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Renewable energy

Pakistan's Solar Revolution: Lessons for Emerging Economies

Strategic Insights

— 2 min read

As Pakistan rapidly adopts solar-plus-battery systems to meet household and business energy needs, the country is experiencing an unprecedented energy revolution. This shift offers valuable lessons for emerging economies navigating their own energy transitions, particularly in reducing dependence on imported fuels, easing pressure on balance of payments, and strengthening energy sovereignty.

Pakistan's energy crisis, exacerbated by the 2022-23 energy crisis, has led to chronic power shortages and soaring electricity costs due to heavy reliance on imported coal and gas. To address this, residential, commercial, and industrial consumers are increasingly turning to decentralized energy solutions, with rooftop solar combined with battery energy storage systems at the forefront. In 2024, Pakistan imported 17 gigawatts (GW) of solar photovoltaic (PV) and 1.25 gigawatt-hours (GWh) of lithium-ion battery packs, significant additions to the country's energy system with approximately 40 GW of total installed capacity.

Key Takeaways:

  • Pakistan's solar boom, driven by the increasing adoption of solar-plus-battery systems, has led to a significant reduction in energy costs and improved reliability for individual users.
  • The country's total battery imports could reach 8.75 GWh by 2030, sufficient to meet over a quarter of peak demand, while solar could cover most daytime electricity needs.
  • The rapid growth of distributed energy and a lack of system-level planning and integration are raising critical questions for Pakistan's national grid, including ensuring fairness in cost sharing and grid resilience.
  • Pakistan's National Electric Power Regulatory Authority (NEPRA) reports that capacity payments to power plants exceeded PKR2 trillion (Pakistani rupee) or $7 billion in 2024, which must be recovered through higher tariffs on fewer ratepayers regardless of actual usage.
  • Blended finance, using public or philanthropic funds to unlock private investment, could lower entry costs for underserved users and support grid upgrades, playing a crucial role in making the transition more inclusive.
  • Development banks such as the Asian Development Bank (ADB) and Green Climate Fund (GCF) are already active in Pakistan and could help structure financing mechanisms for rooftop solar and batteries.
  • Pakistan will need to expand utility-scale solar to complement rooftop and distributed systems, which may reduce the use of existing thermal plants even further, to meet growing demand and drive the transition.
  • Creating mechanisms that make clean, reliable power accessible to all will ensure Pakistan's rapid shift to solar and storage strengthens the entire power system.

Statistics:

  • In 2024, Pakistan imported 17 GW of solar PV and 1.25 GWh of lithium-ion battery packs.
  • Total battery imports could reach 8.75 GWh by 2030, sufficient to meet over a quarter of peak demand.
  • Capacity payments to power plants exceeded PKR2 trillion (Pakistani rupee) or $7 billion in 2024.
  • The Pakistan Distributed Solar Project uses a GCF-backed guarantee to finance 43 megawatts of solar PV installations for households, agribusinesses, and small- and medium-sized enterprises.

Sources:

  • World Economic Forum (no date)
  • Pakistan's National Electric Power Regulatory Authority (NEPRA) (2024)
  • Asian Development Bank (ADB) (no date)
  • Green Climate Fund (GCF) (no date)
  • [References to other sources should be listed in the exact format they appear in the original text]

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