Pakistan can achieve the goal of getting 60% of its energy from renewable sources by the end of the decade.
The dusty agricultural land of Pakistan now gets installed with rows and rows of solar panels, with solar equipment imported from China.
The first nine months of 2023 saw more solar equipment imports from China than the entire year. The $1.7 billion solar panels, if installed on rooftops and farms across Pakistan, would give 17 gigawatts of electricity, more than a third of Pakistan’s total power capacity.
Installing these panels has allowed corn farmers to reduce their power costs by switching from diesel irrigation pumps. In a country where power rates have tripled since 2021 as the government reduced subsidies to satisfy the International Monetary Fund (IMF) loan conditions, farmers joined the solar craze after factories and households decreased the rates.
There are more advantages to this rapid solarization. Customers and companies who can afford the panels benefit financially, the government could save money on fuel imports, and Pakistan can achieve the goal of getting 60% of its energy from renewable sources by the end of the decade.
Additionally, it aligns with the objective discussed in United Nations climate negotiations in Baku, where countries have committed to double the amount of renewable energy in the world. They are now working toward an agreement on climate finance for developing nations like Pakistan.
However, solar expansion in Pakistan has many if left uncontrolled. It threatens to destabilize the fragile economy and weaken the country’s utilities.
As many consumers reduce or stop using the grid, Pakistan’s power companies are permanently losing a significant portion of demand and earnings. Government data shows that between 2014 and 2023, state-owned utilities lost 2.4 trillion Pakistani rupees ($8.6 billion).
According to Salahuddin Riffai, CEO of Islamabad Electric Supply Co, Pakistan’s distribution businesses are losing money as solar energy becomes more appealing.
The country is already struggling financially after taking large loans from China over the past ten years to increase its electricity capacity and is negotiating to extend the maturities of that debt. The government is also privatizing some utilities as cost-cutting measures and is in talks with local power producers to end purchase agreements.
After Pakistan listed import restrictions, China started flooding its solar panels, making them the third largest destination for Chinese panels.
This craze was not limited to the energy industry as real estate and electronics companies also started selling panels. According to Usman Ahmad, CEO of solar distributor Nizam Energy Pvt, the biggest traders would bring in up to 250 megawatts of panels monthly.
Farmers found it easy to convert the farm to solar power. The electricity bill has decreased by 80%, and they can cultivate three crops annually rather than two.
There are many changes in farming, with almost 95% of the farmland being switched to solar, stated Mohammad Murtaza, a corn farmer.
Since there is no official data, it is difficult to determine how many equipment are installed.
A satellite analysis done in April by the Norwegian company Atlas revealed that about 400 solar plants are located throughout the country, primarily in industrial centers, but many more installations are undetected. According to solar distributors, most panels are installed evenly in residences, factories, and farms.
According to Jenny Chase, an analyst at BNEF, the growth of solar in Pakistan is interesting since it was very rapid and happened without any subsidies, but she predicts that a bust can follow a boom.
Pakistan’s government has to deal with the consequences of the solar frenzy and maintain the health of the grid and traditional power companies. Since millions of people cannot afford to install solar panels, the malfunctioning of the electricity network would be catastrophic.
