Islamabad: Experts on Friday at the high-level dialogue marking the inception of the Annual State of Renewable Energy (ASRE) 2025 called for a coordinated policy approach, urging greater alignment between economic and energy policies to unlock Pakistan’s full renewable energy potential.
Experts agreed that a structured transition strategy, investment incentives, and infrastructure modernization will be essential in ensuring a stable, cost-effective, and sustainable renewable energy future for the country.
The ASRE 2025 Inception event hosted by the Sustainable Development Policy Institute (SDPI) brought together leading experts from government, industry, and international organizations to discuss the future of Pakistan’s renewable energy sector. The discussion focused on critical policy reforms, infrastructure development, and financial mechanisms needed to address emerging challenges and accelerate the country’s energy transition.
The ASRE Report, a flagship initiative of the SDPI, serves as a key resource in Pakistan for understanding market trends, regulatory barriers, and investment opportunities in Pakistan’s renewable energy landscape. Published annually, it provides evidence-based insights and forward-looking policy recommendations to guide national energy planning, ensuring that decision-makers are equipped with the knowledge needed to drive sustainable growth in the sector.
Aqeel Jafri, Director Policy/International Cooperation, PPIB, who chaired the panel, outlined government priorities in RE development, stressing the need to increase the share of renewable energy in the grid while promoting Distributed Generation (DG), battery energy storage systems (BESS), and pumped storage hydro projects.
He highlighted affordability as a major challenge due to rising electricity costs, emphasizing that planned capacity additions are crucial to avoid further financial burdens.
Jafri also pointed out that generation synchronization between the north and south is a key government priority to enhance grid stability and ensure a more efficient and reliable power supply.
Engr Ubaid ur Rehman Zia, Head of the Energy Unit at SDPI, emphasized that the ASRE Report remains a flagship initiative in Pakistan offering critical insights to policymakers, industry leaders, and investors. He mentioned that Pakistan is going through two key trends in its renewable energy sector. At the utility scale, the progress has remained very limited where the country have not had any financial closure of an RE project since 2021. However, at the decentralized stage particularly the Solar PV market, Pakistan is the leading success story across the world. It is now one of the biggest Asian market especially for Chinese PV products. He further highlighted that this trend will further continue in coming years and what is needed for the government is to bring these consumers on the government systems through improved regulations.
Dr. Khalid, Research Fellow, SDPI, highlighted key concerns, noting that Pakistan’s renewable energy sector is struggling at the utility scale due to stagnation caused by already installed capacity. He emphasized the shift from an energy accessibility crisis to an affordability crisis, stressing the need for careful capacity expansion, early retirement of low-utilization power plants, and reassessment of Power Purchase Agreements (PPAs). He also pointed to transmission limitations, the surge in Non-Performing Market Volume (NPMV), and the need for investment in green hydrogen and RE-linked opportunities. Additionally, he underscored the importance of reorienting subsidies to ensure an inclusive and equitable energy transition.
Faran Rana, Associate Program Officer, IRENA, provided insights into global renewable energy financing, stating that in 2023, global energy transition investments exceeded $2 trillion, yet developing economies like Pakistan received only 10% due to high financing costs and macroeconomic risks. He noted that Pakistan’s Weighted Average Cost of Capital (WACC) for utility-scale projects remains between 15-20%, making investment difficult. He called for strong fiscal incentives and policy stability to attract international and domestic investors.
Ms. Naila, Project Manager, Agora Energiewende, discussed institutional and regulatory hurdles slowing Pakistan’s RE growth. She emphasized that a lack of structured RE policies, outdated transmission planning, and inefficient regulatory frameworks are deterring investment. She urged for greater transparency, long-term planning, and competitive market mechanisms to enhance investor confidence.
Irfan Ahmed, Renewable Energy Expert, highlighted grid modernization and wind energy potential, noting that Pakistan’s installed wind capacity stands at 1,845 MW, but actual peak utilization remains around 1,200 MW due to curtailment issues. He cautioned that curtailment not only causes revenue loss but also damages infrastructure, emphasizing the need for community driven RE projects and local manufacturing to reduce reliance on imported technology.
Mr. Ahad Nazir, Associate Research Fellow, SDPI, emphasized that Pakistan’s renewable energy transition must be driven by economic feasibility rather than solely by policy incentives. He stressed the need for modernizing energy infrastructure, optimizing transmission efficiency, and strengthening the RE value chain through local manufacturing, assembly, and warehousing. He also highlighted that investment decisions should be based on economic viability to ensure long-term sustainability. Mr. Nazir recommended that the next ASRE Report should assess the economic feasibility aspect of RE investments to provide a more comprehensive understanding of sectoral opportunities and challenges.
