Pakistan's solar revolution

Something remarkable is happening in Pakistan. Over the past five years, the country has imported roughly 45 gigawatts of solar panels — an amount equal to the entire installed capacity of its national grid. By some estimates, 20% of all electricity in the country will come from solar by the end of 2026. Renewables now supply 53% of Pakistan's electricity, with a government target of 60% by 2030.

This is, by any measure, one of the most rapid energy transitions in the developing world. It has been driven primarily by market forces — consumers responding to price signals and the falling cost of solar technology. And it presents both significant opportunities and complex policy challenges that regulators are now working to address.

Figure 1: Pakistan's solar panel imports grew from under 1 GW in 2020 to an estimated 28 GW by 2025

What drove the solar boom

Several factors converged to create the conditions for rapid solar adoption. Electricity prices in Pakistan rose significantly over recent years, driven by global energy price increases following the Russia-Ukraine conflict and necessary tariff adjustments to improve the financial health of the power sector. At the same time, Chinese solar panel manufacturers expanded production, bringing panel prices to historic lows.

The result was a convergence of push and pull factors. Households, farmers, and businesses found solar increasingly attractive both for cost savings and energy security. In the nine months between July 2024 and March 2025, Pakistan imported 12.7 gigawatts of solar PV — a remarkable figure given its total installed power generation capacity of 46.6 GW.

By the end of April 2025, net-metered solar had reached 5.3 GW. There are now 4.66 lakh net metering connections in the country, concentrated in urban areas.

As Muhammad Mustafa Amjad of Renewables First notes: 'This is not government deciding this is the route to take. And it is not being driven by climate concerns, it is all about the economics.' This bottom-up, market-driven character distinguishes Pakistan's transition from many state-led renewable energy programmes elsewhere.

The shift from net metering to net billing

On February 10, 2026, NEPRA notified the Prosumer Regulations 2026, transitioning from the net metering framework in place since 2015 to a net billing system. This represents a significant policy adjustment aimed at addressing emerging challenges in the power sector.

Under the previous net metering regime, a unit exported to the grid was credited at the same rate as a unit imported — a one-to-one exchange. Under the new net billing system, export rates have been adjusted to approximately Rs 8-11 per unit, while import rates reflect prevailing tariffs. The contract period has been adjusted from seven years to five.

Figure 2: The net billing system introduces differentiated rates for grid exports and imports

The rationale for this change reflects legitimate concerns. As NEPRA has noted, utility-scale solar is now contracted below Rs 10 per unit, while rooftop exports under net metering were being credited at Rs 22-27 per unit. In FY2024, electricity sales fell by 3.2 billion units, affecting distribution company revenues by nearly Rs 101 billion.

The policy shift has generated public discussion, with some existing prosumers expressing concerns about the transition. The Prime Minister has directed the Power Division to review the regulations, and Power Minister Awais Leghari has indicated that accommodations for existing users are being considered. This ongoing dialogue reflects the government's responsiveness to stakeholder feedback.

The emerging battery storage market

The policy evolution is coinciding with rapid growth in battery storage adoption. Pakistan imported an estimated 1.25 gigawatt-hours (GWh) of lithium-ion battery packs in 2024, with another 400 MWh in the first two months of 2025. The Institute for Energy Economics and Financial Analysis (IEEFA) projects this could increase to 8.75 GWh by 2030 — enough to meet over a quarter of peak demand.

Even with taxes and customs duties adding 48% to battery import costs, home systems offer a payback period of three to five years; commercial and industrial setups pay for themselves in four to six years.

Figure 3: Battery storage capacity is projected to reach 8.75 GWh by 2030

As Afia Malik of the Pakistan Institute of Development Economics has observed: 'The decreasing costs of battery energy storage systems will play a critical role in driving solar PV demand. Off-grid and hybrid energy solutions are also gaining traction in remote areas and will continue to do so in the future.'

In urban areas, developers are now offering houses with built-in solar-and-battery systems as standard features. In agricultural areas, farmers are using solar-powered tube wells with battery backup. From cold storage units to small IT firms, solar-battery combinations are improving energy reliability across sectors.

Grid integration challenges and opportunities

The rapid growth of distributed solar presents both challenges and opportunities for grid management. As more consumers generate their own power, the demand profile on the grid is changing. This requires adaptation in how the power system is planned and operated.

Figure 4: The growth of distributed solar is changing electricity demand patterns

In FY2024, capacity payments to power producers exceeded PKR 2 trillion. Some thermal plants built in recent years are now operating at lower utilisation rates than originally projected. The government has been managing fuel supply contracts to align with evolving demand patterns.

These dynamics are common to energy transitions globally and require thoughtful policy responses. The shift to net billing is one element of the regulatory evolution needed to balance the interests of prosumers, remaining grid customers, and the financial sustainability of the power sector.

Ensuring inclusive access

An important policy consideration is ensuring that the benefits of clean energy are broadly accessible. Solar-plus-battery systems require upfront capital that not all households can readily access. Microfinance mechanisms for solar installations are developing but remain limited, particularly in rural areas. Net metering is generally approved on a single-meter basis, which can present challenges for apartment buildings and shared properties.

Addressing these access gaps will be important to ensure that the energy transition benefits all segments of society. Development finance institutions and government programmes can play a role in expanding access to clean energy solutions for underserved communities.

The path forward

Several institutions have offered constructive recommendations for managing this transition. The IEEFA has suggested that the government consider 'take and pay' contracts with electricity generators instead of 'take or pay' arrangements, and invest in grid modernisation including smart metering and demand-response capabilities.

The World Economic Forum has called for financing mechanisms that lower entry costs for underserved users and support grid upgrades. Development banks like the ADB and the Green Climate Fund could structure blended finance facilities to make solar-plus-battery solutions more accessible.

The key policy questions going forward include: How to integrate large amounts of distributed solar and storage into grid planning? How to ensure the benefits of clean energy reach those who cannot afford upfront investment? How to manage the transition for existing power generation assets? And how to maintain grid reliability and financial sustainability while accommodating rapid change?

Conclusion

Pakistan's solar revolution demonstrates what is possible when market conditions align with consumer needs. As Amjad notes, Global South countries 'don't have to be the laggards. They can actually be the leaders of the energy transition.'

The policy adjustments now underway — including the shift to net billing — reflect the necessary evolution of the regulatory framework to keep pace with market realities. Managing this transition effectively will require continued dialogue between government, regulators, industry, and consumers.

Pakistan has an opportunity to build an energy system that is cleaner, more distributed, and more resilient. The pace of change has been remarkable. The task now is to ensure that the transition is managed in a way that is sustainable, equitable, and beneficial for all Pakistanis.

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