Pakistan’s Solar Leapfrog

This unprecedented surge was enabled largely by a massive oversupply of photovoltaic panels from China, where manufacturers expanded supply-chain capacity far beyond global demand and drove module prices below 10 cents per watt by 2024 and 2025. Pakistan initially spurred this adoption through broad tax exemptions on imported equipment, though policies have since evolved. In July 2025, authorities applied a 10% sales tax to finished modules while maintaining customs exemptions, and in February 2026, the electricity regulator replaced net metering with a net-billing framework, significantly cutting compensation rates for surplus power fed into the grid by new rooftop systems.

While local manufacturing remains largely restricted to module assembly and struggles to compete with cheap Chinese imports, the government is pursuing domestic production incentives, including zero-duty machinery imports and proposed production-linked support. Meanwhile, Chinese firms are exploring local manufacturing investments. Beyond residential use, solar adoption is expanding quickly among agricultural tube wells, though this growth has sparked concerns regarding accelerated groundwater extraction. Analysts suggest that if this decentralized model is adopted by other energy-importing developing nations, rapid distributed solar growth could weaken global hydrocarbon demand just as new international liquefied natural gas supplies arrive.