ISLAMABAD: Pakistan’s Climate Prosperity Plan (CPP) report has revealed that the country has become the world’s third-largest importer of solar panels.
The report argues that, to comprehensively address the country’s energy sector debt while creating space for cheaper renewable generation, Pakistan must adopt a multipronged strategy involving the restructuring or renegotiation of high-cost power purchase agreements (PPAs), improved cost-reflective tariffs, and the phased retirement of older, inefficient fossil fuel plants.
“Pakistan imported 17 GW of solar power systems in 2024, which is twice the amount imported in the previous year, making it the world’s third-largest importer of solar panels,” said the report titled Pakistan’s Climate Prosperity Plan (CPP), prepared by the Ministry of Finance in collaboration with the Ministry of Climate Change.
The report outlines several targets, including achieving a 60% clean energy share by 2030, generating 50% of total electricity through increased renewable capacity by 2035, and increasing renewable sources to 95% of total electricity generation by 2040. It also aims to phase out or convert 14,000 MW of fossil fuel plants by 2035, reduce transmission and distribution losses from 19% to 8%, achieve 100% electricity coverage across Pakistan, install rooftop solar systems in 100% of government secondary schools by 2035, and generate carbon credits equivalent to 200 million tonnes of carbon emissions annually by 2030 for revenue generation.
Volatile global energy prices and currency risks have increased generation costs, contributing to higher consumer tariffs and a growing circular debt crisis in the power sector. “In essence, Pakistan has been paying for expensive capacity it often cannot even fully utilise,” the report states, adding that reducing fossil fuel imports through a shift towards indigenous renewable energy sources, including solar, wind, hydro and local biomass, is vital for easing pressure on foreign exchange reserves, improving energy security and reducing emissions.
The report says a transition can reduce dependence on costly fuel imports, lower air pollution, decrease greenhouse gas emissions and reduce electricity costs. It adds that investment in large-scale solar and wind farms, energy storage solutions and grid modernisation will enhance energy security while reducing the burden of capacity payments linked to under-utilised power plants.
At the same time, Pakistan must invest in grid modernisation and storage solutions to improve reliability as cheaper renewable energy expands and opportunities emerge in transport electrification. The report says the surge in solar imports has been driven by high electricity tariffs and decline in panel prices.
To comprehensively address energy sector debt while creating room for cheaper renewable generation, the report recommends a multipronged strategy, including restructuring or renegotiating high-cost PPAs, introducing improved cost-reflective tariffs, and gradually retiring older and inefficient fossil fuel plants.
By accelerating these, the government can ease the financial pressures that sustain circular debt while meeting rising electricity demand through cleaner and more affordable sources.
The report further recommends introducing transparent auctions for new renewable energy capacity and enhancing credit guarantees to attract private investment.
They would create fiscal space for investment in grid upgrades and efficiency measures required to develop a modern power sector.
