This story originally appeared on the CGIAR website.
By Zain M. Akbar (IWMI), Claudia Ringler (IFPRI), and Mohsin Hafeez (IWMI)
In Pakistan, unlike India, the solar-powered irrigation revolution is largely driven by farmers purchasing solar pumps directly without the provision of favorable interest rates or other subsidies. Better-off farmers have flocked to solar-powered pumps largely to counter Pakistan’s challenging energy supply situation: electricity access in rural areas is often unreliable, while electricity prices have dramatically increased to secure loans from the International Monetary Fund. At the same time, diesel prices are not only high, but subject to high fluctuations making it challenging for farmers to ensure profitability.
Since 2022, the base tariff on electricity has increased by around 75% from USD 0.06 to USD 0.11/kWh, while between March 2022 and September 2023 the price for diesel fluctuated between USD 0.52 and USD 1.19/liter, a more than 100% change in price. While electricity prices have been increasing and diesel prices fluctuating, the price of solar panels has been declining, making solar-powered irrigation a more favorable option for Pakistan’s farmers — at least for those who can afford the high initial investment cost — as obtaining finance from the formal banking system is challenging.
Prices for solar panels have fallen to between USD 0.13-0.14/watt and were as low as USD 0.086 to 0.12/watt as of November 2024. However, the recent, rapid adoption of solar-powered pumps has raised concerns of rapid groundwater depletion in Pakistan.
The CGIAR Initiative on NEXUS Gains has been working for close to three years on supporting the equitable and sustainable rural energy transition in Pakistan. It has been researching ways to overcome gendered inequalities in energy access, including through the development of the Women’s Empowerment in Energy Index, by identifying business and finance models that improve access to clean energy sources in rural areas, and more recently by initiating solar sizing to reduce water wastage in the wake of the rapid exchange of diesel- and electric-powered pumps for solarized pumps.
Solar sizing is essential for the sustainability and equity of water use: solar panels that are too large might lead to over-extraction of water and accelerated groundwater depletion and would be too costly for smallholder farmers; while panels that are too small would lead to reduced farmer profitability and a wasted investment. NEXUS Gains has focused research on Rahim Yar Khan district in Punjab Province, where recent data collection suggests that out of around 100,000 tubewells 6,000 (or 6%) are solarized.
During fieldwork in Rahim Yar Khan and Okara districts, Punjab, and on the sidelines of Pakistan Water Week 2024, we had the opportunity to speak with three solar-powered irrigation system providers to see how NEXUS Gains research can support private sector actors and their clientele. We had the pleasure of speaking with Muhammad Nasir Jamal, the founder and Chief Executive Officer of Rabail Technologies, a company based in Islamabad with eight staff members that has been designing solar-powered and other irrigation systems since 2015; Muhammad Mustafa Ali, Senior Executive Officer of Pak Solar in Rahim Yar Khan district with three staff members; and Asghar Ali, owner of Kissan Solar System in Okara, a seasonal village-level shop with two staff members.
Muhammad Nasir Jamal
Can you tell us about Rabail Technologies?
Rabail Technologies provides high-efficiency irrigation systems (HEIS) and solar energy solutions. The company offers sprinkler, rain gun, and drip irrigation systems as part of HEIS. Additionally, the company provides after-sales support, such as maintenance and repair services. While solar systems are an important component of our business, the large decline in solar panel costs has made it risky for us to maintain a stock of panels due to the risk of making a loss if prices further decline.
What barriers do poorer farmers face when acquiring solar-powered irrigation technologies?
One of the major problems is that smaller farmers often buy C-grade solar panels at the market or village shops (C-grade panels generally have visible defects, such as small cracks, chipped cells, or water marks, reducing their efficiency and longevity; A- and B-grade panels are superior, but more expensive options). C-grade panels tend to break down after a few months leaving farmers in the lurch. At the same time, smallholder farmers often cannot afford A- or B-grade panels and the customized systems that Rabail Technologies and other private sector actors provide. They also face challenges accessing bank loans, either due to religious reasons or because the interest is too high; others do not approach banks due to documentation and collateral requirements.
However, solutions can be found for smaller farmers; for example, a three horsepower, direct current motor powered by a few solar panels can be sufficient for three acres of crop land. The motor also avoids the solar inverter cost, which is a major cost item in the solar-powered system.
When asked if standardization of solar-powered systems would reduce farmers’ woes, Muhammad Nasir Jamal suggested that this would require regulations which would be difficult to enforce and might lead to monopolies that could further price out smaller farmers.
Solar sizing to the rescue?
When asked about the solar sizing tool that NEXUS Gains and SDC SoLAR project are developing, Muhammad Nasir Jamal noted that this could be a true game changer, if the tool is simple enough for farmers to use. With a solar sizing app or similar application, farmers can calculate the required horsepower and watts to meet irrigation water demands. This would counteract the common practice of suppliers selling whatever product and size they have in stock without engaging with farmers on what they actually need. This tool, if developed in a user-friendly manner, could open
Muhammad Mustafa Ali
Can you tell us about Pak Solar?
Pak Solar sells solar systems and accessories to be used in agriculture, installs solar systems, and provides after-sale services, including repair services to farmers. Over the last six months, the company has sold around 150 solar-powered irrigation systems, mostly of 10 kW power.
How can smaller farmers access your technologies?
With current [low] solar prices, farmers with 10 to 12 acres can afford a solar system. In the case of contract or tenant farmers (thekdars) or other farmers who work the land but do not own it, the landowner could install the system and the tenant farmer could pay a higher rent due to cost savings; or they could install the solar system directly and remove it when the arrangement ends. Smaller farmers would likely need to seek a loan. If they own at least five acres, they should have enough income to pay 20% of the principal every six months. However, documentation is a major hurdle for bank loans. Most smaller farmers therefore rely on self-finance or borrow from family or friends. Pak Solar only sells solar equipment for cash and does not provide loans.
Will standardization of solar equipment help improve the quality available?
Standards can be developed, but it is the implementation of those standards at the ports of entry that is most important. Farmers usually go for sub-standard solar equipment to save money. The sub-standard equipment is less efficient its performance declines quickly.
Would a tool to size solar panels help farmers make more informed decisions?
A solar sizing tool will be beneficial, but most farmers are illiterate, and prefer advice from people they know. Most farmers rely on the advice of other farmers to invest or experiment rather than doing their own research. It will therefore take a lot of outreach to raise awareness about solar sizing tools. Farmers who are literate and have the ambition to use advanced technology have a better chance of benefitting from such a tool.
Asghar Ali
Can you tell us about Kissan Solar System?
Kissan Solar System sells and installs solar systems against cash. Over the last six months, the company has sold around 90 solar-powered irrigation systems. As a small, seasonal enterprise, after-sales services are limited. For larger issues, farmers consult other establishments in Haveli Lakha (a nearby town).
How can smaller farmers access your technologies? Are bank loans an option?
Small farmers have faced challenging market and climate conditions over the past few years: crop prices have declined and climate-extreme events have destroyed production systems. Therefore, farmers are currently not willing to take major risks, including installing an expensive solar system. Farmers also face multiple barriers in accessing bank loans. One of the main barriers is the requirement of collateral, which requires a lot of documentation. While solar panels are cheaper, the installation cost remains high and often unaffordable for poorer farmers.
Will a solar sizing tool help farmers make informed decisions?
A tool that can guide farmers in making informed decisions can be useful, but farmers rely more on people’s advice and suggestions when making an investment. Moreover, they do not generally make decisions on the technology to purchase based on scientific methods. However, they might be interested in soil and water testing avenues for smaller farmers to acquire smaller, well-sized solar systems and thus also reduce the risk of groundwater depletion.
Next steps
Pakistan’s conjunctive and groundwater-fed irrigation systems are rapidly being solarized. However, solar opportunities are stacked against smallholder farmers due to the significant initial capital cost and limited information and awareness by smallholders of what solar systems they need. Combining innovative business and finance models that align repayments alongside farmers’ agricultural income cycles with capacity sharing tools, such as the ‘solar sizing tool’ under development, could break the trend of increased inequities and increased risk of groundwater over-exploitation. However, tools to help farmers select an affordable and profitable solar system would need to be widely disseminated to expand farmers’ sources of information for technology decisions. Information on the tool would also need to be made accessible to illiterate farmers.
