How cheap Chinese solar is reshaping Pakistan's energy future

Pakistan's fast-growing adoption of rooftop solar panels is reshaping its power sector, reducing demand for grid electricity and creating new financial pressures for legacy utilities, according to officials, industry groups and analysts.

The consumer-driven boom, described by some experts as a "solar shock," also underscores China's expanding influence over the energy transition in the global south.

Record heat above 50°C and frequent power cuts have pushed many households and businesses to install solar panels despite the upfront cost. Electricity bills can consume a quarter of a typical household's income. Pakistan has become the world's second-largest importer of solar panels this year, with most shipments coming from China, says Economist.

Imports of Chinese-made panels rose nearly fivefold between 2022 and 2024 to reach 16 gigawatts (GW) annually. Another 16GW arrived in the first nine months of 2025. By year-end, cumulative imports are expected to roughly equal the installed capacity of Pakistan's national power system.

Panels now appear widely across the country, from bungalows and mosques to farms and roadside shops. In rural areas, many are mounted on trailers, and solar panels are increasingly being included in marriage dowries.

Growing numbers of users are also pairing their panels with Chinese-made batteries, extending access to electricity after sunset. Imports of batteries have increased sharply, and Energy Minister Awais Leghari has said falling storage costs will accelerate the shift.

Pressure on utilities

The rapid consumer uptake has contributed to a 12% fall in grid electricity consumption since 2022. Analysts expect further declines as batteries become more widespread.

Lower demand has cut revenues for Pakistan's utilities, which must still service debt and maintain infrastructure. Much of the debt stems from investments in coal-fired power plants, many financed under China's Belt and Road Initiative (BRI). With costs fixed and consumption falling, remaining customers face higher tariffs, prompting more households to switch to solar—a dynamic characteristic of a "utility death spiral". Conventional generators are also facing growing levels of surplus capacity.

Pakistan introduced a 10% sales tax on imported solar panels in June, but officials say it has not slowed demand.

China's technology reshapes global south markets

Pakistan has become a test case for how cheap solar technology is reshaping energy systems in lower- and middle-income countries. For the first time, China's solar exports to the global south (126GW) have surpassed exports to the global north (116GW), supported by steep falls in the cost of solar power.

The growth of solar has challenged incumbent energy systems elsewhere, prompting several governments to impose new barriers. South Africa has applied 10% tariffs, Brazil has increased duties on modules to 25%, and Nigeria has considered an outright ban.

Pakistan is also in talks with China to restructure agreements covering its coal-fired projects. According to researchers, China has expanded its green-energy-related BRI investments, loans and construction contracts, which reached $11.8 billion in 2024, a 60% increase from the previous year. Chinese green-tech companies have also pledged about $200 billion in overseas investments since 2022 to navigate rising trade restrictions.

Analysts say China aims to shape the technical standards of future energy systems across the developing world, embedding technology compatible with Chinese equipment and bolstering its political influence.

Conditions for a successful transition

Experts argue that Pakistan's rapid shift demonstrates how quickly technologies can spread when consumers are able to adopt them without extensive permitting. But they also warn that the long-term outcome depends on whether the country can modernise its grid in time.

Leghari has sought advice from China and other countries on grid upgrades and financing models. Industry groups such as the Pakistan Solar Association have encouraged China to support local manufacturing of panels and batteries, provide expertise on solar deployment and explore funding options for large-scale storage projects.

Lauri Myllyvirta, an energy analyst, has said the speed of Pakistan's transition reflects the advantages of consumer-led adoption. However, Muhammad Mustafa Amjad, a researcher on China–Pakistan energy cooperation, has cautioned that Pakistan could become "an excellent story" if grid reforms keep pace, or "an example of what not to do" if they do not.

Political instability and earlier BRI projects that fell short of expectations give China a strong incentive to help ensure Pakistan's solar expansion becomes a model for the global south, analysts say.