Pakistan’s consumer-led solar boom creates new pressures on national grid

Pakistan has emerged as the world’s largest importer of solar panels, driven by a grassroots energy shift rather than top-down policy. As reported by The Print, the growth has been largely powered by retail consumers and low-cost Chinese imports, even as the country struggles with an IMF-led economic recovery and mounting power sector debt.

In 2024 alone, Pakistan imported 17 GW of solar panels, more than double the volume in 2023. Chinese firms such as JinkoSolar, Trina Solar, and Longi account for over 95 per cent of these shipments. Solar systems are increasingly common across income groups, with reports of families including small solar units as part of wedding dowries.

According to the Pakistan Solar Association, solar now meets nearly 25 per cent of the country’s monthly grid electricity demand. This makes Pakistan one of only 17 countries globally to reach such a level of solar penetration, and the only one from the Global South. However, much of this growth has happened without central coordination or planning.

Several developments enabled this shift. Net metering rules introduced in 2015 allowed consumers to sell surplus solar power to the grid. At the same time, the State Bank of Pakistan launched a subsidised loan scheme offering 6 per cent interest on solar purchases, significantly below market rates. Meanwhile, a sharp rise in conventional power tariffs, partly due to US dollar-linked generation contracts, made solar more attractive.

A turning point came in 2023 and 2024, when global solar panel prices collapsed amid excess Chinese production. That made solar more affordable despite the weak Pakistani rupee. This combination of falling prices, supportive regulation, and public demand created what local industry describes as a bottom-up energy transformation.

Industry estimates cited by The Print show that about 30 per cent of solar installations now serve agriculture, mostly tube wells. Another 30 per cent support industrial loads, while urban rooftops with net metering account for 25 to 30 per cent. Rural households and small businesses make up the rest.

Despite this progress, Pakistan’s solar surge is putting stress on the formal power sector. State utilities must still pay capacity charges to fossil fuel plants under long-term contracts, even when their power is not used. With solar eroding demand for grid electricity, these fixed payments are becoming a burden, increasing electricity costs for those still dependent on the grid.

Pakistan’s total installed capacity is 35 GW, but solar contributes only 10–15 per cent to grid supply. When off-grid systems are included, solar’s share could be as high as 25 per cent. However, grid electricity sales declined 2.8 per cent year-on-year in June, as per The Print. The power sector is already grappling with over $8 billion in debt.

To contain fiscal pressure, the government is now planning policy changes. These include a 10 per cent import tax on solar equipment and a sharp cut to net metering tariffs, from PKR 27 to PKR 10 per kilowatt-hour. A revised solar policy is expected soon. Officials estimate that the change could save PKR 4.3 trillion (about $15.1 billion) over the next decade.

The policy shift comes as Prime Minister Shehbaz Sharif’s administration works with the IMF to reduce oil imports and ease energy subsidies by encouraging renewables. However, despite the rollback in incentives, demand for solar and batteries remains strong. Battery imports reached $95 million in three months, as users prepare to go off-grid rather than sell power back to the system.

Energy analysts told The Print that while local manufacturing remains limited, Pakistan has the potential to build a domestic solar industry if cost barriers are addressed. For now, Chinese imports remain dominant due to pricing.

Pakistan’s solar transition offers a case study in decentralised energy growth. But without a national roadmap, the rapid expansion is straining both infrastructure and finances. As incentives are reduced and grid parity is redefined, Pakistan will need to reconcile consumer-driven progress with systemic reform.