Mehmood ul Hasan Qadir — Economist & Financial Analyst | Dubai, UAE

The Pakistan Ledger | Opinion

Pakistan receives between 1,900 and 2,200 kilowatt-hours of solar irradiance per square metre annually across most of its territory — among the highest solar resource endowments of any major populated country on earth. Balochistan’s solar irradiance levels are comparable to the Saharan zones that Europe is planning to harness through multi-billion-dollar undersea cable projects. This is not a marginal solar opportunity. This is a fundamental energy transition asset that could, within a decade, eliminate Pakistan’s dependence on imported fossil fuels, resolve the circular debt crisis, and reduce industrial electricity costs to levels competitive with the region’s leading manufacturing economies. And Pakistan’s policy environment is, almost systematically, making it harder to realise.

The AEDB Data — What’s Actually Been Built

The Alternative Energy Development Board reports grid-connected solar capacity of approximately 1,500–2,000 megawatts as of mid-2020s, with rooftop and distributed solar adding an estimated 2,000–4,000 megawatts more — much of it installed outside the formal grid registration system. This off-grid solar boom — driven by electricity-starved households and businesses purchasing panels directly from the market to escape load-shedding — is Pakistan’s most significant grassroots energy revolution in decades. It is also almost entirely despite government policy, not because of it.

Net Metering — The System DISCOs Are Fighting to Strangle

Pakistan’s net metering policy — introduced in 2015 and expanded subsequently — allows solar panel owners to sell surplus electricity back to the grid and offset their bills. In theory, this is a sensible distributed generation mechanism that reduces peak demand on the grid, rewards solar investment, and accelerates the energy transition. In practice, the Distribution Companies have fought net metering at every administrative turn.

DISCO resistance to distributed generation is not irrational from their institutional perspective. Net metering customers — typically middle-class and commercial consumers — are the most profitable segment of the distribution company customer base. They pay bills, they are electrified, and they subsidise the cross-subsidy regime that covers agricultural and low-income domestic consumers. When these profitable customers reduce their grid consumption through rooftop solar, DISCO revenue falls while fixed costs — the grid infrastructure, the capacity payments, the staff — remain. The DISCOs’ opposition to net metering is a symptom of a fundamentally broken utility economics model, not a rational energy policy position.

Solar LCOE vs. RLNG — The Economics Are No Longer Debatable

The Levelised Cost of Energy from utility-scale solar in Pakistan — calculated on current panel prices, financing costs, and irradiance levels — is estimated at Rs. 10–15 per kilowatt-hour. The equivalent cost of electricity generated from Re-gasified Liquefied Natural Gas — which Pakistan imports at international spot prices — runs at Rs. 35–55 per kilowatt-hour depending on global LNG market conditions. This cost differential is not a projection. It is a current economic reality.

Every gigawatt-hour of electricity generated from domestic solar instead of imported RLNG saves Pakistan precious foreign exchange, reduces the circular debt increment, and reduces industrial electricity costs. The arithmetic is unambiguous. The policy response has been to simultaneously encourage solar development through AEDB programmes while allowing NEPRA and the DISCOs to restrict net metering connections, impose grid stability charges on solar customers, and delay new solar project approvals in bureaucratic processing queues.

The Financing Gap — Why the Rooftop Solar Programme Underdelivered

The government’s Rooftop Solar Programme — designed to accelerate residential and commercial solar adoption through concessional financing — has consistently underperformed its installation targets. The financing gap reflects multiple failure points: commercial banks’ risk appetite for solar loan portfolios is limited by unfamiliarity with the asset class; the concessional credit lines have not been channelled efficiently through lending institutions to end users; and the technical assessment capacity for solar project approval at bank level is inadequate.

Pakistan’s solar salvation requires three policy decisions that must be made simultaneously: full net metering rights with transparent, rules-based grid access; solar financing mainstreamed through the banking system with SBP support; and a utility economics restructuring that decouples DISCO revenue from volume sales — removing the institutional incentive to resist distributed generation. These decisions are technically straightforward. They are politically difficult because they threaten entrenched utility interests and require acknowledging that the grid-centric power sector model Pakistan built over fifty years needs fundamental redesign. The sun is not waiting for that acknowledgement.

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Mehmood ul Hasan Qadir is an Economist and Financial Analyst based in Dubai, UAE. He writes on Pakistan’s economic structure, policy failures, and reform pathways for The Pakistan Ledger.