From Solar Boom to Green Industrialization: Policy Pathways to Localizing Solar Value Chains in Pakistan

Pakistan’s energy landscape is undergoing a transformation driven by the rapid
uptake of imported solar photovoltaic (PV) systems: as of mid-2025, solar is
expected to contribute over 25% of Pakistan’s power supply (including off-grid
solar generation), surpassing the share of any single fossil fuel and becoming
the second-largest source of generation after hydropower in Pakistan’s energy
mix. However, this solar boom has not benefitted all citizens equally. The
installation of solar systems under net metering remains unaffordable for lowincome
families. The shift to rooftop solar has also reduced demand from the
national grid, which has led to revenue losses for public-sector distribution
companies, increased the financial burden on consumers who rely solely on
grid supply, and posed challenges to overall grid stability. In recent years,
the country has spent over USD 4 billion on imported solar equipment as
it heavily relies on foreign manufacturers, particularly Chinese firms, without
giving sufficient attention to developing local solar manufacturing capacity.
This policy report advocates the localization of solar manufacturing to reduce
import dependence, create jobs, and improve energy security. It explores
key opportunities and challenges in developing a local solar PV value
chain, including the use of special economic zones (SEZs), the provision of
financial incentives, and the establishment of joint ventures with Chinese
manufacturers under the China-Pakistan Economic Corridor. We propose a
“5S” (Strategy, Subsidy, Standards, SEZs, Science & Knowledge) roadmap to
foster a competitive solar industry in Pakistan.