The latest indicators reveal a remarkable shift in Pakistan's energy policy, after the country became the third largest importer of solar panels in the world, in a step that reflects the acceleration of reliance on renewable energy to face the electricity crisis and the accumulated debt in the energy sector, and reduce dependence on imported fossil fuels.
And this development came in a report entitled "Pakistan's Climate Prosperity Plan - CPP", prepared by the Ministry of Finance in cooperation with the Ministry of Climate Change, and its details were quoted by the Pakistani newspaper The News, where the report confirmed that Pakistan imported during 2024 solar energy systems with a capacity of 17 GW, which represents twice the volume of imports recorded in the previous year, thus ranking third in the world in importing solar panels.
And the report finds that this accelerated growth was not only the result of government policy, but was driven by two main factors: the continuous rise in electricity prices inside the country, and the significant decline in solar panel prices in global markets, which prompted individuals and companies to expand the use of solar energy as a more feasible economic alternative.
Radical reform of the electricity sector
The report stresses that the electricity sector crisis in Pakistan cannot be addressed through partial solutions, but rather requires a comprehensive structural reform that ensures the long-term sustainability of the sector.
The report proposes a multi-pronged strategy that includes restructuring or renegotiating high-cost power purchase agreements, introducing an electric tariff that reflects the true cost of production, and phasing out old fossil fuel-fired power plants that are characterized by low efficiency and high operating costs.
And the report pointed out that the Pakistani government has been paying large costs over the past years for electricity production capabilities that are not being fully exploited, which contributed to exacerbating the circular debt crisis that the sector suffers from.
Ambitious targets to 2040
According to the report, the Pakistani government has developed a long-term roadmap for the transformation of the energy sector, which includes achieving a set of main objectives, most notably:
Raise the share of clean energy to 60% of the energy mix by 2030.
Producing 50% of electricity from renewable energy sources by 2035.
Raise the contribution of renewable energy sources to 95% of total electricity production by 2040.
Exit or convert 14,000 MW of fossil fuel plants by 2035.
Reduce transportation and distribution losses from 19% to 8%.
Achieve full electrical coverage throughout the country.
Equip all public high schools with rooftop solar systems by 2035.
Producing carbon credits equivalent to 200 million tons of emissions per year by 2030, allowing the government to generate additional revenue from carbon trading.
Reducing dependence on imported fuel
The report notes that global oil and gas price fluctuations, along with the devaluation of the local currency, have significantly raised the costs of electricity production, which has been reflected in energy prices for consumers and has led to increased financial pressure on the government.
And the report’s authors argue that expanding reliance on domestic energy sources, such as solar, wind, hydropower, and biomass, represents one of the most important solutions to reduce the fuel import bill, preserve foreign exchange reserves, and enhance national energy security.
The report also confirms that the shift towards renewable energy will contribute to reducing carbon emissions and improving air quality, as well as reducing electricity production costs in the long term.
Modernization of the electrical grid
And despite the boom in solar energy use, the report warns that the success of the energy transition depends on the development of infrastructure for the electricity sector, noting that the current grid needs significant investments to accommodate the expansion of renewable energy sources.
The report recommends investing in modernizing the transmission and distribution network, and establishing advanced energy storage systems, ensuring stable electricity supplies and improving grid reliability as reliance on electricity produced from the sun and wind increases.
Attracting private investment
And to promote a clean energy transition, the report calls for transparent auctions for new renewable energy projects, as well as expanded credit guarantee programs, encouraging the private sector to invest more in this area.
The report argues that these measures will provide the government with the financial space to finance the modernization of the electricity grid and improve the efficiency of the sector, while reducing the pressures resulting from circular debt, and meeting the growing demand for electricity through more sustainable and less expensive sources.
A Strategic Shift in Energy Policy
And the rapid shift towards solar reflects a clear change in Pakistan’s economic and energy policy priorities as the government seeks to reduce dependence on imported fossil fuels, improve energy security, reduce the import bill, and at the same time meet its international climate commitments.
Observers believe that the success of this plan will depend largely on the government's ability to implement structural reforms in the electricity sector, provide the necessary funding to modernize the networks, and attract domestic and foreign investment, ensuring a gradual transition towards a low-emission and more sustainable economy during the next two decades.
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