The continuous decline in solar-storage costs has led more and more Pakistani households to consider installing home solar-storage systems. On one hand, these systems ensure household power supply during outages; on the other, they help reduce overall electricity costs through self-built solar-storage systems. As a result, the demand for home solar-storage systems in the Pakistani market is rapidly increasing.
As the solar-storage market in Pakistan heats up, more Chinese solar-storage companies are entering this market.
Power Development Issues
Pakistan, located in South Asia, has a high demand for electricity, but faces significant power development challenges.
First, Pakistan's southern region is tropical, while the rest is subtropical, with an annual average temperature of 27°C. The high temperatures in summer increase electricity demand. Additionally, Pakistan has a population of 240 million, so electricity demand is relatively high.
Second, Pakistan primarily relies on traditional energy sources and hydropower, with low installed capacity for renewable energy. In 2023, fossil fuel-based power plants, including oil, natural gas, and coal, accounted for over 50% of the total installed capacity, while hydropower contributed more than 20%. Renewable energy's share is relatively low, with wind power making up around 4% and solar power only about 1%.
Pakistan's power generation mainly relies on natural gas, coal, and oil, but the country lacks sufficient domestic fossil fuel resources and depends heavily on imports. The high cost of fuel imports restricts the development of Pakistan’s power system. The uncertainty and availability of fuel prices are key factors limiting Pakistan's long-term power expansion plans.
This year, the export volume of batteries, inverters, and solar modules to Pakistan has grown rapidly. Local battery and module production capacity in Pakistan is small, largely depending on imports from China. According to the General Administration of Customs, in the first four months of this year, China's exports of solar modules, inverters, and lithium batteries to Pakistan amounted to 7.83 billion RMB, 779 million RMB, and 330 million RMB, respectively, representing year-on-year increases of 110%, 170%, and 250%.
The demand for these three major components in Pakistan has increased two to three times compared to the same period last year, showing explosive growth. The root cause of this surge is Pakistan's severe power shortage, making home solar-storage systems a critical need for ensuring household power supply and reducing electricity costs, driving the rapid growth of the distributed solar-storage market.
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In recent years, Pakistan has placed great emphasis on energy transition, supporting renewable sources like hydropower, wind, and solar. Pakistan has introduced several policies, including the Renewable Energy Development Policy, Integrated Energy Planning, and the Renewable and Alternative Energy Policy (2020). The country aims to increase the share of renewable and alternative energy in the electricity market to 20% by 2025 and to 30% by 2030.
Regarding solar power deployment, Pakistan’s National Electric Power Regulatory Authority (NEPRA) has actively initiated tenders for solar power projects, launched competitive bilateral trade contract markets, and introduced a new wholesale electricity market model to stimulate the construction of solar projects in Pakistan.
Due to fiscal challenges, the Pakistani government has continuously raised electricity prices to increase fiscal revenue. To address its fiscal crisis and secure loans from the International Monetary Fund (IMF), the government hopes to boost income from the electricity sector through price hikes.
According to NEPRA, residential electricity prices have risen by more than 100% since 2020. Residents' actual electricity costs consist of the basic electricity price, fees charged by power companies, and government fees.
In addition to usage-based electricity charges calculated by tiered pricing, electricity bills also include fees from power companies (such as fuel price adjustments, fuel cost surcharges, and quarterly tariff adjustments) and various government taxes (including a 17% sales tax, 8.4% income tax, and taxes related to fuel price adjustments).
Rising electricity costs, combined with unstable power supply, have led many residents to complain about the unaffordability of electricity. As solar-storage installation costs fall and high electricity prices drive up returns on residential storage systems, demand for solar-storage is expected to surge, potentially leading to explosive market growth.
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According to NEPRA's Generation Capacity Expansion Plan (IGCEP 2047), Pakistan's installed solar capacity is expected to grow rapidly in the coming years, reaching 12.8 GW by 2030 and 26.9 GW by 2047. To achieve the 2030 and 2047 targets, annual solar capacity additions need to average 1.65 GW and 1.07 GW, respectively.
The sharp rise in electricity prices has driven more residents to turn to solar energy, with a surge in orders for solar panel installations. According to the Photovoltaic Association, Asia surpassed Europe as the largest export market for photovoltaic products in the first half of this year. Pakistan has become the second-largest solar module export market after Europe.
Since 2023, the prices of solar modules and energy storage batteries have dropped rapidly, significantly lowering installation costs. As a result, solar-storage systems, once considered a luxury, have become affordable for the general public, triggering a surge in demand.
According to estimates, a home solar-storage system can pay for itself in five years. For example, the installation cost for a typical “5kW solar + 10kWh storage” system in Pakistan is about 25,000 RMB. Assuming an average electricity price of 70 PKR (including basic electricity fees and various taxes), equivalent to 1.8 RMB/kWh, and considering Pakistan's benchmark interest rate and loan rate of 22%, the system's return on investment is around 37.5%, allowing for a payback period of 4-5 years.
With the rising popularity of solar-storage installations due to Pakistan's recent large-scale blackouts, many Chinese solar-storage companies, such as Xingshiju Century, Firstar Energy, and Deye, have entered the market. At the solar exhibition held in February this year in Lahore, Pakistan's second-largest city, energy storage companies like Sungrow, SAJ Electric, Megarevo, Okaya New Energy, and GNY participated in the exhibition.
As solar-storage installation costs continue to fall and electricity prices rise, solar-storage demand is expected to explode. Solar-storage companies that have prioritized emerging market expansion will likely benefit from this rapid growth.
Source：TrendFroce
