Liaquat Ali runs a snooker club in Rawalpindi. In the summer months, when temperatures routinely exceed 100 F, he needs to keep eight air conditioners in constant operation to keep his players comfortable.
But electricity prices are so high that “for all of last year, we could only afford to run four,” he says. “Our patrons were so uncomfortable in the heat that they would stay at home.”
So, in April, Mr. Ali took matters into his own hands and installed a solar-powered air conditioning system. In doing so, he joined a quiet revolution that has made Pakistan the third largest importer of solar panels in the world last year. Pakistanis installed the equivalent of half the national grid in solar capacity in 2024, often figuring out how to do it themselves from videos on TikTok and YouTube.
Why We Wrote This
Pakistan is the third largest importer of solar panels in the world. It’s not that the government is especially green. In fact, it has nothing to do with government policy. It’s just that solar energy is a lot cheaper than conventional power.
Analysts have been astonished by the pace at which the country of 240 million has made the transition, and without a great deal of government assistance. “It’s not that the government is pouring billions in subsidies into making it really attractive,” says Jan Rosenow, professor of energy and climate policy at the University of Oxford, England. “It seems to be very much a bottom-up driven market.”
It is a market driven also by low solar costs. The war in Ukraine has driven up global fuel prices, which have pushed up Pakistan’s electricity tariffs. It will take Mr. Ali only about six months to recoup his $7,800 air conditioning investment, since he used to pay about $1,300 a month for electricity and now pays nothing.
Cost, not climate, driving change
Like most of his neighbors, Mr. Ali is using inexpensive Chinese solar panels, whose cost fell by 40% in 2023, boosting their affordability. But it is the prohibitive price of conventionally generated electricity that has made the real difference.
Increasing oil prices due to the war in Ukraine, the depreciation of the Pakistani rupee against the U.S. dollar, and the end of government subsidies in compliance with International Monetary Fund directives, have driven up electricity prices by around 155% since 2021.
“Before I installed solar panels on my house, I was routinely paying 10 percent of my monthly income on electricity bills,” says financial services consultant Waqar Hasnain. “I predict that as batteries become cheaper and we are able to store our electricity to use in the night, everyone in the country will leave the grid.”
Environmentalists, in particular, have welcomed the shift, noting that Pakistan has had its fair share of climate catastrophes. The government of Punjab – Pakistan’s most populous province – has already evacuated around 900,000 people as the country grapples with yet another round of devastating floods.
“People in Pakistan aren’t putting up solar panels because of the climate challenge, but there’s no country on earth that has suffered more from the climate crisis,” says clean energy activist Bill McKibben, who founded 350.org. “There’s something eloquent about the fact that Pakistan is turning out to be one of the early places where solar power finds a footing.”
The risks of a rapid transition
Yet the rapid pace of private sector solarization is creating a new set of challenges.
In the 1990s, Pakistan’s cash-strapped government opened the electricity market to the private sector in an attempt to meet the growing demand for electricity. Under this policy, the government is obliged to pay independent power producers to keep their power plants operational, even if they do not produce any electricity.
“The more people who use solar to generate their own electricity, the fewer people buy electricity from their energy supplier,” says Professor Rosenow, “and that means the overall cost per unit (of conventional electricity) may well go up, which in turn, drives more people toward solar.”
But if the government loses more money on electricity, it will have to make up its losses elsewhere by raising taxes or hiking utilities bills, says Miftah Ismail, a former Pakistani Finance Minister.
“The government tries to sell you an expensive product that people can make cheaper at home,” he explains. “The problem is that the people of Pakistan own the government. So, on the one hand, people are making decisions for themselves, which are good for them, but the aggregate is that all the government’s losses come back to the people.”
The government has tried to take some benefit from the solar boom, however. It has slapped a 10% tax on imported solar panels, and plans to raise that to 18% in next year’s budget.
