Qamar Bashir
China has a robust, well-regulated solar energy policy driven by long-term vision and comprehensive planning, unlike Pakistan, where policies are often short-sighted and poorly implemented. During a recent visit to three provinces and five cities in China, we observed that rooftops in residential and commercial areas lacked solar panels, in contrast to Pakistan, where rooftop solar installations are common but often give a cluttered appearance to homes and neighborhoods.
China’s focus is on large-scale solar farms and industrial applications, with most of its renewable energy capacity coming from centralized installations rather than individual households. Both state and local governments prioritize energy-efficient infrastructure and centralized solar energy feeding into the national grid, rather than encouraging decentralized rooftop solar production.
In contrast, Pakistan’s telemetry policy promotes household solar panel installations, allowing households to sell excess electricity to the national grid while using WAPDA-supplied power for their own needs. Although this provides short-term electricity cost relief for households, it has unintended consequences. The policy has not accounted for its impact on the national energy system, contributing to circular debt in the electricity sector. This happens because reduced household demand forces Independent Power Producers (IPPs) to shut down production, but they still receive capacity payments despite not generating electricity, creating financial strain on the government.
The high initial cost of solar panels has made them inaccessible to poorer households, exacerbating inequality. While wealthier households can install solar systems to avoid rising electricity costs, lower-income segments are left to bear the burden of increasing tariffs, worsening the financial strain on the energy sector.
Additionally, China’s solar panel overcapacity, exacerbated by international sanctions, has led to a significant drop in the price of Chinese-made solar panels. As a result, Chinese manufacturers have flooded markets like Pakistan with cheaper panels, further incentivizing households and businesses to adopt solar energy to escape rising electricity costs.
Compounding the issue, political parties such as PML(N), PPP, and PTI have promoted the distribution of portable solar panels to households as a means of gaining voter support. This has led provincial governments to launch large-scale subsidy programs for solar energy installations, driven more by political motives than long-term energy planning. These interventions, while providing short-term relief, have intensified the challenges faced by Pakistan’s formal energy sectors, such as coal, oil, gas, hydel, and nuclear power, and contributed to rising electricity costs.
These policy interventions and the political promotion of widespread solar panel adoption have ultimately increased the cost of electricity produced by the formal sector. Any potential savings households may have gained from installing solar panels have, in reality, been offset by the growing circular debt, which will eventually be paid by the Pakistani consumer. As a result, the net financial impact of mass solar panel installations has turned into a loss at the national level.
Based on an estimated total power generating capacity of 43,000 MW versus an actual demand of 14,000 MW, and with the cost of electricity to the consumer set at Rs. 72 per unit, the nation is suffering a projected annual loss of Rs. 8.83 trillion due to the reduced demand faced by Independent Power Producers (IPPs) following the shift to solar panels.
While this figure might seem exaggerated—factors such as taxes, levies, line losses, and electricity theft are not fully accounted for—even if the loss were reduced by half to Rs. 4.42 trillion, it would still represent a significant cost. This burden, whether absorbed by the federal government or passed on to consumers, constitutes an accrued liability that ultimately affects the people of Pakistan.
If we compare Chinese and Pakistan policy initiatives we might reach the conclusion that China focuses on large-scale solar farms and centralized solar energy production integrated into the national grid. This ensures controlled energy management, reduces grid instability, and avoids the complications of decentralized solar power generation by households. It also ensures uniformity in policy implementation and reduces the risk of creating energy imbalances that could impact the overall energy sector.
Whereas, Pakistan’s telemetry policy, allowing households to produce and sell electricity, creates an unregulated surge in household-level solar panel installations. While this policy has benefits, particularly for individual household savings, it also introduces challenges like grid instability, capacity payment obligations to IPPs, and increased circular debt.
Pakistan’s solar energy policy requires a shift from its current decentralized, short-sighted approach to a more balanced and long-term strategy. Unlike China, which focuses on large-scale solar farms and centralized energy integration, Pakistan’s telemetry policy encourages household solar installations, leading to grid instability, increased circular debt, and financial strain due to capacity payments to Independent Power Producers (IPPs). To resolve these issues, Pakistan should prioritize large-scale solar projects, reform the IPP payment model, and implement grid modernization with smart technologies. Additionally, equitable access to solar energy for lower-income households and reform of the net metering system are essential to prevent the financial burden from falling on the poorer segments of society. Rural areas should adopt localized solar systems to reduce dependence on the national grid, while energy efficiency measures and public awareness campaigns can ensure responsible adoption of solar power. By focusing on a centralized, well-regulated solar strategy, Pakistan can stabilize its energy sector and mitigate the economic challenges it currently faces.
