Energy is undeniably a critical component of economic development, as it fuels industrial and commercial growth. However, in Pakistan, around 15% of the population still lacks access to electricity, which stifles opportunities for inclusive progress.
Up until the mid-1980s, all power plants in Pakistan were jointly managed by the Karachi Electric Supply Corporation (KESC) and the Pakistan Water & Power Development Authority (WAPDA). Due to public sector financial constraints, the government halted its support for WAPDA in 1985. Recognising the increasing energy demands of the country, it collaborated with the World Bank to develop an energy policy that encouraged private investment in the power sector.
Energy in Transition
In 1993, the government foresaw a power shortfall of around 2,000 MW and formed an energy task force to assess Pakistan’s electricity needs up to the year 2020. Faced with the challenge of financing large public projects, the government shifted its focus to privatising the power sector, introducing the 1994 energy policy. This policy incorporated many recommendations from the task force, particularly related to tariffs and financial incentives.
The “cost-plus” model was adopted to determine electricity rates, offering an attractive rate of 6.5 cents per kWh to encourage private investment. Additionally, the policy offered several financial incentives, such as low taxes, exemption from protracted negotiations, and security packages, which simplified the process for independent power producers (IPPs).
As a result, local and international investors, including consortiums from multinational banks and organizations like the Asian Development Bank (ADB) and the World Bank, responded positively by initiating several power generations projects. Among these were HUBCO, KAPCO, and numerous other projects.
In total, 21 autonomous power generation projects were developed under the 1994 policy. Following this, the government introduced the 1995 Hydroelectric Policy to encourage hydropower generation, offering concessions for private sector investments in both thermal and hydro generation. Successive power policies, such as the 2002 Power Policy and the 2013 National Power Policy, aimed at further reducing power shortages and transmission and distribution losses, while simultaneously lowering the average cost of electricity generation.
Pakistan’s Growing Solar Industry
The energy landscape in Pakistan is undergoing a significant transformation, driven by a sharp decline in the cost of solar panels. With prices dropping to PKR 28 per watt, solar energy has become an increasingly viable option for consumers across the country. This price reduction is the result of growing demand, government initiatives, and international market dynamics. The solar revolution in Pakistan presents both opportunities and challenges as the country transitions toward more sustainable energy solutions.
Federal Minister for Energy Owais Laghari recently revealed that Pakistan imported a staggering 8,000 megawatts (MW) of solar panels in the last 12 months. To put this into perspective, this figure amounts to nearly 35% of the electricity produced by China’s Three Gorges Dam, the world’s largest hydropower facility with a capacity of 22,000 MW. This development reflects a growing trend in the country’s energy mix, driven by economic pressures and a desire to move away from traditional, expensive energy sources.
The surge in solar panel imports is particularly noteworthy in a country like Pakistan, where the energy crisis has long burdened the economy. The affordability of solar power is not only attracting large businesses but also households seeking relief from high electricity costs. As of 2024, electricity prices in Pakistan range from PKR 4.96 to PKR 29.78 per unit, depending on the consumer category and usage. With soaring utility bills, the growing accessibility of solar energy offers a much-needed solution.
Key Drivers of Growth
The drop in solar panel prices has not been limited to Karachi, though the city currently enjoys the lowest rates at PKR 28 per watt. Other cities like Lahore also report significant price reductions, further fuelling the solar adoption movement. As prices continue to fall, more consumers are expected to shift to solar energy, further driving the market. The future potential for solar energy in Pakistan is immense, particularly as local suppliers predict even lower prices soon.
The growth of solar energy is not just a result of price drops but also government policies that aim to encourage renewable energy adoption. The federal budget for 2023–2024, presented by Finance Minister Ishaq Dar, includes substantial relief for the solar energy sector. This includes the removal of duties on inverters, batteries, and related equipment. These incentives are intended to support domestic solar panel production and enhance the adoption of solar energy across the country.
The Adoption of Solar Power
For consumers looking to switch to solar power, there are several key steps involved in making the transition smooth and cost-effective. First, it is crucial to assess energy needs by reviewing monthly electricity consumption and calculating peak load requirements. Once this is done, consumers must decide on the type of solar system to install—whether an on-grid system (connected to the national grid), an off-grid system (independent, requiring battery backup), or a hybrid system combining both.
The size of the solar system is another important consideration. Small systems (1-3 kW) are sufficient for basic household needs, while larger systems (10-20 kW and above) are best suited for commercial or industrial purposes. Additionally, choosing the right components, such as solar panels, inverters, batteries, and charge controllers, is critical to ensuring an efficient system. Buyers must also consider government incentives such as net metering, which allows them to sell excess electricity back to the grid, further reducing costs.
The Green Advantage
The transition to solar energy offers both economic and environmental benefits. On the economic front, consumers can significantly reduce their electricity bills, especially with net metering in place. Furthermore, as fuel prices remain volatile and continue to rise, solar energy provides a stable and cost-effective alternative. By investing in solar panels, consumers can shield themselves from the fluctuating cost of traditional energy sources like natural gas, coal, and oil.
On the environmental front, solar energy helps reduce Pakistan’s reliance on fossil fuels, thereby lowering greenhouse gas emissions. As a country that faces significant challenges related to climate change, investing in renewable energy like solar is critical to building a sustainable future. The government’s efforts to promote renewable energy, including solar power, are aligned with its long-term goals of reducing carbon emissions and addressing the global climate crisis.
Final Thoughts
The sharp decline in solar panel prices in Pakistan marks a turning point in the country’s energy landscape. With growing market demand and government support, solar energy is rapidly becoming an affordable and viable option for consumers across the country. By investing in solar power, Pakistan can not only alleviate its energy crisis but also contribute to global efforts to combat climate change. The road ahead is filled with opportunities for both consumers and the government to make solar energy a cornerstone of Pakistan’s energy future.
