Solar Power Boom in Pakistan

[Riaz Haq]

Falling solar panel prices and soaring rates for grid electricity are driving a renewable power boom in Pakistan. A second factor spurring the growth in clean energy installations is the requirement of major western apparel brands for garments and textile manufacturers to switch to clean energy. As a result, the solar panel imports in the country jumped from 2,800 MW in 2022 to 5,000 MW in 2023, in spite of stringent import controls imposed by the government. Solar imports are on track to reach 12,000 MW in 2024, according to solar installers. The total current installed generation capacity in Pakistan is around 40,000 MW. Grid electricity demand in Pakistan plunged in 2023 by nearly a sixth and a decline in 2024 would mark the first time in 16 years that annual electricity use has fallen consecutively, data from energy think tank Ember showed, according to Reuters.

Pakistan Solar Panel Imports. Source: PV Magazine

Omar Malik, the CEO of Shams Power, a major solar system contractor in Pakistan, was recently quoted by PV Magazine as saying: “In 2022, 2.8 GW of solar panels were imported into Pakistan. In 2023, about 5 GW, despite the import controls, and this year the prediction is for up to 12 GW”. 

Aamir Hussain, chairman Pakistan Alternative Energy Association, told Arab News that solar panels of around 1,800 MW were purchased and installed last year, which was expected to jump to 3,000 MW this year due to the lower prices of the panels and increased customer demand.

 “Pakistan will be spending over $3.5 billion [this year] on solar panel imports only as this doesn’t include import of batteries, inverters and other auxiliary items,” Hussain said. “Pakistan needs to follow consistent policies regarding renewable energy to meet its national and international obligations for the greenhouse gas emissions.”

Pakistan's Monthly Solar Imports in millions of US$. Source: Bloomberg

Japanese publication Nikkei Asia recently reported seeing residential building rooftops covered with solar panels in Islamabad. It also reported proliferation of rooftop solar in small towns and villages across the country. In particular, the Nikkei story mentioned the remote village of Kardigap with a population of 5,000, in Balochistan province, where solar panels are becoming more common on the rooftops of houses. 

Responding to western apparel brands' demand for sustainability, a number of large Pakistani textile manufacturers are switching to clean energy, particularly solar. Tayyab Group of Industries (TGOIs), a major textile manufacturer, has recently signed an MOU to install a 20 MW solar system for its needs. Gul Ahmed Textile Mills Limited announced recently that it will install a 17.1 MW roof-top solar power plant to meet its energy needs.

While rapid uptake of solar is good news for the planet, it does create a major fiscal issue for the Pakistani government struggling to pay for power produced by the independent power producers (IPPs). The IPPs, many of them Chinese, secured a guaranteed return on investment indexed to the U.S. dollar, plus payment for fixed capacity charges -- covering their debt servicing and other fixed costs -- regardless of whether the power plants are operational, according to Nikkei Asia. As the demand for the grid power from the IPPs declines with rising solar, the taxpayers are still on the hook for the unused installed capacity charges running into billions of dollars. Higher power tariffs and taxes will only make the situation worse. 

Capping Net Metering power and reducing payments for supplying excess power to the grid are not going to solve the problem either. It will only encourage more consumers to switch to rooftop solar and use less electricity from the grid. Self consumption of the rooftop solar power saves significant energy costs for the consumer. 

It seems the only way forward for the Pakistan government is to renegotiate the terms with the IPPs to significantly reduce grid power costs to address the growing cost gap between rooftop solar and the grid power. 

Related Links:

Haq's Musings

South Asia Investor Review

Clean Energy Revolution in Pakistan

Pakistan Electric Vehicle Policy

Nuclear Power in Pakistan

Recurring Cycles of Drought and Floods in Pakistan

Pakistan's Response to Climate Change

IPP Contacts Bankrupting Pakistan

Renewable Energy for Pakistan

Net Metering in Pakistan

LNG Imports in Pakistan

Growing Water Scarcity in Pakistan

China-Pakistan Economic Corridor

Ownership of Appliances and Vehicles in Pakistan

CPEC Transforming Pakistan

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Riaz Haq's YouTube Channel

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[Riaz Haq]

Pakistan to cut power prices in a sign economy stabilising

https://www.reuters.com/world/asia-pacific/pakistan-cut-power-tarif...

ISLAMABAD, April 3 (Reuters) - Pakistan will cut power prices for domestic and industrial users, Prime Minister Shehbaz Sharif said on Thursday, in a sign of the economy's recovery from the brink of default.
The International Monetary Fund stepped in to stabilise the Asian country's finances with a standby arrangement in 2023 and then a $7 billion bailout last year.

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Lower power prices will be a relief to Pakistanis after several increases in the past couple of years.

Pakistan's $350 billion economy has been struggling since inflation rose to record high of 38.50% in May 2023, with growth turning negative, reserves shrinking to barely a couple of weeks of controlled imports, and interest rates jumping to 22%.
"We have successfully brought the inflation down to single digit," Sharif said, adding that the nearly 10-percentage-point reduction in the country's main interest rate in the last year would help businesses grow.

The tariff will be cut by an average 7.41 rupees ($0.0264) per kilowatt-hour to 34.47 rupees for domestic users, and by an average 7.59 rupees per kilowatt-hour to 40.60 rupees for industrial users, Sharif said.

[Riaz Haq]

How Pakistan quietly became world’s biggest solar importer | The Independent

Stuti Mishra

https://www.independent.co.uk/climate-change/news/pakistan-solar-en...

There was no sweeping law, no global investment blitz, no prime minister announcing a green revolution. And yet, by the end of 2024, Pakistanimported more solar panels than almost any other nation in the world.

The South Asian country, facing economic challenges and high energypoverty, is witnessing one of the most unexpected clean energy success stories of the decade.

Pakistan has joined the ranks of the world’s leading solar markets, importing 17 gigawatts of solar panels last year alone, according to the Global Electricity Review 2025 by Ember, an energy think tank in the UK.

This surge represents a doubling of the previous year’s imports, and makes Pakistan one of the top global buyers of solar panels.

The scale of Pakistan’s imports is particularly striking because it is not driven by a national programme or utility-scale rollout.

Instead, the majority of the demand appears to come from rooftop solar installations by households, small businesses and commercial users looking to secure cheaper and more reliable electricity in the face of frequent power outages and rising energy costs.

According to Ember’s report, rooftop solar installations in homes and businesses in the country has soared as a “means of accessing lower-cost power”.

Pakistan’s experts echo this analysis.

Muhammad Mustafa Amjad, programme director at Renewables First, tells The Independent that the solar boom is best understood as a “survival response” by people and businesses that were “increasingly being priced out of the grid due to inefficient planning and unreliable supply”.

“It marks a structural shift,” he adds, “in how energy is perceived in Pakistan.”

Pakistan’s solar panel imports in fiscal year 2024 alone, Mr Amjad says, amount to roughly half of the national peak power demand.

“Rooftop solar is fast becoming the preferred energy provider,” he adds. “And the role of the grid has to massively adapt in order to remain relevant in a fast-transitioning energy economy.”

Ubaid Ullah, an energy expert in Karachi, argues that the energy transition is driven by people taking matters into their own hands.

“If you look at satellite images of any Pakistani city,” he tells The Independent, “all the roofs appear blue, covered in solar panels.”

In a region often plagued by grid instability, solar panels have emerged as a practical alternative to unreliable public supply. The sharp increase in imports in 2024 follows years of worsening power cuts, fluctuating tariffs, and high costs associated with diesel generators and imported fuels. Rather than waiting for national reforms, many Pakistanis began adopting solar technologies directly – often installing panels and inverters without much reliance on subsidies or centralised planning.

This makes Pakistan’s solar growth somewhat unusual in the global landscape.

In many countries, solar adoption has been closely tied to climate policy or international financing. Pakistan’s solar boom, in contrast, appears to be a response to market logic and local necessity, not climate diplomacy.

The Ember report notes that Pakistan's growth is happening largely “outside formal energy planning frameworks”.

Industry experts say there is minimal direct government intervention in Pakistan’s solar journey. In fact, the infrastructure is struggling to keep up.

While regulators have approved net metering policies and eased import restrictions in recent years, there have been no major public spending programmes or large-scale solar auctions to match the pace of adoption seen at the household or commercial level.

Despite importing record volumes of solar panels, Pakistan’s official grid-connected solar capacity remains far lower, indicating that much of the new solar is operating off-grid or behind the meter, where it escapes inclusion in national electricity statistics.

[Riaz Haq]

Pakistan's electricity sector faces challenges despite growth in renewables, says 2025 review - Profit by Pakistan Today

https://profit.pakistantoday.com.pk/2025/05/10/pakistans-electricit...


One of the most notable developments in FY24 was the surge in imports of solar photovoltaic (PV) panels from China, which contributed to rapid growth in rooftop solar installations across the country. By March 2025, Pakistan had installed 4.9 GW of net-metered solar capacity. However, the review notes that a considerable number of behind-the-meter solar installations have not been documented, which could mean the actual capacity is even higher.

Pakistan’s total installed power generation capacity rose to 46.2 GW during FY24, following the addition of three new utility-scale solar plants. This brought the share of utility-scale renewables in the country’s generation mix from 6% to 7%. Despite these additions, the report highlights that the overall contribution of renewable energy sources—wind, solar, and bagasse—remained stagnant at 5%, well below the targeted 30% share by 2030.

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Pakistan Electricity Review 2025 highlights progress in solar installations but flags persistent issues like transmission bottlenecks and rising capacity payments.

The Pakistan Electricity Review 2025, launched by Renewables First, a think tank based in Islamabad, provides a detailed examination of Pakistan’s power sector during the fiscal year 2024 (FY24). The report identifies significant strides in the sector, particularly in renewable energy, but also points out several continuing challenges that hinder further progress.

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Pakistan’s total installed power generation capacity rose to 46.2 GW during FY24, following the addition of three new utility-scale solar plants. This brought the share of utility-scale renewables in the country’s generation mix from 6% to 7%. Despite these additions, the report highlights that the overall contribution of renewable energy sources—wind, solar, and bagasse—remained stagnant at 5%, well below the targeted 30% share by 2030.

Transmission bottlenecks and overloaded grid infrastructure were identified as key obstacles to the efficient transfer of power, particularly from the south to the energy-demanding north. These limitations forced the system operator to reduce dispatch from lower-cost plants, relying more on expensive RLNG-based generation, which led to a sharp increase in energy purchase costs. The total energy purchase cost surged to PKR 1.3 trillion, with RLNG generation accounting for PKR 568 billion, nearly 51% of the total.

The report also noted a decline in electricity sales for the second consecutive year, with overall sales falling by 3%. The industrial sector, in particular, saw an 11% year-on-year decrease in consumption, reflecting economic challenges and a shift towards more cost-competitive energy sources.

On the financial front, capacity payments rose to PKR 1.9 trillion, a 46% increase compared to FY23. This spike was largely driven by the commissioning of new coal and RLNG power plants, which carry high fixed costs. However, when these plants operate below optimal capacity, the cost is passed on to consumers, further straining the sector’s financial health. Despite these challenges, a reduction in electricity generation led to a modest 7% reduction in energy purchase prices.

The report also highlighted the growing issue of circular debt, which rose to PKR 2.4 trillion by the end of FY24, an increase of 3.6% over the previous year. This ongoing debt accumulation underscores the financial pressures faced by the sector.

The Pakistan Electricity Review 2025 serves as both a snapshot of the progress made in the energy sector and a stark reminder of the structural issues that continue to impede its growth. It calls for continued policy efforts to address these challenges as Pakistan strives to meet its renewable energy goals and ensure a more sustainable and efficient power sector.

[Riaz Haq]

Pakistan allocates 2,000 megawatts of electricity to bitcoin mining, AI data centres | Reuters

https://www.reuters.com/sustainability/boards-policy-regulation/pak...

ISLAMABAD, May 25 (Reuters) - Pakistan will allocate 2,000 megawatts (MW) of electricity in the first phase of a national initiative to power bitcoin mining and AI data centres, its finance ministry said on Sunday.

The allocation is part of Islamabad's plans to use its surplus electricity to bitcoin mining and AI data centres.

Pakistan's energy sector is grappling with challenges, including high electricity tariffs and surplus generation capacity.

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https://www.coindesk.com/business/2025/05/26/pakistan-taps-surplus-...

What to know:
Pakistan is allocating 2,000 megawatts of electricity to support bitcoin mining and artificial intelligence data centers.
The initiative, led by the Pakistan Crypto Council, aims to create tech-related jobs and attract foreign investment while taking advantage of surplus capacity.
Pakistan is also developing a regulatory framework to support its estimated 15-20 million cryptocurrency users.

Pakistan has committed 2,000 megawatts of electricity to bitcoin mining and artificial intelligence data centers, the country’s finance ministry said.

The committed energy is being directed from coal-fired power plants that are currently running at 15% capacity, Bloomberg reports, in an initiative spearheaded by the Pakistan Crypto Council.

By tapping surplus energy, the government hopes to turn a liability into an asset. Officials say the plan will create tech-related jobs and help attract overseas capital as the country works to stabilize its fragile economy, which came close to default in 2023.

Pakistan is also laying the groundwork for a regulatory framework to support its estimated 15 to 20 million cryptocurrency users.

[Riaz Haq]

Chinese battery glut plugs into solar boom to power Pakistan

https://www.ft.com/content/2b4c598e-a4b3-4c6e-9c38-97e46357f819

The combination of a glut of lithium, a key battery material, and overcapacity of lower-tier China-made batteries has created a flood of cut-price battery energy storage systems for lower-income countries such as Pakistan. Lucky is investing roughly Rs1.5bn ($5.3mn) to convert a rubble-strewn site into a 20.7MW unit supplied by the world’s biggest battery maker CATL, which can hold enough energy to power up to 20,000 homes for an hour. The battery energy storage system will be Pakistan’s largest to date, Lucky said. “A price collapse in wind, solar and batteries has made the payback periods very competitive,” said Hassan Mazhar Rizvi, the factory’s general manager for power generation. “This will ensure smooth operations, and increase our solar and wind portions.” Chinese solar panel prices have plummeted in recent years as the cost of electricity from Pakistan’s grid has surged, prompting the country of 240mn people to import solar panels with the capacity to generate about 19GW last year, according to Jenny Chase, BloombergNEF lead solar analyst. Pakistan is still buying panels that collectively could generate 1GW to 3GW a month this year, she estimated, enough to power a city of millions. The battery storage system will help factories to more cheaply extend their operations beyond daylight hours and scale back the use of fossil fuels, compensating for reliability issues from the grid’s renewable sources. For households, hooking up to a battery is a way to store enough energy to cope with spontaneous blackouts and avoid higher rates for energy from the grid during peak usage times in the evenings. “The limit on the [solar] boom was always likely to be the number of daylight hours,” said Chase. “Larger solar systems are useful, because as well as meeting instantaneous demand they can charge the battery for later.”

“Customer interest has gone through the roof,” said Mujtaba Haider Khan, chief executive of Reon Energy, a Karachi-based renewable energy and battery company. Reon’s energy storage systems, including the one purchased by Lucky, mix predictive software, CATL-made batteries and mostly Chinese-origin solar and wind technology, and can boost a factory’s clean energy usage and cut fossil fuel energy waste, said Khan. “Companies can now recover their investment in transitioning to predominantly renewable energy — using solar, wind and batteries — in less than two years.” The battery storage systems are still too expensive to be adopted as widely as solar has been in Pakistan in the near future. But distributors say prices are falling rapidly and demand continues to grow. Faaz Diwan, director at Karachi-based Diwan International, one of Pakistan’s largest solar and battery distributors, said the cost of the BYD batteries he sold had fallen by more than a third since last year to about Rs275,000 for a 5kWh unit that is enough to power a small house. His company has been importing more than 500 batteries a month since March, three times more than last year, as wealthier households, gyms, mosques and businesses gobble up storage systems to save money on air-conditioning ahead of summer.

[Riaz Haq]

Battery energy storage projects in Pakistan


From Google AI Search:

Pakistan is investing in battery storage projects to improve grid stability, integrate renewable energy sources, and reduce reliance on traditional power sources. These projects are being developed by both public and private entities, with significant funding from international organizations like the Asian Development Bank (ADB).
Key Developments:
NTDC-Jhimpir Battery Energy Storage System:
A 20MW BESS project, part of the MFF Power Transmission Enhancement Investment Program, is being developed by the National Transmission and Dispatch Corporation Limited (NTDC) in Jhimpir, Sindh province. This project aims to improve grid frequency stability and facilitate the integration of wind power.
Oracle Power and CET Project:
Oracle Power and China Electric Power Equipment and Technology (CET) are developing a 1.3GW hybrid project combining solar, wind, and BESS technology in Jhimpir, Sindh. This project includes an 800MW solar PV plant, a 500MW wind project, and a BESS of undisclosed size.
Private Sector Initiatives:
Companies like Reon Energy Limited and K-Electric are also investing in battery storage projects, including large-scale REFLEX™ Battery Energy Storage projects and 10 MW pilot projects in Karachi, respectively.
Focus on Grid Stability and Renewables:
These projects are crucial for improving grid stability, enabling better integration of renewable energy sources like solar and wind, and reducing the need for load shedding.
Economic Benefits:
Battery storage projects are expected to lead to cost savings compared to traditional diesel-based backup systems, reduce load shedding, and provide a more reliable and affordable power supply.
Benefits of Battery Storage in Pakistan:
Improved Grid Stability:
BESS can help stabilize the grid by quickly responding to power fluctuations, preventing load shedding, and maintaining frequency requirements.
Enhanced Renewable Energy Integration:
BESS can store excess energy generated by renewable sources during periods of low demand and release it during peak demand, improving the reliability and predictability of renewable power.
Reduced Load Shedding:
By providing backup power and stabilizing the grid, BESS can reduce the need for power cuts, which have a significant impact on the economy and daily life.
Cost Savings:
BESS can reduce the cost of electricity by optimizing energy usage, reducing reliance on expensive diesel generators, and improving the overall efficiency of the grid.
Sustainable Energy Transition:
BESS plays a crucial role in enabling Pakistan's transition to a more sustainable and renewable energy future.
Challenges and Opportunities:
Technical Challenges:
Integrating BESS into the existing grid infrastructure requires careful planning and consideration of technical challenges.
Regulatory Framework:
Clear regulations and policies are needed to support the development of BESS projects, including tariffs, grid integration rules, and safety standards.
Financial Support:
Access to funding for BESS projects is essential, and initiatives like the State Bank's Solar Loan Scheme need to be expanded to include battery financing.
Local Expertise:
Building local expertise in battery management systems (BMS) is crucial for the long-term success of BESS projects.
Public Awareness:
Increased public awareness and understanding of the benefits of BESS are needed to foster broader adoption.

[Riaz Haq]

Does battery storage improve grid stability?
Search Labs | AI Overview
Learn more
Yes, battery storage significantly improves grid stability. Battery energy storage systems (BESS) act as a buffer, balancing supply and demand, regulating frequency and voltage, and providing backup power. This results in a more reliable and resilient electricity grid, reducing the risk of blackouts and improving overall grid performance.
Here's how battery storage enhances grid stability:
Balancing Supply and Demand:
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BESS can store excess energy when it's abundant (e.g., during peak solar generation) and release it when demand is high or supply is low, smoothing out fluctuations in supply and demand.
Regulating Frequency and Voltage:
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Batteries can rapidly respond to changes in grid frequency, helping to maintain it within a stable range.They can also provide voltage regulation, further improving grid stability.
Providing Backup Power:
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BESS can act as a backup power source during grid outages, ensuring continued power supply to critical facilities and reducing the risk of blackouts.
Facilitating Renewable Energy Integration:
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By storing and releasing excess energy, BESS helps to integrate renewable energy sources like solar and wind, which are intermittent, into the grid more effectively.
Reducing Grid Congestion:
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By storing and releasing energy at strategic locations, BESS can help reduce grid congestion and improve overall grid efficiency.
Improving Grid Resilience:
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BESS enhances the overall resilience of the grid by providing backup power and helping to manage fluctuations in supply and demand.
In essence, BESS acts as a dynamic, flexible tool that can help to optimize energy flows, balance supply and demand, and maintain grid stability, especially as the world transitions to a more renewable energy-based system.

[Riaz Haq]

From TechJuice:

A major shift is underway in Pakistan’s energy sector.

As electricity prices soar and solar technology becomes more affordable, the country’s import of battery energy storage systems (BESS) is accelerating. According to IEEFA, these imports are projected to reach 8.75 gigawatt-hours (GWh) by 2030.

BESS offers a crucial bridge to reliable, decentralized renewable energy infrastructure. For Pakistan, this could mean more stable grids, reduced fossil dependence, and long-term cost savings.

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Battery storage and the future of Pakistan's electricity grid

https://ieefa.org/resources/battery-storage-and-future-pakistans-el...

The convergence of rising energy prices and falling costs for Distributed Energy Resources (DER), such as rooftop solar photovoltaic (PV) systems and Battery Energy Storage Systems (BESS), have encouraged consumers to adopt decentralized energy solutions, reducing reliance on the grid and energy costs.

Pakistan imported an estimated 1.25 gigawatt-hours (GWh) of lithium-ion battery packs in 2024 and another 400 megawatt-hours (MWh) in the first two months of 2025, a trend that is likely to continue. As BESS adoption accelerates, it has the potential to reshape Pakistan’s energy landscape, driving the shift toward a more decentralized, consumer-centric system. While necessary, adding DERs to Pakistan’s conventional grid presents multiple challenges.

The country’s rapid adoption of solar PV systems has already started impacting centralized grid generation. As more consumers shift to net metering and self-generation, the overall electricity demand from the national grid has started declining. However, due to contractual obligations resulting from long-term power purchase agreements, the exit of paying consumers from the grid increases the financial burden on remaining users through higher fixed costs and capacity payments.

The impact of BESS adoption will depend on the pace of government investment in grid modernization and the development of advanced markets that enable decentralized battery storage to support the grid.

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What is the cost of Chinese lithium ion batteries per kWh in Pakistan
AI Overview
Lithium-Ion Battery Pack Prices See Largest Drop Since 2017 ...
The average cost of Chinese lithium-ion battery packs in Pakistan ranges from $230/kWh to $360/kWh. This cost is significantly higher than in China due to high customs duties and taxes levied in Pakistan.

Here's a more detailed breakdown:
High Costs:
Despite the continuous decline in battery prices worldwide, including China, the cost of lithium-ion batteries in Pakistan remains elevated due to import duties and taxes.
Battery Imports:
Pakistan's lithium-ion battery imports are projected to increase substantially in the coming years.
Payback Period:
Despite the high costs, solar-plus-battery systems in Pakistan are still attractive due to their relatively short payback periods, typically 3-5 years in residential sectors and 4-6 years in commercial and industrial sectors.
Impact of Taxes:
High taxes and duties on lithium-ion batteries can significantly increase their final cost, with estimates of a 48% cost increase in some cases.