The Perfect Storm Fueling Pakistan’s Solar Boom

Pakistan has witnessed one of the most rapid and unanticipated transitions to clean energy, driven largely by homes and businesses installing rooftop solar panels. In just a few years, the country’s electric grid transformed from negligible solar power to an expected 20% of all its electricity coming from solar by 2026.

What began as a modest adoption under a 2015 incentive program transformed into a mass phenomenon a decade later, with households, businesses and farmers rapidly turning to solar. While energy transitions are often imagined as a complicated political process that requires long-term planning, international climate finance or industrial policy, Pakistan proves a different story is possible: A revolution driven by market forces, rather than climate-driven or state-led green policies.

A Perfect Solar Storm

Solar adoption in Pakistan resulted from a “perfect storm” of supply and demand.

On the demand side, an unprecedented hike in electricity tariffs — up 155% in just three years — rendered grid power unaffordable for many people and businesses. Industrial and residential users faced sharp price increases as subsidies were withdrawn. Simultaneously, Pakistan’s economic crisis, high global fuel prices and mandatory fixed costs to maintain underutilized fossil-fuel plants compounded the spiralling costs.

On the supply side, global solar panel prices fell by nearly 50% due to Chinese manufacturing overcapacity, while Pakistan exempted solar photovoltaic (PV) imports from duties and sales taxes until mid-2025. Together, these factors made rooftop solar systems (also known as distributed solar PV) financially attractive.

In agriculture, the removal of diesel subsidies further tipped the balance toward solar pumps, while maintaining the grid stability made solar appear more dependable than grid.

The combination of these demand- and supply-side disruptions made solar an infrastructure of necessity. It offered cheaper, more reliable and more immediate energy relief compared to the grid. Pre-existing policies which supported this included the favorable net-metering policy — which subsidized customers to sell power into the grid at a price higher than just the fuel saving; legacy subsidy programs for off-grid solar for rural households and agriculture; and policies for development of utility-scale power plants.

Between 2019 and 2025, cumulative solar panel imports surpassed Pakistan’s total installed power plant capacity by 2 gigawatts (GW). Yet only a fraction of this was utility-scale (0.7 GW) and connected to the grid suggesting a paradigm shift in the country’s power sector, with rapid growth of small solar PV systems, the actual scale of which is difficult to estimate.

The Early Adopters

Pakistan’s residential sector became an important early adopter as it sought more affordable electricity, particularly by households consuming large amounts of electricity. They faced volume-based prices where the last unit of electricity used is priced at a much higher rate than the first unit in an effort to protect energy access for its poorer residents. As tariffs rose steeply, many high-consumption households installed rooftop systems to reduce demand on the grid. In 2020, 10% of consumers were paying unsubsidized tariffs. By 2024, that number decreased to 1%, while those benefiting from net-metering policies rose from 57% to 89%.

Off-grid households, especially in remote provinces like Balochistan and Sindh, where grid access remains below 70%, have increasingly come to rely on stand-alone PV systems, as well. With an estimated capacity between 1 GW and 1.7 GW, stand-alone solar home systems are now the most common off-grid electricity source, enabling households in poor and remote areas to access daytime electricity for their basic needs — a service that was until now unavailable to them.

Farmers, too, were among the earliest movers in the agricultural sector’s shift away from using diesel generators and/or an unreliable power grid. Contributing roughly 19% of the country’s GDP and employing about 38% of its workforce, the trajectory of the agricultural sector’s shift to using solar  represents one of the least discussed but most transformative changes.

Of the 1.5 million to 2 million nationwide tube wells (which are pumps that provide groundwater to crops), 80% relied on imported diesel units unconnected to the grid. As diesel became expensive with the removal of subsidies, solar pumps became much more cost effective. At the same time, the grid was becoming more unreliable, also motivating a shift to solar. As a result, agricultural electricity demand decreased by 34.3% in 2024.

Estimates by experts suggest that half of the tube wells will switch to solar power, adding 5.6 GW to 7.5 GW of distributed PV capacity — equivalent to 1 million U.S. residential rooftop solar systems. This shift has not only restructured energy in rural Pakistan but also reduced dependence on costly imported diesel.

Businesses in the industrial sector also embraced renewable systems to hedge against both tariff hikes and frequent electricity supply interruptions. Given that industry was already dependent on expensive backup diesel and gas generators, the removal of subsidies improved the business case for solar adoption in the industrial sector as well. Export-oriented industries, especially textiles, found solar doubly beneficial – lower costs and cleaner electricity for global competitiveness. While solar plus batteries cannot yet ensure full energy independence, it has significantly reduced the strain on the electricity grid, with industrial demand falling from 31,008 GW per hour (GWh) in fiscal year 2023 to 27,830 GWh in fiscal year 2024.

Financing, Informal Economies and Community-Built Infrastructures

Perhaps the most distinctive feature of Pakistan’s solar transition is its facilitation by a new wave of mostly self-taught solar entrepreneurs who entered the market during the country’s economic decline beginning in 2022. Leveraging informal merchandise networks in rural areas and importing solar panels through wealthy Pakistani trading houses from China, they have created hyperlocal supply chains that extend into Pakistan’s interior lands. Technicians have learned installation and maintenance by doing — circulating knowledge within communities and via YouTube and WhatsApp groups. These people-led efforts built a domestic workforce and created exportable skills, with Pakistani solar technicians now finding opportunities abroad.

Civil society and non-governmental organizations have also helped facilitate the transition by piloting school solarization or bundling small household systems with microfinance. The dominant pattern, however, is vernacular: infrastructures improvised through neighborhood electricians, local supply chains and community trust. Social proof reinforced this spread — seeing peers succeed (and often reduce their electricity bills to near zero) increased the attractiveness and reduced the risk perception for new adopters.

Moreover, what began as a solar rush is now evolving into a solar-plus-storage story, as imports of lithium-ion batteries grew in 2024 alongside solar PV imports, despite high taxes and import duties. Alongside 17 GW of solar PV imports in 2024, Pakistan imported an estimated 1.25 GWh of lithium-ion batteries. Battery storage allows households and businesses to not just save money during the daytime, but also use stored energy in morning and evening hours to minimize outages and better optimize the electric grid. Though nascent, battery adoption is rising and will soon become another source of income to help stabilize Pakistan’s overall electricity grid.

Solar as an Equalizer of Energy Access

One of the most profound yet under-acknowledged dimensions of Pakistan’s solar boom is how it’s facilitated energy access after 60 years of trying to do this with subsidized fossil fuels. Instead of just urban areas and industrial clusters, where the grid is centralized, vast swaths of rural Pakistan that were previously unserved by the grid, now has access to low-cost electricity.

For rural households, stand-alone PV systems mean that access to lighting, connectivity and cooling are no longer contingent on state investment in transmission lines. For schools, solarization is enabling study sessions, functioning fans during heat waves and reliable power for learning — outcomes that directly address decades of infrastructural neglect due to the high costs of importing diesel fuel. Rural health clinics, too, are beginning to operate refrigerators for vaccines and equipment for basic diagnostics, where unreliable electricity made sophisticated electronics unworkable.

By creating new access opportunities in marginalized communities, solar challenges the entrenched inequities of Pakistan’s energy regime. However, this democratizing potential is still uneven: Households able to afford storage systems or larger arrays benefit more than those limited to small daytime systems. Yet, even within these limits, solar has begun to blur the structural divides between the grid-connected and the energy-poor, offering an incremental correction of historical legacies.

Emerging Challenges

Despite the staggering rates of adoption, contradictions continue to persist. Distributed solar has reduced grid demand, triggering what analysts describe as a potential utility death spiral. Electric companies, already plagued by 20% transmission losses and endemic theft, now face collapsing revenues as high-paying consumers defect. Pakistan faces a paradox — a surplus of fossil-fuel plants with installed capacity of 46 GW under the China–Pakistan Economic Corridor partnership is now underutilized, but the U.S.-dollar denominated debt still has to be repaid. As more high-paying consumers defect, revenues collapse and electricity rates go up due to fixed capacity payments to idle thermal plants, deepening circular debt.

Policy responses — such as eliminating net-metering programs and imposing a 10% tax on imported panels — are unlikely to reverse the trajectory. Further, as central and provincial policies continue to act at cross-purposes, with provincial authorities promoting agricultural solarization, and the federal government imposing import taxes to stabilise revenues, these contradictions may push more consumers towards off-grid systems, accelerating the fragmentation of the power sector.

How Can Pakistan Maintain Its Solar Momentum?

Pakistan’s solar transition has demonstrated a definitive shift from technology commercialization to full market acceptance of renewable energy among lower-income communities. It is neither a climate-driven decarbonization nor a state-led green transition, but a counter-infrastructure of necessity that has expanded access at a pace unimaginable through conventional planning. What began as fragmented responses to tariff hikes and unreliable supply, has grown into one of the most striking people-led energy shifts in history.

While contradictions remain — utilities face revenue collapse and uneven finance access risks deepening divides — the broader trajectory is still transformative. Solar has displaced expensive imported fossil fuels, powered education and health care institutions, and given households and farmers a measure of energy sovereignty long denied by the centralized grid. Equally important, it has fostered new skills, livelihoods and forms of collective learning that extend well beyond energy.

Momentum is likely to accelerate as cost declines, supply chains improve and storage becomes standard on all new deployments. With localized guidelines, skill investment and recognition of solar PVs role in expanding energy access, Pakistan’s people-led transition can evolve from an infrastructure of necessity into a foundation for resilience, opportunity and social renewal.