Finally, the manipulation of price girders by various OEM sales managers became a final nail in the coffin to sink the entire Solar ship. Few investors were given extra favors while the rest of the importers and industry at large suffered resulted in importers moving away from top three brands to newer brands. There was already an excess of supply upcoming which on top coupled up with fresh imports for newer brands thus resulting into a baggage of excess supply. Today, a 1,000 of containers have already reached Karachi port while most of importers already sitting on stock giving away ready stock in same price as that of pre-booking rates.
The Net Metering Game!
While there are rumours that the net metering rate might be revised from an existing PKR 22 to PKR 11 per unit, this would further slowdown market activity thereby limiting system size of existing and newer users. Having said this, the industry may see surge in EV charging stations and battery storages thus keeping the demand for solar panels afloat!
