Pakistan's solar energy surge reshapes power sector landscape

Pakistan's power sector is undergoing a transformation as thousands of households and businesses shift to solar energy to combat rising electricity costs and load shedding.

According to the National Electric Power Regulatory Authority (NEPRA), solar energy generation rose from 1,000MW in March 2023 to 1,800MW in March 2024. The figure is projected to surpass 3,500MW by March 2025.

The rapid adoption of solar panels is driven by soaring electricity prices. From 2022 to 2023, power tariffs increased by nearly 140%, pushing consumers to seek cheaper alternatives. The trend has particularly benefited small businesses, farmers, and rural communities.

Pakistan imported $1.4 billion worth of solar panels from China between 2023 and 2024, with a capacity to generate at least 9,500MW — around 21% of the country's gross power production.

However, the solar revolution poses a challenge for the national grid. Off-grid solar systems, which do not feed electricity into the grid, are widespread, making it difficult to measure their impact. NEPRA estimates that the rising use of solar power added an extra burden of PKR 200 billion on grid-dependent consumers in 2024.

The shift has also contributed to a decline in overall power demand. Research by Arif Habib Limited shows average power production fell 3% in the first seven months of the fiscal year due to lower demand, improved temperatures, and increased solar use.

Despite the financial strain on the power sector, solar energy is helping reduce Pakistan's fuel import bill, supporting foreign reserves and the exchange rate.

Federal and provincial governments are promoting solar adoption through tax exemptions, free solar panel distribution schemes, and low-interest financing.

Energy Minister Sardar Awais Leghari said the government is committed to supporting the transition while addressing the challenges posed to the national grid. "Solar energy is the future, but we need balanced policies to ensure sustainability for all consumers," he said.