How Rooftop Solar Became Pakistan’s Answer to Power Shortages
Pakistan’s long-running power shortages have eased in recent years, not primarily through government programs but through a bottom-up solar boom. Federal Minister for Power Awais Leghari stated in August 2026 that the country’s solar capacity had reached 38,000 megawatts. Independent estimates from the energy think tank Renewables First place operational solar capacity even higher, at approximately 51 gigawatts as of March 2026, based on module import data. This growth has altered the national energy landscape in ways that large-scale public projects in other countries have not.
The distributed nature of this shift makes it unusual. In China, India, and Brazil, state-backed solar parks dominate capacity additions. In Pakistan, households, shopkeepers, and factory owners have invested their own capital in rooftop systems. The net-metering framework introduced by NEPRA in 2015 allowed consumers to offset grid imports with solar exports on a one-to-one basis. Between FY2021 and FY2025, the rupee depreciated roughly 75 percent, electricity tariffs rose about 140 percent, and global solar panel prices fell nearly 60 percent, making rooftop solar an attractive private investment. Bloomberg cited Pakistan as a rare example of a developing country where citizens have solved an energy problem largely on their own.
This solar expansion has reduced the severity of load-shedding and lowered daytime demand on the national grid. It has also reduced the reliance on expensive imported fuels. According to data presented at a SAARC webinar, solar generation under net metering grew from 190MW in FY2020 to nearly 7,000MW by June 2026, a roughly 37-fold increase. The Pakistan Business Forum noted that the country’s installed generation capacity reached 49,651MW in March 2026, with 7,319MW added through solar net metering.
The financial implications for the power sector are significant. Under the one-to-one net-metering mechanism, the Power Division estimated a revenue impact of Rs 101 billion in FY2024. In response, NEPRA introduced a net-billing framework under the Consumer Regulations 2026, effective February 8, 2026. Under net billing, exporting electricity is compensated at a lower reference price rather than the retail tariff, while imported electricity continues to be billed at standard retail rates. NEPRA later amended the regulations to protect existing net-metering agreements until their terms expire, while applying the new rules to new applicants and those materially expanding their systems.
The solar boom intersects with two costly structural problems in Pakistan’s power sector. The first is take-or-pay LNG contracts. Pakistan is bound by agreements requiring payments to LNG terminal operators even when cargo does not arrive or facilities are not fully utilized. As of March 2026, Pakistan was paying $538,535 per day, nearly $15 million per month, in capacity and utilization charges to its two RLNG terminals despite Qatar Energy’s force majeure declaration on LNG supplies. Federal Minister for Petroleum Ali Pervaiz Malik called these agreements “faulty” and “not in favour of the country.”
The second issue is capacity payment to independent power producers. Pakistan’s electricity consumers have paid Rs13.397 trillion to IPPs over the past five years, with only Rs7.275 trillion spent on electricity actually supplied to the grid. The remainder went largely toward capacity payments, including payments to plants that generated no electricity. Capacity payments totaled Rs2.1 trillion in FY2024, equal to roughly 78 percent of total payments to generators and about the same share of the average residential bill. This structure has made Pakistani electricity among the most expensive in the world.
Expanding solar generation reduces the demand that expensive grid capacity must serve. If more consumers generate their own power, the burden of fixed capacity payments falls on a smaller base of remaining grid customers, which can raise tariffs further for those who cannot afford solar. This dynamic creates policy tensions. The government faces pressure from the IMF to maintain the existing financial structure of the power sector, while solar adoption accelerates outside the grid.
Several countries demonstrate that energy self-sufficiency is achievable through consistent policies. Norway relies predominantly on hydropower. Iceland uses its geothermal and hydroelectric resources to meet nearly all of its energy needs. Denmark has achieved notable success in wind energy. These examples show that sustained policy focus, not one-time interventions, drives structural change.
For Pakistan, the path forward involves several practical measures. First, the government could require solar installation in all commercial buildings and affluent households, which would accelerate capacity additions without public spending. Second, subsidies and low-interest loans for low-income households and remote areas could ensure more equitable access to solar technology. Third, electrifying the railway network and promoting electric buses, motorcycles, rickshaws, and vehicles would reduce fuel imports and create more efficient use of electricity demand.
Solar expansion also raises a question about the grid’s future role. If a growing share of demand is met by distributed generation, the national grid must still serve as a backup and handle evening peaks when solar output falls. Managing this transition requires investment in grid flexibility, not just generation capacity.
Pakistan’s solar boom has demonstrated that consumers will invest in alternatives when grid electricity becomes unreliable and expensive. The policy challenge is to align the regulatory framework with this reality rather than protecting legacy contracts that no longer serve the public interest. If solar adoption continues and grid reforms follow, Pakistan could reduce its vulnerability to fuel price shocks and external pressures. The alternative is a power sector where consumers who can afford solar exit the grid, leaving those who cannot to pay increasingly unaffordable bills.
