The war in the Middle East has reinforced the energy-security case for renewable energy in energy-importing economies, particularly China and the EU. But one of the most striking examples is emerging elsewhere. In Pakistan, expensive LNG, an unreliable power system and collapsing solar-panel prices have helped drive a largely bottom-up energy revolution, driven not by a centralized state strategy but by households and businesses pursuing cheaper and more reliable electricity. If this model spreads across other emerging economies, its implications could extend far beyond Pakistan. Combined with the coming wave of new LNG supply and potentially a fuller return of Iran to global oil and gas markets, rapid growth in distributed renewables could weaken hydrocarbon demand just as supply expands, reshaping South Asian energy markets more profoundly than currently expected.
Before 2000, the Global North had achieved near-universal fixed-line telephone penetration, while much of the Global South remained poorly connected. In sub-Saharan Africa, fixed-line penetration was still below 3% around 2000, with many rural areas virtually disconnected. Rather than following the same infrastructure path as developed economies, however, Africa largely bypassed the landline era and leapfrogged directly into mobile communications. Pakistan may now be experiencing a comparable leapfrog in electricity. Instead of waiting for a conventional grid system to become universally reliable and affordable, households and businesses are increasingly turning to distributed solar generation. In doing so, they are simultaneously reducing their dependence on an unreliable electricity grid and cutting the country’s exposure to expensive imported LNG.
A Bottom-Up Revolution
The contrast with the situation less than a decade ago is striking. According to International Monetary Fund estimates, in 2017 average electricity outages amounted to around five hours per day in urban Pakistan and 10 hours per day in rural areas. Pakistan today has ample installed generation capacity, but power cuts persist because of transmission and distribution bottlenecks, electricity theft, line losses and severe financial constraints within the power sector rather than simply because the country lacks generating capacity. At the same time, Pakistan’s electricity mix is becoming increasingly domestic. Energy Minister Awais Leghari has stated that around 74% of electricity generation now comes from domestic sources, and that the government aims to raise this share above 96% by 2034. Hydro, nuclear and solar together account for roughly 55% of electricity generation. The role of imported LNG has already declined sharply: LNG-based electricity generation fell substantially from its earlier peak, while electricity produced from imported coal and fuel oil has also decreased.
The most dramatic shift, however, has taken place outside the conventional grid. Distributed solar generation has expanded at extraordinary speed. Estimates based on official Pakistani data cited by Ember suggest that between financial year 2023 and FY2025, total electricity demand increased by 21%, or around 33 terawatt hours, while GDP grew by only 5.2%. Remarkably, this entire increase was accounted for by distributed solar, which rose by approximately 36 TWh, from about 15-51 TWh, while grid generation actually declined slightly. Distributed solar’s share of total electricity generation consequently increased from around 10%-28% in only two years. By 2026, installed distributed and rooftop solar capacity was reported at more than 20 gigawatts. Whatever methodology is used, the direction is unmistakable: Pakistan has experienced one of the fastest expansions of distributed solar generation anywhere in the world. This has already begun to change the country’s demand for imported fuels. LNG-based power generation has fallen significantly, imported-coal generation has also declined and fuel-oil generation has become marginal. Pakistan’s electricity system is therefore undergoing a substantial reorientation toward solar and other domestic energy sources, reducing the role of imported hydrocarbons, especially LNG.
The transformation cannot be explained by high LNG prices and instability in the Mideast Gulf alone. A combination of mutually reinforcing factors created unusually favorable conditions for solar deployment: falling solar-panel prices, government tax incentives, high domestic electricity tariffs, unreliable grid supply and massive overproduction in China’s photovoltaic (PV) industry.
China’s Solar Glut
Pakistan initially encouraged solar deployment through highly favorable tax treatment. Imported PV equipment benefited from extensive exemptions, making panels considerably cheaper for consumers. The policy has subsequently become less generous. Since July 2025, finished PV modules have remained exempt from customs duty but have been subject to a 10% sales tax, while machinery and selected inputs for domestic solar manufacturing continue to benefit from preferential or zero-duty treatment. The government is therefore gradually shifting from indiscriminate support for imports toward policies intended to encourage domestic manufacturing. The scale of the solar boom has itself forced the authorities to reconsider earlier incentives. In February 2026, Pakistan’s electricity regulator replaced net metering with a net-billing framework and sharply reduced the compensation available to new rooftop-solar users for surplus electricity supplied to the grid.
China has been crucial to making this transformation possible. Chinese manufacturers expanded capacity across the entire solar supply chain far faster than either Chinese or global demand could absorb. The resulting overcapacity generated intense competition and drove module prices to historically low levels. By 2024–25, prices in several market segments had fallen below 10¢ per watt, squeezing margins and forcing some producers to sell at or close to production cost. For Chinese manufacturers, this represented an industrial problem, while for countries such as Pakistan, it represented an extraordinary opportunity. The glut of inexpensive Chinese panels dramatically reduced the capital cost of self-generation and shortened the payback period for households and businesses.
Pakistan’s solar revolution has therefore been driven primarily by imported technology rather than by the development of a large domestic PV industry. Local manufacturing remains limited and is concentrated mainly in module assembly. Pakistani producers struggle to compete with Chinese imports because many components still have to be imported and because domestic production, financing, labor and quality-control costs raise the final price. The government is now trying to develop a more substantial domestic solar supply chain. Its measures include zero-duty imports of manufacturing equipment, tax incentives and proposals for production-linked support, while Chinese companies have begun exploring or announcing manufacturing investments in Pakistan. Even so, the immediate success of Pakistan’s solar transition continues to depend heavily on access to inexpensive imported panels. The next stage could extend well beyond residential electricity generation. Solar penetration remains comparatively limited in transport, while its use in agriculture is already expanding rapidly. Cheap solar electricity could facilitate the spread of electric motorcycles, rickshaws and other light electric vehicles. In agriculture, hundreds of thousands of tube wells are already estimated to run on solar power, displacing grid electricity and diesel, although the expansion has also raised concerns about increased groundwater extraction.
This does not mean the end of the natural gas or nuclear power from Pakistan’s energy system. Nuclear power will continue to provide stable low-carbon generation, while natural gas is likely to remain important both for balancing an increasingly renewable electricity system and as a feedstock for the chemical and fertilizer industries. Solar will therefore substitute for only part of Pakistan’s hydrocarbon consumption. Its wider importance lies in reducing the country’s dependence on expensive imported LNG and weakening the link between economic growth and rising fossil-fuel imports. Greater reliance on distributed solar gives Pakistan more flexibility as a new wave of global LNG liquefaction capacity comes on line.
A Wider Energy Shift
If Pakistan’s path is replicated by other energy-importing countries in South Asia, Africa and the Middle East, the consequences could be much larger than the Pakistani market alone would suggest. Distributed solar could allow emerging economies to bypass part of the traditional fossil-fuel-intensive development path, just as mobile telephony allowed many countries to bypass fixed-line infrastructure. If that happens on a sufficiently large scale, Pakistan’s quiet solar revolution could become a genuine game changer for both regional energy systems and global hydrocarbon demand.
Danila Bochkarev is an independent analyst covering Eurasia energy issues. The views expressed in this article are those of the author.

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