The Pakistan Energy Market Review 2026, published by Pakistani energy and environmental policy think tank Renewables First, highlights the growing contribution of distributed solar systems installed on rooftops and other locations.
The report says these systems are increasingly meeting the country’s energy needs, but their contribution is not fully captured in official data, leaving a gap between Pakistan’s reported energy figures and the actual energy landscape.
A growing solar sector missing from official statistics
According to the report, Pakistan’s primary energy supply increased by 1.6 per cent in the fiscal year 2024-25, while reported energy consumption rose by around 8 per cent. However, these figures do not fully account for electricity generated through distributed solar systems.
Renewables First estimates that distributed solar displaced approximately 13 million tonnes of oil equivalent (Mtoe) in primary energy requirements during FY2024-25.
In other words, solar power supplied a substantial share of the country’s energy needs, reducing the amount of energy that would otherwise have had to come from conventional sources.
The gap in official statistics is significant because incomplete data can affect estimates of electricity demand, future energy planning and government policy decisions.
How solar power is reducing reliance on imported fuel
Pakistan’s energy system has long depended on imported oil, gas and coal, placing considerable pressure on the country’s foreign exchange reserves.
The report says imported fossil fuels accounted for around 41 per cent of Pakistan’s primary energy supply in FY2024-25, compared with 37 per cent in the previous fiscal year.
It also estimates that fossil fuels accounted for more than 90 per cent of the country’s $128 billion energy import bill between FY2020 and FY2026.
Against this backdrop, the expansion of solar power is helping reduce the need for imported fuels. As households, businesses and industries generate more of their own electricity, demand from the national grid can decline, potentially reducing the amount of fuel required for power generation.
Renewables First estimates that distributed solar helped Pakistan avoid around $15 billion in fossil fuel imports in FY2026.
The figure is the think tank’s estimate and should not be interpreted as an officially verified government saving.
Could every dollar invested in solar save more than nine dollars?
The report also estimates that every dollar spent on solar photovoltaic panels and inverters could generate approximately $9.23 in avoided fossil fuel imports over the long term.
This projection is based on a model covering FY2017 to FY2050 and relies on specific assumptions about installed solar capacity, fuel consumption and future energy prices.
It is therefore a projected economic benefit rather than a guaranteed or already realised return.
Nevertheless, the estimate highlights why solar investment should be viewed beyond its immediate impact on electricity bills. The technology could also help reduce Pakistan’s exposure to international fuel markets and the foreign exchange costs associated with energy imports.
Solar expansion is also changing the LNG market
The growth of solar energy is affecting not only electricity generation but also demand for imported natural gas and liquefied natural gas (LNG).
Pakistan had entered into long-term LNG supply agreements to meet the country’s power generation needs. However, as solar generation expanded, the power sector’s requirement for LNG was affected, creating a gap at times between contracted supplies and actual demand.
According to the report, Pakistan’s LNG imports declined by 4 per cent in FY2024-25 to 8.7 Mtoe. Lower demand also contributed to situations in which surplus LNG cargoes had to be diverted to international markets.
The development illustrates how changes in one part of the energy system can have wider consequences for existing contracts, supply arrangements and government planning.
Can solar power solve Pakistan’s energy crisis?
Despite the rapid expansion of solar power, Pakistan continues to rely heavily on imported fuels across several sectors.
The report says the transport sector accounts for around 90 per cent of the country’s annual oil consumption, making it the largest consumer of petroleum products.
It is also the least electrified sector, meaning that much of the country’s transport system continues to depend on petrol and diesel.
Meanwhile, declining domestic crude oil production and pressure on natural gas supplies remain major challenges for the energy sector.
Renewables First estimates that Pakistan received around 82 Mtoe of primary energy in FY2024-25, but only 26 Mtoe was converted into useful energy services. The gap points to significant inefficiencies and energy losses across the system.
This suggests that while solar power is reshaping electricity generation, wider reforms in transport, energy efficiency and domestic energy production are also needed.
Energy policy must catch up with the solar transition
Pakistan’s solar expansion is no longer a marginal development. Households, businesses, industries and agricultural users are increasingly turning to solar power to meet their energy needs.
However, managing this transition will require more accurate energy statistics, improvements to the electricity grid, greater energy storage capacity and long-term planning that reflects changing patterns of energy consumption.
The key question is no longer simply how many solar panels have been installed across the country. It is how much electricity they are generating, how much imported fuel they are displacing and whether government energy policies are keeping pace with this transformation.
Pakistan’s solar revolution is already underway. But until its full contribution is reflected in official statistics, the country’s energy landscape will remain only partially visible.
