Solar energy business: potential commercial avenue for K-Electric


Master of Business Administration Executive

Faculty / School

Faculty of Business Administration (FBA)

Year of Award

Spring 2019

Project Type

MBA Executive Research Project

Access Type

Restricted Access


Renewable energy sources | Energy crisis -- Pakistan | K-electric -- Pakistan

Executive Summary

Renewable energy and more importantly solar energy offers immense potential to the energy landscape of the country. Both utility-scale and rooftop solar have specific driving factors that contribute to the growth of this resource. Considering the growth of small scale solar in both urban and rural areas, this report identifies its impact on the distribution revenue of KE, and subsequently, lays out a comprehensive strategy to capitalize from this window of opportunity. This report dives in to get the perspective of the stakeholders, the federal bodies on the overall feasibility of solar in the Pakistani market, the consumers on their viewpoint for KE as a solar provider, and the KE leadership on their concerns of getting into this new domain. Summarily, the purpose of this feasibility study was an investigation of the net metering impact on KE in terms of loss in distribution revenue, its market potential, and a parallel strategy that can be adopted by KE at the regulatory level. This report, therefore, investigates the feasibility for KE to enter into the solar PV market, outlining the current solar market status, potential revenue streams, expected margins, the business model, and the associated risks of the company. It goes on to present a holistic viewpoint of the solar industry, and the avenues for commercialization by energizing with KE' s existing operational streams. The latter sections present a clear strategy that KE would need to take with the regulator to promote renewable energy sustainable, and in its true essence. Different business models have been presented here, ranging from a complete simple revenue sharing to a more complex equity investment system, and to a more futuristic model on the likes of a technology management company. The model selected thus, is based on creating a platform of selected solar vendors and a bank, where KE is expected to act as a catalyst and an insurer in the developing market, wherein it would ensure that the consumers get the optimum solution service suiting their requirements. As a base case, this report assumes the basis of the requests of net metering cases that KE' s platform can easily attract over 2 MW of solar installations across the city in its first year. The background of this project takes into account the emerging rooftop solar industry, which is regularly portrayed as the victim in a struggle with utilities enjoying a relationship with fossil fuels. But the reality, as it has been painstakingly detailed, is much more complex, with the utilities worldwide beginning to adapt to a new paradigm of renewable energy. The solar PV distributed generation, therefore, poses a major challenge for utilities, which are used to sending unidirectional electricity from power plants to users. Research has indicated that rooftop solar growth in the coming years is likely to rebound to about 15% every year. A few utilities are taking tantalizing first steps into the new realm of decentralized, electricity generation. Like global trends, renewable energy is increasingly playing a vital role in the energy landscape of Pakistan. The trend of adoption of renewable energy technologies specifically of solar PV has been promising. Along with the easing up of government regulations and the financial market, KE, as the sole electric utility serving a population base of more than 22 million people in southern Pakistan, has a unique opportunity to create synergies with its current operation, and diversify into the solar business. This report intends to serve as a feasibility study for the solar business that could potentially be undertaken by KE for the population of Karachi and its adjoining areas. The methodology that was followed throughout this project was where the entire feasibility study was broken down into four phases: from the impact of net metering on KE distribution business, to the current status of the PV market (including both global and local contexts), to the drivers for the solar market in Pakistan and the potential growth of this market, to the feasible business models for the solar business unit, and to the financial and risk analysis, including a detailed working case on the IBA solar project. Conclusively, the results of interviews and surveys portrayed an overwhelming interest of consumers in PV systems for its ability to reduce household bills. Respondents trusted KE's technical competence, their ease for net metering application, their customer eccentricity, and service affordability. As a first mover amongst the electric utilities, KE can explore various innovative schemes that can support uptake of solar PV with provision of on-bill financing, consumer analytics for demand management, one window net metering solutions, and potential development of microgrid solutions for different areas within KE jurisdiction that will apart from minimizing the costs will additionally be able to reduce distribution losses incurred in serving those areas. Possible synergy exists in the market, where a fixed pool of money for the market development effort. A common platform for awareness sessions would be conducted, and resources should be pooled for a website, other content development, and for one window after sales team of technicians. A common training mechanism would be formed for technicians, with the market knowledge and exchange of global best practices. As a result of this study, it has been shown that KE has the unique technical competence to manage a solar business, and with a huge customer base exceeding 2.3 million, it has the opportunity to tap into the potential market to create a brand value accepted by the citizens. The immense potential exists for KE to innovate the electricity market building on its own brand and competencies, with opportunities to innovate, develop alternate revenue streams, and increase renewable energy mix in its generation portfolio. Consumers stand to gain extensive benefits, and survey findings showed extremely positive results, with the respondents being highly receptive to solar as an alternative energy source to grid, with the opinion that KE serves as a viable option which can be trusted for solar PV system design and installation, and provide renewable energy solutions to consumers.

This document is currently not available here.

The full text of this document is only accessible to authorized users.