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

Pakistan's $20 Billion Tourism Industry Boom

Riaz Haq's YouTube Channel

PakAlumni Social Network

[Riaz Haq]

‘The Solar Blitz’: How crisis-ridden Pakistan is leading the world on the ‘Solar March’ – pv magazine International

https://www.pv-magazine.com/2025/03/04/the-solar-blitz-how-crisis-r...

The annual global solar radiation in Pakistan is 1.5 to 2.5 times the German values. With the possible photovoltaic expansion of 17 GW in 2024 or around 26 GW in the two years 2023/24, depending on the situation in the country, 30 to 50 TWh of solar power could be produced per year.

I'm sorry, what? That would be at least 30% of total electricity consumption, and it was “solarized” in a maximum of two years?

That is entirely conceivable and feasible:

If the regulators/grid operators can't do it, you can also generate XXL electricity yourself with solar energy.

Anyone can get involved — the technology forgives many mistakes and is largely “plug and play”. The Pakistanis are also used to bridging their grid problems with diesel generators or batteries of all kinds, and now both solar modules and batteries are cheaper than ever and available in large quantities. Thanks to the good relations with China, there are no tariffs standing in the way of taking advantage of the low prices in Pakistan. You just get started, put modules on the roof, in the field or wherever. If they fall over or fall down, you just install them again. Finally having permanent and cheap electricity is an extremely good motivation and, as already described, anyone can get involved, because solar is known to range from very small to atomic size.

You can see how quickly a “super grid” becomes obsolete when you combine production and consumption in a decentralized manner at thousands of locations. If the battery or generator is there anyway, there is no discussion about blackouts or anything like that. Impressive.

And yes:

If a poor country can do that — then many others will surely follow suit.

And for our (fear-filled) discussions in Germany, Pakistan can once again be a global example of what is possible if you really want it. Or if the citizens just do it. In Germany and the EU, for example, grids are only popular as long as energy generation cannot take over a 24/7 supply 365 days a year in a decentralized manner (usually redundant anyway) at a much cheaper rate.

The issue is already a reality in China: photovoltaic-wind power-storage hybrids on a gigawatt scale without a grid connection, but because their product is hydrogen and not clean electricity. This is now possible everywhere, even on a small scale, and Pakistan seems to be showing the way with warp speed and XXL.

I am excited to find out what we will learn about the details in Pakistan and how big the “solar flash” really is. For me, it is already one of the most exciting and inspiring stories in my 33 years as a solar entrepreneur. I hope that the people of Pakistan can continue to shape this great development for their own benefit and I am a little jealous of this “just do it, paperwork later” mentality.

Karl- Heinz Remmers — The author Karl-Heinz Remmers has been working as a solar entrepreneur since 1992, beginning with the planning and installation of solar systems and the production of solar thermal collectors. In 1996, he launched Solarpraxis, with its own specialist articles, book and magazine publishing and Solarpraxis Engineering, which is still active today. The successful start-ups also include the pv magazine Group, now overseen by well-known partners, and the conference series Forum Solar Plus. In addition to Solarpraxis Engineering, the focus of his activities today is on the development, planning, construction and operation of solar systems as IPP. He also carries out active political work within the framework of the Association of Energy Market Innovators (bne). More here: https://www.remmers.solar/ueber-mich/

[Riaz Haq]

Pakistan nearing $4.4 billion loan to ease power sector debt

https://www.arabnews.com/node/2592811/pakistan

Pakistan’s government is negotiating 1.25 trillion Pakistani rupee loan with commercial banks
Plugging unresolved power sector debt is top priority under ongoing IMF bailout program
KARACHI: Pakistan’s government is negotiating a 1.25 trillion Pakistani rupee ($4.47 billion) loan with commercial banks to reduce its bulging energy sector debt, the power minister and banking association said.

Plugging unresolved debt across the sector is a top priority under an ongoing $7 billion International Monetary Fund (IMF) bailout, which has helped Pakistan dig its way out of an economic crisis.

“The loan will be repaid over a period of 5 to 7 years,” Power Minister, Awais Leghari told Reuters, adding that the term sheets are yet to be signed.

Pakistan’s government, the largest shareholder or owner of most power companies, faces a challenge in resolving debt due to fiscal constraints. To address this, Islamabad has raised energy prices, as recommended by the IMF, but still needs to settle the accumulated debt.

“We’ve approached many banks, let’s see how many participate. It’s a commercial transaction and they have the choice of participating, however, we think there is liquidity in the system for it and banks have the appetite,” Leghari said.

The government plans to reduce “circular debt” — public liabilities that build up in the power sector due to subsidies and unpaid bills — this year by eliminating government-guaranteed debt and moving to a revenue-based system.

This approach is expected to lower financing costs, enabling the government to pay off interest and service debt obligations, he added.

“Such repricing of liabilities induces more efficiency, and reduces cost for consumers,” said Ammar Habib Khan, adviser to the power minister.

Zafar Masud, Chairman of the Pakistan Banks Association, told Reuters that the interest rate would be a floating exchange rate and the country’s top banks would participate, in addition to those who are already part of the outstanding loan.

“⁠This will help in clearing up all the debt in the next 4 to 6 years which has been sitting on banks’ balance sheets,” he said.

Masud added that more than half of the 1.25 trillion debt is already on the banks’ books and is undergoing restructuring through self-liquidating facilities, which currently lack identifiable cash flows to support them.