Solar is no longer a novelty in Pakistan — it is a compulsion

Solar has stopped being a novelty

The episode opens with Muzamil setting up the moment. For three or four years he has been having a version of the solar conversation, but it has always carried what he calls “a novelty factor.” That has now changed. NEPRA has shifted from net metering to net billing, the Iran war has scrambled regional energy economics, and the public interest in solar has finally caught up to the engineering.

To make sense of it, he brings on Daniyal Siddiqui, founder and CEO of DS Group of Companies — one of the country’s largest industrial solar providers, with more than 780 megawatts deployed across industries and over 1,400 residential systems in the field. Daniyal has been in the industry for fifteen years and has watched Pakistani solar move from a fringe pitch to a procurement default.

His framing of the current moment is the cleanest line in the conversation. “Right now if you are an industrial owner, so literally you cannot survive if you don’t have a solar power plant running. You cannot be competitive specially in terms of grid pricing.” Five years ago, solar was competing against gas. Then it was competing against grid electricity. Today, against Pakistan’s current power tariffs, it has no real competitor at all. And uniquely, it is the only line item in the cost stack whose price has gone down while the rupee has fallen and inflation has run.

The 18-gigawatt number, and what is actually deployed

Muzamil raises the figure that has been doing the rounds in international coverage: that Pakistan deployed something in the order of 18 gigawatts of solar last year, and that this is partly what allowed the grid to absorb the shock of the war period. He asks Daniyal whether that number is real.

Daniyal’s answer is more careful than the headlines. The only verifiable number sits with customs authorities, because solar panels were duty-free until July 2025 and large volumes moved through the ports. NEPRA only sees what is registered for net metering or net billing applications. Industrial deployments for self-consumption — which is most of what DSG installs — never touch NEPRA’s books at all.

His read: the headline 18-gigawatt figure is probably inflated, partly because some volume is suspected to have moved on into Afghanistan and elsewhere. But the underlying claim that Pakistan has been through a solar revolution is correct, particularly in industry and residential. He offers an almost surreal illustration. On the recent Eid, the country had a power surplus because industrial load dropped — and the distribution companies, MEPCO and LESCO included, had to call solar customers and ask them to shut their plants down. “Can you just imagine this is happening in Pakistan that there was a surplus power because solar energy was excessive.”

The distribution network, he notes, was simply not built for a bottom-up generation system.

From 35 cents to 12 cents a watt

The conversation then moves into the numbers Muzamil has been trying to get a clean read on. Daniyal walks through the decade.

Pakistani solar started in 2012 and 2013 with 250-watt panels. DSG is currently deploying 750-watt panels across more than 50 megawatts of industrial sites. Panel pricing, always quoted per watt, has collapsed from 35 cents five years ago to 12 cents today, and briefly touched 8 cents. The drivers are a small set of vertically integrated Chinese cell manufacturers, a wave of assemblers competing aggressively, and Pakistan’s status as a high-volume, price-sensitive market.

The levelised cost of a one-megawatt industrial plant — panels, inverters, cables, structures, the lot — has fallen from 150 to 160 million rupees a few years ago to about 75 million today, and bottomed at 55 to 60 million four months earlier. Residential systems sit at around 100 rupees per watt, or roughly a million rupees for a 10-kilowatt installation without batteries.

The ROI math is what makes the case. Depreciated over ten years and including financing costs at current KIBOR, an industrial solar unit lands at around six and a half to seven rupees. Set that against a grid unit which sits near 36 rupees without taxation and considerably more once unrecoverable sales tax is included. The savings work out to a payback period of roughly two and a half years for industry — what Muzamil correctly characterises as a 50% ROI per annum.

Daniyal is direct about it. “There is no better investment than going for a solar power plant.”

The net metering correction nobody wanted to make

Residential economics are different, and the episode spends real time here because this is where the policy shift bites.

Daniyal sketches the history. The original 2016 net metering scheme was, in his words, an invitation — a one-to-one cancellation between what you exported to the grid and what you imported from it. He puts on his “financial hat” and is plain that internationally the model never works that way. In Scotland and the UK, where he has worked, the government buys electricity back at roughly a fourth or a fifth of what it sells it for, because the cost of generation, transmission and distribution sits on the grid side.

Net metering was a starter incentive that was never meant to last in its original form. But, he says, “there was no government which was bold enough or strong enough to take this call.” The correction was repeatedly delayed because cutting the buy-back rate is the textbook unpopular decision.

When NEPRA finally moved to net billing, it set the buy-back at the national average energy rate — roughly 11 to 12 rupees per unit, varying quarterly. Existing seven-year contracts were grandfathered. New installs are on the new terms.

Even at that lower rate, the residential math still works. DSG’s data, pulled from smart boxes paired with Huawei inverters across more than 1,400 systems, shows that on a typical day a household self-consumes around 60% of what it produces and exports 40 to 50% — because the panels are peaking between 10 a.m. and 2 p.m. when most of the family is out of the house. Cancel the self-consumed portion against the full residential tariff, and sell the rest back at 11 and a half rupees, and a battery-less residential system still pays back in about four and a half years. “If anybody was got a house, it becomes no brainer that you should still put on a solar system.”

Why this is a dollarised hedge

Muzamil restates the underlying point in a way that lands. The standard payback model assumes a flat rupee value of electricity and a flat capex number. But both sides are inflating. Pakistani electricity tariffs are effectively dollarised, and the capex itself cannot be procured outside dollar markets. So a one-off solar investment buys what is, in his framing, “a dollarised commodity” that pays out in long-term inflation protection. The real payback is materially faster than the headline number.

Daniyal agrees without qualification.

The battery question, and the 2027 inflection

The bottleneck, both of them concede, is storage. Solar produces for roughly four hours of useful peak, and Pakistan’s distribution network cannot consume the surplus or push it where it needs to go. The grid problem and the off-grid dream both route through batteries.

Daniyal walks through battery economics with the same rigour. Lithium cells are produced by a small handful of Chinese giants — CATL, Narada, EVE. Most of what reaches Pakistan is assembled, not cell-manufactured locally. International CFR pricing for lithium currently sits around $120 per kilowatt-hour. Add Pakistani duty, sales tax, and the quietly raised valuation ruling NEPRA pushed through alongside the net billing announcement, and the landed cost rises further.

His ROI math for batteries: depreciated over ten years, a battery costs around 14 to 15 rupees per unit to utilise as a tool. Add financing, and that becomes 17 to 18 rupees. Couple it with solar at six rupees, and the blended solar-plus-battery unit cost lands at roughly 23 to 24 rupees. Set that against an evening grid unit at 44 to 45 rupees — the delta is 18 rupees, and the combined system pays back in about six to seven years.

That is still good, but it is not the no-brainer industrial solar already is. And critically, it does not yet beat the 11-rupee buy-back rate. Until per-unit battery cost falls below the grid’s buy-back price, the rational system is solar plus net metering plus a modest battery bank for peak hours — not full off-grid.

This is where Daniyal makes his forward call, on the record. “I am calling the 2027 I believe. 2027 would be the revolution year for batteries, for battery packs in Pakistan.” Second-tier Chinese suppliers are already selling 20% below the top names. Sodium-ion is moving from announcement to commercialisation. When pack prices clear the 11-rupee threshold, he says, there is no stopping retail off-grid adoption — and households will have battery containers parked outside the way they have generators today.

The policy critique: announcements without implementation

Muzamil presses on what the government should actually be doing. Daniyal divides the answer into popular policies and unpopular ones, and is willing to defend the unpopular ones on their merits.

The net billing rate cut, he says, was the economically correct move — it brought Pakistan closer to the international model. But six months after the policy was announced, no new net billing meter has actually been installed. DSG has 440 applications sitting with discos for the last five months. “Even 11 rupees ki bijli bhi woh system mein in nahi kar paye.” Either the policy is being implemented or it is not, and what looks like a deliberate signal is mostly an absence of execution capacity.

His clearest recommendation is to privatise the distribution companies. He points to K-Electric, the only semi-private disco in the country, as the cleanest net metering experience DSG has — because it is digitised. The rest of the network is still running on linemen, SDOs and XENs walking meter to meter. Until that infrastructure modernises, more sophisticated market designs cannot land.

On financing, he is equally specific. With the IMF in the room, a subsidised refinancing scheme of the kind State Bank ran in 2017 — when industrial owners could get solar capex at an effective 3% — is off the table. But banks could absolutely treat solar and batteries as a financeable consumer product, leased the way cars are leased. “Lease pe le sake,” he says. “Iss se jo revolution hai woh aur badhega.”

The free-market debate Muzamil pushes

Muzamil presses for a sharper answer on whether Pakistan should move toward a genuinely free electricity market — hour-by-hour pricing, market-driven supply and demand, with the government providing only the base distribution layer. He compares it to how the US grid sets prices in real time and lets households and businesses optimise around them.

Daniyal does not disagree with the destination but pushes back on the timeline. The infrastructure to support real-time pricing does not exist yet. Pakistani meter readers still walk house to house with a mobile phone, photographing meters. Less than 5% of meters are AMI — the smart, GSM-connected meters that would allow real-time data. Without that data layer, the dynamic market Muzamil is describing has nowhere to land. The right sequencing, Daniyal argues, is private-sector investment into smart meters under public-private partnership models, then privatised discos, then the market mechanics on top.

CTBCM — the combined trade bilateral market mechanism, also called wheeling — is the legal scaffolding for this. It allows two private parties to trade electricity through the grid, with the disco repositioned as “supplier of last resort.” It is real, it is partially live, and Daniyal expects it to matter increasingly between 2028 and 2030.

Micro-grids and the SME opening

The final section is the one that should land hardest with the average reader, because it is the one that opens the energy transition up beyond institutional players.

Muzamil cites a Bangladeshi startup that has been quietly taking neighbourhoods off-grid by combining centralised solar deployment, central battery storage, and a neighbourhood-scale micro-grid. He puts a thesis on the table: for the first time in Pakistan’s history, energy is a sector the ordinary retail investor can enter. Where institutional rent-seeking elites used to be the only people who could play, an SME operator can now build a neighbourhood battery business instead of opening a poultry farm.

Daniyal confirms the legal point most listeners will not know. The 18th Amendment moved energy to the provinces, and NEPRA’s existing disco definitions already allow private developers to register as discos. DHA, EME and a private developer in Lahore have all registered. There is no statutory blocker to a colony-scale micro-disco. What is missing is the first proven case study.

“It’s a fabulous idea that privatisation ko karein,” he says, and adds that Chinese financing is already standing by for exactly these deployments. “I assure you that there would be time pretty soon when micro grids would in reality kick in because of the BES or the battery prices coming down.”

By the end of the conversation, Muzamil and Daniyal have made the same case from two angles. Solar is the rational individual decision today. Batteries make it the rational collective decision by 2027. The grid, in either case, becomes a backbone rather than a gatekeeper — and whoever builds the first working micro-grid in a Pakistani neighbourhood is going to set the template the rest of the country copies.