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31.08.2017

Afghanistan: Great Potential for Profitable Solar Power

By: BSW-Solar

First study on Afghan photovoltaic market published / Investigation of local conditions and potential business models / Results presented at Intersolar Middle East as well as in webinar

Solar power is set to play an important role in the future energy supply of Afghanistan. The government wants to create the appropriate framework conditions and provide attractive business opportunities for foreign investors, project developers and suppliers. These are the central findings of a study compiled by the German Solar Association (BSW-Solar), the Afghanistan Renewable Energy Union (AREU) and eclareon. The study, which was funded by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) on behalf of the Federal Ministry for Economic Cooperation and Development (BMZ), has now been published by BSW-Solar.

“The first study on Afghanistan’s solar market shows that the existing potential for photovoltaic systems can be gradually boosted over the next few years. Security provisions have to be closely followed, but this is not a criteria that excludes doing business in this market,” says Jörg Mayer, managing director of BSW-Solar. “The findings presented in this study will help the Afghan government, with the support of international investors, to modernize the energy sector in such a way that photovoltaics can cover a major part of the country’s energy supply. There is an impressive level of willingness to develop solar energy, and this political will represents a key stability factor for the country that has suffered so much.“

By 2032, the Afghan government plans to install 1.5 gigawatts of photovoltaic capacity; the AREU even assumes an economically viable output of 3 gigawatts. To reach these targets, the government will provide support to foreign investors. At the same time, local actors such as investors and banks must receive specialized training regarding the technical and economic potential of photovoltaics.

Specifically, the study examines three business models as well as the framework conditions that demonstrate this economic potential: off-grid energy services based on renewables (RESCO models, Renewable Energy Service Company), power purchase agreements (PPA) for large-scale solar power plants and net metering models for rooftop systems.

Although the government has not yet finalized its support mechanisms, its policies are already bearing fruit: Four PPA contracts with the state-owned energy provider (Da Afghanistan Breshna Sherkat, DABS) have been signed, including for a 10-megawatt project in Kandahar with a runtime of 15 years, in which the electricity price will be negotiated individually.

The photovoltaic projects that have so far been successfully implemented in Afghanistan, which have a total capacity of 1.8 megawatts, have been financed by international donors with an investment focus mainly on renewable energies. 60 percent of the Asian Development Bank fund, for example, amounting to around 300 million dollars, are designated for the development of sustainable energy sources.

Background

The study will be presented to the public on 26 September during a workshop held at Intersolar Middle East in Dubai (www.intersolar.ae/en/conference/session/enabling-pv-afghanistan-1658.html). Solar industry players who are active in the Middle East or who are interested in this region should neither miss this opportunity to engage in an exchange on the topic nor the Business Matchmaking Event on 27 September (www.intersolar.ae/en/program/special-events/business-matchmaking-event-afghanistan-pakistan.html). Further information is available at: www.intersolar.ae/en/home.html

Preliminary insights into the study can be gained from a free webinar (in English), which will take place on 5 September. Registration is possible at http://bsw.li/2wQsww9

The study can be downloaded free of charge here: www.solarwirtschaft.de/en/international-activities/enabling-pv.html

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