ISLAMABAD: Pakistan is witnessing a solar revolution, driven by falling solar panel prices and rising grid tariffs, resulting in over 25 GW of solar capacity. This includes net-metered systems, which feed electricity back to the grid, and behind-the-meter systems, which operate independently.
The surge is reshaping the country’s load curve, creating a “duck curve” where daytime demand dips while evening usage spikes. The current tariff structure, still based on per-kilowatt-hour charges, is unable to capture the benefits of surplus solar generation.
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While solar output reduces daytime grid demand, the cost of fixed capacity remains unchanged, forcing utilities to recover costs from fewer kilowatt-hours sold. Experts warn that without reform, this trend could accelerate grid defection, higher tariffs, and a growing circular debt burden.
Analysts advocate shifting to a subscription-style tariff model, unbundling costs into three components: capacity subscription, network charges, and energy charges based on short-run marginal cost. Such a system would recover fixed generation and network costs from subscribed capacity, while allowing energy charges to reflect real-time supply-demand conditions.
This would encourage industries to operate during the daytime, taking advantage of surplus solar and improving grid utilization. Battery storage is also expanding rapidly, with Pakistan expected to have 18 GWh of stationary storage by mid-2025, potentially reaching 75 GWh by 2028.
Aggregating these batteries into virtual power plants could mobilize up to 15 GW of flexible capacity during peak hours. Policymakers face a critical decision: adapt tariff design to integrate solar and storage effectively, or allow the existing system to deteriorate under financial stress, harming both consumers and the grid.
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The solar revolution presents an opportunity to strengthen Pakistan’s power sector if tariffs are redesigned to reflect modern demand patterns, incentivize daytime consumption, and integrate distributed generation. Otherwise, the mismatch between fixed costs and declining kilowatt-hour sales could jeopardize the system’s sustainability.