Pakistan emerges as sixth-largest solar market

ISLAMABAD: Pakistan has become the world’s sixth-largest solar market, with its swift transition to solar energy offering valuable insights for emerging economies, according to a World Economic Forum (WEF) report released this week.

As Islamabad faces surging fuel prices, the focus on renewable energy is gaining momentum.

The country’s energy sector has long grappled with challenges such as circular debt, power theft, and transmission losses, leading to frequent blackouts and soaring electricity costs. However, experts highlight that Pakistan’s favorable climate, with over nine hours of daily sunlight in most regions, makes it ideal for solar power generation. The World Bank estimates that utilizing just 0.071 percent of Pakistan’s land for solar photovoltaic (PV) power generation could meet the nation’s entire electricity demand.

Currently, only 5.4 per cent of Pakistan’s 39,772-megawatt installed power generation capacity comes from renewables such as wind, solar, and biomass, as per the National Electric Power Regulatory Authority (NEPRA). Fossil fuels dominate the energy mix at 63 percent, followed by hydropower at 25 percent.

The WEF report attributes Pakistan’s rise in solar energy adoption to falling solar panel prices and steep hikes in grid electricity tariffs, which have surged by 155 per cent over three years. “This is fueling a renewable energy rush, with solar power taking the lead,” the report noted.

China’s overproduction of solar panels has played a key role in this shift, making Pakistan the third-largest destination for Chinese solar exports. The report revealed that Pakistan imported 13 gigawatts (GW) of Chinese solar modules in the first half of this year, with projections reaching 22GW by year-end.

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The report also pointed to systemic inefficiencies in Pakistan’s energy sector, including inconsistent government policies and production and pricing challenges, which have worsened the energy crisis. These issues have led to an over 10 per cent drop in grid electricity demand in the past fiscal year, as inflated tariffs pushed consumers to seek alternatives like solar power. This trend has seen a surge in solar adoption among industrial, commercial, and residential users who can afford self-generation solutions.

WEF recommended supportive policies such as providing credit for solar in off-grid areas and restructuring consumer categories to further accelerate renewable energy adoption.

“Pakistan’s experience highlights the importance of aligning policy innovation with market dynamics to achieve sustainable and equitable energy solutions,” the report concluded.